NEW YORK (Reuters) - AT&T Inc has standardized rules for subscribers with unlimited data service plans after a public outcry about its practice of slowing down speeds for its heaviest users, but the change also drew sharp criticism.
The No. 2 U.S. mobile service provider said on Thursday that instead of varying its speed throttling practices from location to location, it will now slow down services for all unlimited-use customers who have used a specific amount of data.
The company said it needs to manage data use to avoid network congestion that would lead to degraded services for all customers, as it struggles to cope with massive growth in demand for services such as Web surfing and video streaming.
But many customers are pushing for the operator to end the practice of slowing speeds entirely. Change.org, a website that hosts online campaigns, said on Thursday that 11,000 customers signed a petition one AT&T customer had started against throttling.
But instead of ending the practice, AT&T said it would make it more widespread by automatically slowing down speeds for all its heaviest users. "Now they have a level of predictability they didn't have before," said Mark Siegel.
However, Jane Foody, the customer who started the Change.org petition, balked at the decision.
"Who is AT&T trying to fool?" Foody said in an emailed statement. "An unlimited plan is an unlimited plan - not a 3 gigabyte plan. I paid for unlimited data, and no amount of AT&T's corporate-speak will get me and the 11,000 people who've joined my Change.org petition to back down until we get what we've paid for."
AT&T has said that it needs a lot more network capacity to cope with increasing data demand. This was its main argument for its failed bid to buy smaller rival T-Mobile USA last year. Since that deal failed due to regulatory opposition, it has said
it is left with no choice but to closely manage data use.
Long-time telecom industry analyst Jeff Kagan said the operator's throttling strategy could backfire and "hurt AT&T badly" if it drives customers away to a rival service.
"I understand AT&T's problem," said Kagan. "That's not an excuse to treat your valued customers like criminals."
For new customers, AT&T has eliminated monthly plans offering unlimited data use as far back as 2010. Instead it sells new users limited data buckets for a set monthly fee.
But with 44 percent its smartphone customers, or 17 million people, still on unlimited-use plans, the operator said it needs to manage their usage.
It complained in a blog on Thursday that the top 5 percent of its unlimited data subscribers used an average of over 50 percent more data than the top 5 percent of customers on its limited use plans in January.
Before the change announced on Thursday, AT&T was slowing service speeds for the top 5 percent of customers depending on usage trends in the customer's neighborhood.
This meant that some customers were having their data speeds reduced even if they were using less data than customers on tiered plans while others could use a lot more data.
Under the new rules, unlimited customers using AT&T's fastest network, based on a technology known as Long Term Evolution LTE, will all see their data speeds fall if they've used 5 gigabytes or more before the end month.
Customers whose devices are connected to AT&T's slower network and have used 3 gigabytes or more of data in a month will start to see reduced speeds for the rest of the period.
AT&T's biggest rival, Verizon Wireless, also slows down service speeds for its top 5 percent of data users, but only in areas where the network is crowded. And unlike AT&T, once its customers leave the congested area their speeds return to normal, Verizon said.
"Where you'd likely see a very different experience is with streaming video," he said.
(Reporting By Sinead Carew; Editing by Richard Chang)