AT&T (NYSE:T) has never quite been clear on the meaning of the word "unlimited."
The company has regularly played games with customers who purchase so-called unlimited data plans by throttling their connection speeds after they consume a certain amount of data in a given billing period. The company was even sued by the Federal Trade Commission over its throttling practices, and the federal agency made it clear that it also believed the company was unclear as to the definition of the word "unlimited."
"AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," said FTC Chairwoman Edith Ramirez in a press release. "The issue here is simple: 'unlimited' means unlimited."
Now, however, while the wireless company hasn't abandoned throttling altogether, it has made a major change to its policy -- one that benefits its customers.
What did AT&T do?
It's important to note that AT&T no longer sells unlimited-data plans and hasn't for years. That means the only people on those plans are long-term customers who were grandfathered when the change was made.
The company first started reversing its throttling policy in May, when it began throttling only in certain circumstances, not simply because the user had exceeded a cap. Under the new plan, which Ars Technica reported on at the time, the company quietly shifted to a policy of throttling only during times of network congestion.
AT&T spelled out the policy on its website, which Ars shared at the time:
"As a result of AT&T's network management process, customers on a 3G or 4G smartphone or on a 4G LTE smartphone with an unlimited data plan who have exceeded 3 gigabytes (3G/4G) or 5 gigabytes (4G LTE) of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion."
That was an improvement over blanket throttling, but it's still not unlimited, as exceeding 3 or 5 GB in a month isn't that hard to do. That's what makes the company's latest change so surprising, and while it's not an end to throttling unlimited customers, it is for the vast majority of users.
AT&T has, according to 9 to 5 Mac, changed its policy to throttle unlimited-data customers only when they exceed 22GB of data usage for the billing period and are in a congested area. The carrier detailed these latest changes on its website, where it called the policy an "evolution":
"As a result of this evolution, we recently revised our practices such that Unlimited Data Plan smartphone customers can now use 22GB of high-speed data during a billing period before becoming subject to network management practices that might result in reduced data speeds and increased latency."
This type of throttling is perhaps still not precisely "unlimited," but it does change the policy to stop penalizing normal users and really only go after the ones who take the most advantage.
AT&T needs to change
In making these changes, AT&T has done something that's consumer-friendly -- something it has never seemed to consider in the past. It's possible that the FTC lawsuit created some pressure, and it's likely that the customer-first strategy that's propelled fast-rising T-Mobile toimpressive growth in the wireless space also played a part.
T-Mobile doesn't offer unlimited plans, but it's very clear in its marketing that it sells a certain amount of data at top speeds and then unlimited data at slower speeds. That's throttling, too, but it's well packaged and promoted, making it actually seem as if the company is being nice in not charging overages, rather than somehow penalizing customers.
Whatever the reason AT&T has made these changes, the company deserves credit for doing so. It's now treating it's longest-standing customers much more fairly, and that may keep them loyal even in the face of cheaper prices from other wireless carriers.
Daniel Kline has no position in any stocks mentioned. He is about to give up an unlimited data plan. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.