Signage for an AT&T store is seen in New York October 29, 2014. REUTERS/Shannon Stapleton/File Photo

WASHINGTON (Reuters) – A federal appeals court in California on Monday dismissed a U.S. government lawsuit that accused AT&T Inc  of deception for reducing internet speeds for customers with unlimited mobile data plans once their use exceeded certain levels.

The company, however, could still face a fine from the Federal Communications Commission regarding the slowdowns, also called “data throttling.”

The U.S. Court of Appeals for the Ninth Circuit said it ordered a lower court to dismiss the data-throttling lawsuit, which was filed in 2014 by the Federal Trade Commission.

The FTC sued AT&T on the grounds that the No. 2 U.S. wireless carrier failed to inform consumers it would slow the speeds of heavy data users on unlimited plans. In some cases, data speeds were slowed by nearly 90 percent, the lawsuit said.

The FTC said the practice was deceptive and, as a result, barred under the Federal Trade Commission Act. AT&T argued that there was an exception for common carriers, and the appeals court agreed:

The panel reversed the district court’s denial of AT&T Mobility LLC’s motion to dismiss, and remanded for an entry of an order of dismissal in an action brought by the Federal Trade Commission under section 5 of the FTC Act that took issue with the adequacy of AT&T’s disclosures regarding its data throttling plan, under which AT&T intentionally reduced the data speed of its customers with unlimited mobile data plans.

Section 5 of the FTC Act contains an exemption for “common carriers subject to the Acts to regulate commerce.” 15 U.S.C. § 45(a)(2). The panel held that AT&T was excluded from the coverage of section 5 of the FTC Act, and FTC’s claims could not be maintained. Specifically, the panel held that, based on the language and structure of the FTC Act, the common carrier exception was a status-based exemption and that AT&T, as a common carrier, was not covered by section 5.

Asked about the appeals court ruling, a spokesman for AT&T said: “We’re pleased with the decision.”

An FTC spokesman said the agency has not yet decided whether to appeal. “We are disappointed with the ruling and are considering our options for moving forward,” FTC spokesman Jay Mayfield wrote in an emailed comment.

The company, however, could face action from the FCC. In June 2015, the agency proposed a fine of $100 million for AT&T’s alleged failure to inform customers with unlimited data plans about the speed reductions. AT&T has contested that proposed fine.

(By Diane Bartz; Editing by Paul Simao and Matthew Lewis; Additional reporting by Stop the Cap!)

Verizon Wireless today launched LTE Advanced technology to bring up to 50% faster peak wireless data speeds to almost its entire national 4G LTE service area.

LTE-A allows Verizon to better balance its data traffic by combining disparate mobile data channels on different frequency bands to increase bandwidth and speed for mobile data traffic. The technology, known as carrier aggregation, helps mobile providers more efficiently deliver data over multiple frequency bands at the same time. Verizon controls space in the 700 MHz, AWS and PCS spectrum bands giving the company the possibility of combining two or three bandwidth channels together into a single channel, boosting speeds.

There is a catch. Only customers with the latest devices supporting LTE-A will experience dramatic speed boosts. Verizon currently supports 39 LTE Advanced-capable phones and tablets on its network, including the latest Samsung Galaxy and Apple iPhone models. If you own one of these devices, the speed improvements are automatic and no plan change is required.

Verizon’s original LTE network was shown to deliver more than 100Mbps in peak speeds when it was in the lab or during early beta tests. But once actual customers got on the network, speeds began to slow. Most customers today get LTE speeds of 5-12Mbps from Verizon Wireless. Verizon’s press release touts “peak download speeds of up to 225Mbps” using two channel aggregation and over 300Mbps when testing three channel aggregation. But customers may find speeds considerably slower than that as the number of LTE-A capable devices grows in the months and years ahead.

Verizon Wireless is not shy about its boasts for better wireless speed.

“Our customers just received a major network enhancement for no additional cost,” said Tami Erwin, head of operations for Verizon’s wireless unit. “Verizon LTE Advanced works like a turbocharger on an engine. Speed boosts kick in when you need it most, with big data use. That’s when you get the big peak boost of Verizon LTE Advanced.”

“Verizon LTE Advanced means your data session moves more quickly over the best network,” said Nicki Palmer, Verizon’s chief wireless network engineer. “Imagine a road with multiple lanes in which, once you pick a lane, that’s the lane you drive in. That describes our award-winning 4G LTE network. Continuing the metaphor, Verizon LTE Advanced allows cars to change lanes efficiently and flawlessly, balancing the flow of traffic and getting drivers to their destinations more efficiently. That means blindingly fast data transmissions when you need it most.”

Always looking for a new angle.

While T-Mobile and Sprint are preparing to battle it out offering dueling unlimited data plans, Verizon Wireless and AT&T are continuing to raise prices for many customers while pushing upgrades on customers some do not need.

This week, AT&T officially introduced its Mobile Share Advantage plan, with most of the advantages going to AT&T.

Per device fees have shot up by as much as 33% if you have more than two smartphones on your account. AT&T used to charge $15 per smartphone as a device fee. Now it is $20, offset in many cases by some reductions in data plan costs. But once you add a third device, you are paying a $5 rate increase per device.

The company is also trying to clean up its reputation by eliminating the scourge of data-related overlimit fee bill shock. Before the change, AT&T customers faced an overlimit fee of $5 for each 300MB used on its 300MB data plan and $15 per gigabyte on other plans. Instead of billing overlimit fees, AT&T is adopting punishing speed throttles for customers over their allowance. Once customers exceed their plan limit, speeds are reduced to 2G levels, up to 128kbps. While that is just painful for web pages, it makes watching video and uploading photos next to impossible without experiencing frustrating network timeout error messages.

Gone are the 2, 5, and 15GB plans. Customers can now choose from 12 different usage plans ranging from 1-100GB.

But AT&T’s most conservative users of data are going to pay more under the new plan. Customers enrolled in the old 2GB $30 data plan, suitable for those who use their phones to check e-mail and view web pages, will find that same $30 will only buy them 1GB if they switch to the new plan. To avoid the likelihood of hitting the speed throttle, these customers will have to upgrade to a 3GB plan for $40 — a $10 increase.

For everyone else who happens to slightly exceed their data allowance, many may end up preferring the old $15 overlimit fee system. Under the new plan, customers have to live with speed throttles that make their devices almost unusable until the billing cycle refreshes. We predict many customers won’t wait and will upgrade their data plan to restore functionality. But upgrades from the 3GB and 6GB plans come in $20 increments — $5 more than the overlimit fee charged for slightly going over. Even worse, if the overage was a one-time issue, many customers will spend $20 more on a data allowance many probably won’t use.

Customers are free to keep their existing plan, for now. But if they change plans, they won’t be able to switch back.

Windstream will bring its fiber to the neighborhood service Kinetic TV to around 50,000 homes in 13 suburban and exurban communities surrounding Charlotte, N.C., to stay competitive with Time Warner Cable/Charter and a publicly owned cable system serving Mooresville.

The independent phone company submitted a formal application for a cable television franchise with North Carolina’s Department of the Secretary of State to begin offering television service in Albemarle, Badin, China Grove, Concord, Harrisburg, Hemby Bridge, Indian Trail, Kannapolis, Matthews, Mooresville, Mt. Pleasant, New London and Oakboro.

Windstream claims Kinetic TV leverages “a 100 percent fiber-backed network,” which leaves customers with the impression they are getting fiber optic delivery of television, broadband, and phone service. In fact, for many communities Windstream is constructing a network similar to AT&T U-verse. The phone company brings fiber optic cables into each neighborhood, but relies on existing copper wire infrastructure connecting individual homes to a nearby fiber optic-connected neighborhood hub. The upgrade allows Windstream to expand broadband capacity to support concurrent use of television, phone and internet access. For many Windstream customers complaining about the poor performance of Windstream’s DSL service, that offers a significant improvement. But Windstream does provide even better upgrades in some communities. In April 2016, Windstream launched gigabit speed internet service for seven North Carolina towns: China Grove, Concord, Davidson, Harrisburg, Kannapolis, Lewisville and Matthews. By applying for a statewide video franchise agreement in North Carolina, Windstream will be able to sell cable television service along with gigabit broadband speed.

Kinetic TV is now an exceptionally good deal for new customers.

Kinetic TV is already available in Lincoln, Neb., Lexington, Ky., and Sugar Land, Tex.

Windstream aggressively prices its most deluxe double play package of 50Mbps broadband and 270+ channels and Whole House DVR service at a one-year introductory price of $89.99 a month with a one-year service commitment. Customers can upgrade to a triple play package with the same 12 month commitment that includes a phone line with unlimited long distance calling for just $2 more — $91.99 a month. New double/triple-play customers also receive a one-time bill credit of $250, which will generally cover the first two months of service. This promotion is by far the best value for money. Unfortunately, after the promotion expires your price increases by $72.99 to $162.98 a month.

Kinetic TV operates with wireless set-top boxes that can be moved to different televisions as needed. The DVR can handle recording four channels at the same time and Windstream promises no lag while channel changing. The usual $80 installation fee is waived when new customers sign up under a promotional offer. Anyone can register to be notified about Windstream’s promotional offers on the company’s website and will likely receive an invitation as Kinetic TV becomes available in your area.

Earlier this year, Windstream debuted Kinetic TV in Sugar Land, Tex., joining the communities of Lexington, Ky. and Lincoln, Neb. The 13 small cities and communities in North Carolina will be Windstream’s fourth service area for Kinetic TV.

Kinetic TV’s Whole House DVR

The service has received generally positive reviews from those not expecting to place a lot of demand on the service. The fastest internet package tops out for most at 50Mbps and some customers report their actual speeds are sometimes slightly lower. Windstream currently offers Kinetic customers unlimited, uncapped data plans. If you cancel service before the end of your contract, the penalty as stated in Windstream’s terms and conditions is among the steepest we have ever seen: 100% of the charges you would have paid had you kept the service through the rest of your contract.

There is other fine print:

• Kinetic TV cannot support more than four Standard Definition video streams (television sets in use concurrently). HD channels for recording or viewing are limited to between one and four, depending on the capacity of your connection. If you exceed it, the remaining video streams or recordings will be in Standard Definition.
• Kinetic TV will not allow pay per view or video on demand charges to exceed $200 in a calendar month.
• Prices above include one Kinetic TV receiver. Each additional box is billed at $7 a month, and may be limited in quantity. A Windstream gateway, also required for service, is assessed a separate monthly charge.
• Your internet speeds may be affected by how many televisions are concurrently in use in your home.
• Windstream collects information about programming watched, recorded, or accessed. Currently, they use this information to make general programming recommendations to all customers and/or specific recommendations to you based on your personal viewing habits.

(Windstream pricing information gathered by entering a residential street address in Sugar Land, Tex., Zip Code 77478.)

California’s Public Utilities Commission (CPUC) couldn’t get cozier with AT&T if they moved regulators into the phone company’s plush executive suites.

In a 3-2 decision, the CPUC has given California phone companies that cannot manage to keep their wireline networks in good order an early Christmas, allowing the companies to effectively fine themselves for bad performance and keep the money.

Although the CPUC adopted a series of “automatic fines” for companies with chronic service problems (AT&T is by far the largest offender), it completely negated any sting by allowing companies to skip the fine by demonstrating they’ve invested at least twice the amount of the penalty in their networks. That is an expense AT&T’s bookkeepers can manage to document in minutes just by highlighting AT&T’s investments in other parts of the state. AT&T can argue investments in gigabit fiber in southern California or wiring fiber to business parks and cell sites improves service reliability for at least some customers.

CPUC president Michael Picker isn’t in any hurry either, helpfully offering AT&T and other phone companies two years to complete the investments that will cancel their fines:

In support of a request to suspend the fine, carriers may propose, in their annual fine filing, to invest no less than twice the amount of their annual fine in a project (s) which improves service quality in a measurable way within 2 years. The proposal must demonstrate that 1) twice the amount of the fine is being spent, 2) the project (s) is an incremental expenditure with supporting financials (e.g. expenditure is in excess of the existing construction budget and/or staffing base), 3) the project (s) is designed to address a service quality deficiency and, 4) upon the project (s) completion, the carrier shall demonstrate the results for the purpose proposed. Carriers are encouraged to review their service quality results to find appropriate target projects to invest funds.

Consumer advocates have accused AT&T of underinvesting in their wireline facilities for years. Because the CPUC does not require the investment be specifically targeted to correcting problems that prompted the fine, phone companies can continue to allow high cost/low profit rural infrastructure to deteriorate while targeting service-improving investments in more profitable or competitive service areas.

Steve Blum from Tellus Venture Associates, who has closely tracked telecom public policy matters in California for years, called it the most cynical decision he’s ever seen from the CPUC:

Fines, it seems, are just another cost of doing business for telecoms companies and don’t matter anyway. So why not let them keep the money?

Boiled down, that’s CPUC president Michael Picker’s rationale for establishing new telephone voice service level requirements backed up by a swinging schedule of penalties and then saying but we’ll let you keep the money if you invest it in infrastructure or pay staff. Or something. Anything.

Picker

Commissioner Mike Florio called the Picker’s proposal “unenforceable.”

The CPUC’s own staff has documented the troubling condition of landline service in the state. A staff report published in September 2014 showed the largest phone companies in the state — AT&T and Verizon (later sold to Frontier Communications) — that control 88% of landlines in California never met the CPUC’s minimum standard of repairing 90% of “out of service” trouble tickets within 24 hours during 2010-2013.

In 2010 and 2011, AT&T and Verizon needed an average of 110 hours to repair 90% of outages. That is 4.5 days. In 2012 and 2013, repair time marginally improved to an average of 72 hours (3 days). That is three days without any phone service or the ability to call 911, something the CPUC staff said compromised public safety.

AT&T and Verizon have papered the CPUC’s walls with “corrective action reports” over the years explaining why they failed to meet CPUC standards and what actions they planned to take to improve compliance. The staff report found those reports never resulted in improved compliance.

Commissioner Catherine Sandoval submitted an alternative plan of simple fines and a reporting system that gives equal weight to outages occurring in areas served by independent phone companies like Citizens Telecommunications Company of California (d/b/a Frontier) and SureWest Telephone (d/b/a Consolidated Telephone). Picker didn’t bother to hold a vote on Sandoval’s proposal, instead bringing his own proposal to the commission that approved it on a 3-2 voice vote. Florio and Sandoval voted no.

Despite the easy out, the state’s phone companies are still complaining the fine system was unnecessary because the free market was best equipped to manage service outages. If customers don’t like their provider, they can switch, assuming there is another provider available in the large rural and mountainous parts of the state.