The Federal Trade Commission is suing AT&T for allegedly misleading customers over its “unlimited” data plans. The FTC says reducing speeds for people who use large amounts of data counts as a limit,

The case centers on what’s meant by “unlimited,” an issue that’s always controversial with mobile data. While some plans have a fixed data cap (after which users either can’t get online, or face heavy “overage” charges) others are billed as unlimited.

In AT&T’s case, while there was no limit on the amount of data customers could use during a month (other than the physical limits of time and their connection speed), people who reached a certain usage level during a month would have their speeds reduced, a process known as throttling.

According to the FTC, the process began in 2011 and involved throttling kicking in after as little as 2GB of data use, with speeds reduced up to 90 percent and making services such as video streaming effectively useless. It cites a total of 25 million such speed reductions affecting 3.5 million different users. The FTC also says there’s no evidence that the throttling is directly related to actual congestion on the network.

FTC chief Edith Ramirez said ” AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise. The issue here is simple: ‘unlimited’ means unlimited.”

That said, the main legal point in the FTC’s court filing is not simply that AT&T doesn’t live up to the word “unlimited” but rather that introducing the policy constituted a key change in the contract with customers. It says AT&T broke the law in two ways:

• by changing contracts unilaterally mid-term (and then charging high cancellation fees to customers who found out about throttling and wanted out of the revised deal); and
• by misleading customers when they came to renew their deal, unaware that they were signing up to a deal that did indeed have a restriction on data use.

AT&T intends to contest the legal case. In a statement quoted by the Washington Post, it said:

It’s baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers and does it in a way that is fully transparent and consistent with the law and our contracts.