iPhone Unlimited Drama Results in AT&T Lawsuit

March 13, 2012

The courts may start getting tired of hearing cases regarding smartphones and carriers. We reported just yesterday that Apple was being sued by a disgruntled iPhone 4S user who was angry with Siri’s performance (or lack thereof) and now it seems AT&T is the latest to be hit by the smartphone-related lawsuit bug. And it looks like they’ll be divvying out some money to get the suit settled as soon as possible.

iPhone Data Throttling Irks AT&T User

Like many other longtime iPhone owners on the AT&T network, Matthew Spaccarelli has an unlimited data plan for his iPhone. Although these plans were made unavailable to new AT&T subscribers in 2010, those who already had unlimited data were allowed to keep it. AT&T calls this “grandfathering,” and it’s something that other carriers–such as Verizon–have also employed with their iPhone, Android and other smartphone users.


Spaccarelli received a text message notification on his iPhone from AT&T that said he would have his data speeds throttled if he did not reduce his iPhone data usage. Spaccarelli felt that this was a violation of his contract with AT&T (according to Spaccarelli, AT&T “broke its promise to provide unlimited service.”) and decided to file a small claims suit with a court in Simi Valley.

Small Claims Court Suit Win

Somewhat surprisingly, Spaccarelli actually won his small claims court suit on February 24. At the time, the judge in the case ordered AT&T to pay $850 to Spaccarelli for their failure to live up to the contract for his iPhone.

The reason why we say “somewhat surprisingly,” is that Spaccarelli won this $850 award despite the fact that he tethered his iPhone to his computer without purchasing the required data plan. As some may know, this is a violation of the terms of service (TOS) that AT&T makes its subscribers sign, so technically, AT&T did have the right to throttle Spaccarelli’s data because he was not complying with the contract. However, the judge apparently didn’t see it that way.

AT&T Seeks to Quietly Settle Court Suit with iPhone User

Despite the fact that AT&T is justified in throttling or even suspending Spaccarelli’s iPhone service in this case, they still seem quite keen to settle. And it’s for good reason: the idea that they are throttling–or slowing down a user’s data speed once they reach a certain usage criteria–is something that many people will not be happy about.

At this point, no one knows how much AT&T is offering to settle the iPhone data case for–but we do know that they’re appealing the February 24th judgment, so it appears that they won’t be offering Spaccarelli any more than the $850 previously awarded.

What This Means for You

If you currently have an iPhone on either AT&T or Verizon and happen to have unlimited data, take note: unlimited data does not mean you can use as much data as you want. Once you hit a certain level–usually 3 gigabytes or more of data consumption–you will be penalized by your carrier, either through data throttling or removal of your unlimited plan. So use your data wisely.

What Do You Think?

Did Spaccarelli deserve the $850 award despite technically violating his agreement with AT&T? Do you think it’s fair that AT&T is data throttling its iPhone and other smartphone using customers? Leave us a comment below and make your opinion heard.

{ 4 comments… read them below or add one }

JoeShmoe99 March 15, 2012 at 2:39 pm

Did a lawyer for AT&T even show up in court? Small claims suits get settled all the time because no one is really interested in litigating. It probably cost AT&T $10k to settle for $850. A lawyer has to familiarize himself with the case, review the ToS, review the data usage, talk to AT&T representatives, appear in court for a settlement conference, etc. At $400/hour, hitting $10k isn't all that difficult. That's the dirty little secret of justice in the US. You can sue large corporations in small claims court and, as long as you're not being a total pig about it, they'll settle with you to avoid ridiculous fees and the possibility of bad publicity. I'm actually surprised AT&T took this to trial. By the way, I'm a lawyer.


Devil Dog March 16, 2012 at 1:05 am

I’d like to see the AT&T win the appeal. We all know tethering without paying for it is a violation of the TOS. Really interested to know what was going through the judge’s head, and I agree with the lawyer’s comments.

On the other hand, whoever came up with this idea of selling amounts of data is a disgusting abomination and ought to be hung out to dry on the front lines. It’s just as bad of not worse than paying the per-minute charges of long distance on a hard line. Data and communications should be unlimited. However, paying for faster speed… because hell, they have to pay for the new technology somehow… isn’t such a bad idea.


tj Soni March 16, 2012 at 6:56 am

just want to let you know i am iphone user and i have unlimited data plan the day iphone came to market and i been using my phone and i did got the message. and i am really upset about this. because i been with att with several years and this is not a good service from att. they need to do something about this.


Frank C Salamida April 3, 2012 at 1:41 pm

Something to keep an eye on.


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