AT&T loses unlimited data throttling case, forced to pay iPhone owner $935

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As previous reported by CBS News, cellular service and data provider AT&T was attempting to silence 39-year-old, California resident Matt Spaccarelli with a non-disclosure agreement after the man won a court case against AT&T regarding data throttling. While announcing intentions to throttle customers during late 2011, AT&T didn’t being throttling high-data users down to 2G download speeds until mid-December 2011. During February 2012, Spaccarelli noticed that AT&T started decreasing the data speed on his iPhone after consuming 1.5 to 2.0 gigabytes of data during a billing cycle. Spaccarelli’s iPhone is currently on the grandfathered unlimited data plan that AT&T discontinued during June 2010.

at&t iphone 4SAccording to an interview with Mashable, Spaccarelli’s download speed on his iPhone over AT&T’s network is approximately 0.31 Mbps in the Simi Valley area outside Los Angeles, a far cry from the nationwide average of 1.7 Mbps. While text messaging and voice calls were unaffected by the change, Spaccarelli was unable to stream video and browsing the Web become incredibly slow. Spaccarelli also purchased a second iPhone with a sim card from Straight Talk and was able to get a 3.83 Mbps download speed in the same location on AT&T’s 3G network.

Spaccarelli brought the case against AT&T in a small-claims court and Judge Russell Nadel ruled that AT&T violated the terms of the unlimited data plan. The judge ordered that AT&T issue Spaccarelli a payment of $850, an estimation of the data usage over the remainder of Spaccarelli’s contract, plus $85 for court costs. Spaccerelli tweeted a picture of the cashier’s check yesterday on his Twitter account with the phrase “It’s official! I win! Thanks for all the support,” in addition to tagging AT&T’s official Twitter account in the message.

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While Spaccarelli’s win in the case may inspire other AT&T customers to pursue legal action against the service provider, a letter from the law firm representing AT&T indicates that Spaccarelli violated the AT&T agreement by tethering the iPhone 4 to a computer. As detailed on a blog post at PublikDemand, the letter mentioned that AT&T could cut off Spaccarelli’s service for the tethering violation before attempting to encourage him to sign a non-disclosure agreement in regards to the court case.  

Spaccarelli refused to sign the agreement and has continued to remain vocal about the case on his own site in addition to interviews in various national publications. AT&T doesn’t plan on appealing the verdict and previously announced plans to halt throttling on the top five percent of high data users. Instead, the company will throttle all users that consume more than 3GB of data in a billing cycle. Incidentally, 3GB is the current cap on data for users that sign up for a new service plan with the company.  

According to Spaccarelli, he plans to use the money to obtain a new smartphone using a different service provider in addition to traveling to the AT&T stockholders meeting held during April 2012 within Salt Lake City, Utah. Since a clause in the AT&T contract prevents consumers from getting together to form a class-action lawsuit regarding data-throttling, unlimited data users have to use binding arbitration or small-claims court to go after AT&T. While binding arbitration typically requires silence from both parties after resolution, small-claims court doesn’t have this restriction. 

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