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AT&T Ordered to Pay Damages to iPhone User for Throttling Bandwidth

Published: February 25, 2012 | 10:27 am
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In an order that might seem apparently small and insignificant a court in California has passed a judgment that might significantly cut into corporate coffers of AT&T and start a wave of litigation from those similarly affected as the plaintiff.

The story, in short, is that an iPhone user has been awarded $850 in damages after finding out that without his consent AT&T was restricting his data speeds on an unlimited plan.

While AT&T released a statement to the media asserting, “This is a small claims matter. We are evaluating next steps, including appeal. But at the end of the day, our contract governs our relationship with our customers,” customers seem indignant at the act and welcomed the decision.

The customer contract of AT&T specifies that arbitration win would be minimum $10, 000 the amount claimed by the plaintiff. However, the court refused as small causes court did not come under arbitration, and the reasonable damages in the case would be $85 per month for the 10 months left on his unlimited plan.

The dispute arose when Matt Spaccarelli, an iPhone user with an unlimited data plan from AT&T found his data speeds were being throttled after 1.5 to 2GB usage, while users of limited plans did not face any bandwidth throttling at similar data usage thresholds.

Significantly, at least half of AT&T’s smart phone customers have unlimited data plans. With almost 17 million customers who can have similar grievances, this little judgment can lead to disaster for the communications giant.

AT&T representatives have mentioned that the company contract contained rights of the company to “modify or cancel” customer contracts if their usage brings loss to the company or its networks.

The case does seem headed for appeal as AT&T’s contract, surprisingly, contains a clause that prohibits a subscriber from bringing a class action suit against the company.

The prohibitory clause seems wholly against the principles of modern jurisprudence, for a contract that prohibits a party from seeking legal reliefs and procedures granted by the constitution, becomes null and void to the extent it seeks to restrain constitutional rights of citizens.


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