Net Neutrality puts the kibosh on data throttling

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Data throttling, or slowing down network speeds for customers with unlimited-data plans who cross certain data usage thresholds in a billing cycle, is in the spotlight thanks to the FCC’s net neutrality rules:

  • As we previously reported, the FCC is fining AT&T a substantial $US100 million for its data throttling practices. The agency found that AT&T significantly throttled data for customers on unlimited data plans once they crossed 5GB of data in billing cycle and were misleading and opaque in this practice. These customers had throttled data access for an average 12 days per billing cycle, at speeds over 20 times slower than normal network speeds that AT&T claims to offer.

  • On June 12, the day that net neutrality took effect and days before news of FCC’s plans to fine AT&T, Sprint announced that it was suspending its own data throttling policies for customers on its unlimited plans.

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AT&T plans to fight the allegation, claiming that the company disclosed the throttling practice to consumers with unlimited plans. AT&T and Verizon no longer offer unlimited data plans (AT&T customers who subscribed to unlimited plans before they terminated the option were allowed to keep them) because it’s costly and prevents the companies from a more lucrative model of revenue from charging for data based on set tiers.

Sprint and T-Mobile still offer unlimited data packages, which creates a stark value proposition for the two underdogs who are vying to win subscribers from the US duopoly of Verizon and AT&T.

Creating data subscription levels can help mobile service providers drive up the average revenue per user. The average monthly revenue per unit for the US wireless industry dipped by 4% in 2014, according to the CTIA (see chart), as subscriber connections and capital expenditures hit all-time highs.

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