AT&T Sued for Overcharging on Data

AT&T Sued for Overcharging on Data

AT&T is facing a lawsuit claiming the carrier overcharges customers for data, in a legal entanglement that could impact its plans to merge with T-Mobile.

In a four-month study — paid for by the law firm Thornton, Davis & Fein — independent researchers found that AT&T overcharged iPhone and iPad users by anywhere from 3.5- up to 100-kilobytes of data, per 50-kilobytes.

Even phones that removed all data-grabbing apps still rung up charges, sometimes even on the wrong billing cycle.

“We were stunned to discover that AT&T billed for a phone which was left untouched for 10 days, incurring 35 data transactions totaling almost 3,000-kilobytes during that period,” said Barry Davis of Thornton, Davis and Fein.

In response to the lawsuit, AT&T insists the company is billing customers correctly.

“We properly bill for all data that our customers send and receive, including data activity that runs in the background on smartphones and other powerful data devices,” said Kelly Starling, an AT&T spokeswoman.

Since over 20 million Americans own iPhones and iPads, this class-action lawsuit could prove costly for AT&T. Besides the obvious financial ramifications of a settlement, the wireless carrier could suffer in more subtle ways too, if, for example, it was directed to charge less for its services as a result of the suit.

With a $39 billion merger with T-Mobile awaiting FCC approval, AT&T is walking on eggshells as it tries to convince detractors that the deal would benefit customers. Though the company has a powerful lobby, which this week met with venture capitalists and business people, AT&T must ultimately bow to the government’s verdict on its proposal.

Testifying before Congress, AT&T made the case that its acquisition of T-Mobile will alleviate the spectrum crunch and bring 4G service to more consumers around the U.S. Although the merger would consolidate AT&T and Verizon’s power into 80 percent of the wireless market, AT&T insisted smaller wireless carriers would keep cellular competition alive.

AT&T denies this charge, but today’s lawsuit adds scrutiny for the wireless giant. Allegations that its current and past billing behavior has been anything but aboveboard could intensify attention on the company, since regulators are focusing on whether its future billing will be fair to consumers.

The FCC’s jury is still out — judging from its request for citizens’ online input on the matter, the commission is willing to hear all sides of the story before making a decision. Rival Sprint is appealing loudly to Congress and even to individual states, saying the merger would give AT&T free license to charge customers as it pleased and create a virtual duopoly with Verizon.

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