The FCC’s Enforcement Bureau recently announced a $48 million settlement with T- Mobile to resolve an investigation into whether the company failed to adequately disclose speed and data restrictions associated with its unlimited data plan.  See the Regulatory Mix dated 10/20/16. Much of the attention has been focused on the dollar value of the settlement and the unusual mixture of consumer refunds, discounts, going forward investments to narrow the “homework gap,” and the civil penalty it contains.  Less attention has been paid to the valuable insight the Consent Decree offers as to how the FCC is currently interpreting its Open Internet Transparency Rule.

The Transparency Rule was adopted in 2010 and requires that providers of broadband Internet access service (BIAS)1 “publicly disclose accurate information regarding the network management practices, performance, and commercial term” of its service, “sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.”  The rule applies to both fixed and mobile BIAS providers, including resellers.

Broadly stated, disclosures under the Transparency Rule should include some or all of the following types of information, timely and prominently disclosed in plain language: (i) network practices, including descriptions of congestion management practices; (ii) performance characteristics, such as expected and actual access speed and latency; and (iii) commercial terms, such as monthly prices, usage based fees, and fees for early termination or additional network services.  The FCC has issued several Enforcement Advisories and other Guidance documents intended to help providers understand and comply with the rule, as well as sample “Consumer Broadband Labels” that function as a safe harbor.

Why did the FCC investigate T-Mobile?

The investigation began after the FCC received complaints from T-Mobile and MetroPCS customers who felt misled when they discovered their unlimited data plan (UDP) included “de-prioritized” data speeds after using a fixed amount of data each month.  Under its “Top 3 Percent Policy,” T-Mobile de-prioritizes its so-called heavy data users during times of network contention or congestion.  According to consumers, this policy rendered data services unusable for many hours each day and substantially limited their access to data.  The FCC’s investigation confirmed that, under the Top 3 Percent Policy, during times that the network experienced contention, T-Mobile de-prioritized the data usage of UDP heavy user customers below that of other customers.

What was wrong with the disclosures?

From August 2014 until June 12, 2015, T-Mobile’s disclosures did not inform consumers of the specific data usage threshold that would trigger the heavy data user flag under the Top 3 Percent Policy.  Nor did they: (1) explain how the application of the Top 3 Percent Policy could potentially impact a customer’s ability to use data services; (2) discuss the data throughput speed reduction a customer could experience under the Policy; or (3) give an indication about what kinds of data services and applications could be impaired by the reduced resources.

What was right with the disclosures?

The FCC agreed that T-Mobile’s disclosures were significantly improved beginning in June 2015. This is because:

• They included language that gave consumers with more information about when the policy is triggered and how de-prioritized customers can expect their use to be affected.  For instance, they indicated the data usage threshold necessary to trigger the Top 3 Percent Policy, e.g., 25 GB, rather than just telling customers that it would be triggered when the customer used “more data than what 97% of other customers use” based on historical use. The FCC said that this “clear data usage marker allows customers to monitor and anticipate if and when they may be subject to de-prioritization.”
• They state that affected customers “will likely see significant reductions in data speeds, especially if they are engaged in data-intensive activities.” Prior to June 2015, the disclosures lacked such a detailed indication of the effects of the de-prioritization policy on customer usage, only stating that the data throughput of flagged data users would be de-prioritized below other customers during network contention.
• The online disclosures for the Top 3 Percent Policy were revised to state that customers “will have their data usage de-prioritized.”  This definitive language differs from the pre-June 2015 disclosures, which stated that customers “might in some cases have their data usage prioritized.” 

The FCC concluded that that, “[c]ombined, these modifications increase consumers’ knowledge about the operation and effect of the policy, allowing them to make more informed choices in selecting and using their UDP.”

T-Mobile also agreed to:

• use the FCC’s Consumer Broadband Label in conjunction with its online Open Internet disclosures; and
• not make any representation that the amount of mobile data is unlimited without making a clear and conspicuous disclosure of any material restriction on the amount and speed of such data.  The Consent Decree allows this disclosure to be made via a link in certain situations that are space-constrained.

¹ The FCC defines BIAS as “Mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service.” Mass market refers to a service marketed and sold on a standardized basis to residential customers, small businesses, and other end-user customers such as schools and libraries.  Mass market also includes BIAS purchased with the support of the E-rate, Lifeline, and Rural Healthcare programs, as well as any BIAS offered using networks supported by the Connect America Fund.