AT&T Loses Throttling Case, Pays $935 to Customer

AT&T decided to pay up after a California small claims court judge ruled it was unfair to throttle a cellphone data plan advertised as unlimited.

Matt Spaccarelli, 39, challenged AT&T in February after he noticed his 4G network wasn't operating as fast as it should. Spaccarelli is among the 5% of AT&T customers who use the most data. He told the court speeds slowed once he used 1.5GB to 2GB of data after the billing cycle began.

The judge said slowing down data violated AT&T's unlimited data plan terms and ordered AT&T pay $850 plus $85 for court costs.

The cellphone provider initially said it planned to appeal the ruling, but decided to pay Spaccarelli late Friday afternoon. He tweeted a picture of his check for $935:

It's official! I win! Thanks for all the support. @ATT @petersvensson @Team_Shep #netneutrality #throttling twitter.com/matthewspacc/s…

— Matt Spaccarelli(@matthewspacc) March 17, 2012

In an email, AT&T spokesman Mark Siegel confirmed AT&T wrote a check to Spaccarelli, but would not comment further.

AT&T is still throttling Spaccarelli's phone — he had a .31 Mbps download speed on Saturday — but he considers the court ruling a win. He said he plans to use the money to shut off his cellphone service before his contract is up and to go to the AT&T stockholders meeting in April in Salt Lake City, Utah.

"To me the check means AT&T didn't stand a chance in the appeal," Spaccarelli said. "If they did, they wouldn't have paid me."

AT&T's pay-up decision comes after the company offered to settle the case. AT&T asked Spaccarelli to sign a non-disclosure agreement [PDF] that threatened to shut off his phone service for tethering. Spaccarelli refused to sign the agreement.

"It isn't about the money," Spaccarelli said. "It's about getting the service I'm paying for. I pay $130 per month and with that I expect a little bit of reasonableness. "

SEE ALSO: Your Bandwidth Will Be Throttled. Here's Why.

Both AT&T and Verizon throttle users who gobble up the most data. About 17 million AT&T customers have unlimited data plans, according to the Associated Press. Small claims court is the only legal route that has been successful for challenging AT&T's throttling policies. A Supreme Court case last year ruled AT&T does not have to allow class action lawsuits, so customers can't rally in court for a policy change on throttling.

AT&T put limits on its "unlimited" data plans earlier this month. The company said 3G and 4G customers who use more than 3GB during a billing cycle will experience slowing speeds and 4G LTE customers won't be allowed more than 5GB. Even with the change, AT&T says 95% of its smartphone customers won't be throttled.

Spaccarelli said he has found a way to avoid slow speeds. He bought a second iPhone and plugged in a SIM card from Straight Talk, a reseller. He said the download speed is 3.83 Mbps on a AT&T 3G network. "Not bad for paying $45 per month for unlimited talking, texting, data and no contract," Spaccarelli said.