DOJ warns telcos against misleading ‘unlimited’ Internet ads

By: Tarra Quismundo - 10 years ago

Talk about false advertising.

The Department of Justice (DOJ) on Friday warned telecommunications companies against practicing deceptive marketing practices or risk facing penalties even as it reiterated its earlier advisory on the imposition of data caps on “unlimited Internet” promos, which slows down service for online users.

In a statement, the DOJ said the “fair use policy” (FUP) imposed by Internet service providers (ISPs) on subscribers “is inconsistent” with provisions of the Consumer Act, which penalizes deceptive packaging and misleading trade practices and advertisements.

“The contention here is simple: ‘Unlimited’ means unlimited,” the DOJ said in its advisory to telecommunications firms dated Dec. 9.

“While there is nothing wrong with advertisements and promotions, what is promised must be delivered. Our law requires not only truth in advertising, but also fairness in packaging and consistency in the provision of the service,” Justice Secretary Leila de Lima said in the statement.

Justice Secretary Leila De Lima. SENATE POOL PHOTO

Under the FUP, Internet connection is “throttled when usage reaches a certain volume of data bits,” the DOJ said. This slows down Internet connection once a subscriber, who is paying for unlimited data service in the first place, reaches the ISP’s mandated cap for every user for a certain period of time.

Like unlimited rice

In other words, if the service is advertised as “unlimited rice,” FUP allows a subscriber to have only a certain amount of spoonfuls after consuming his or her first cup.

“Unlimited data is like the unlimited rice or buffet concept. Restaurants cannot offer an ‘eat all you can’ promo and when a customer eats more than the average person, actually stop [the customer] and not honor the commitment,” said Assistant Secretary Geronimo Sy, chief of the DOJ Office for Competition.

The DOJ called on the Department of Trade and Industry (DTI) and the National Telecommunications Commission “to monitor and penalize noncompliant telcos.”

It reiterated its advisory after receiving several complaints of slow Internet connection, which the DTI and the office of Sen. Bam Aquino had compiled from Internet service subscribers, including those paying for unlimited data service.

“The imposition of data throttling on unlimited Internet could also be regarded as a violation of the provisions prohibiting false, misleading or deceptive advertisements, hence deemed punishable in accordance with law,” the DOJ said.

Under criminal law, deceptive business practice is a violation of the Consumer Act and is punishable by a fine of between P500 and P20,000, and imprisonment of between three months and two years, or both.

The imposition of data throttling on unlimited Internet could also be regarded as a violation of the provisions prohibiting false, misleading or deceptive advertisements, hence deemed punishable in accordance with law.

A violator may also face administrative fines of between P500 and P300,000, and an additional P1,000 fine for each day of continuing violation.

‘Unlimited’ packages

Telecommunications firms are currently offering unlimited Internet packages for a monthly fee—a P999 promo deal, for instance—but set data caps under the FUP.

One such promo offers supposedly unlimited Internet service with a daily data cap of one gigabyte, or an accumulated use of three gigabytes per month, “whichever comes first.”

“Upon reaching the cap, the subscriber’s Internet connection is slowed down to a 2G speed (one of the slowest)—about a 90-percent reduction from the promised speed,” said the DOJ in its advisory issued on Dec. 9.

Imposition of the FUP, in this case, slowed down Internet connection from an already crawling 2 Mbps, to a punishing 150 Kbps. At such speed, it may take a while for any user to access a website, post an update on social media pages or view traffic updates online while stuck on the road.

The Philippines already has one of the slowest Internet speeds whether via broadband or mobile, in Southeast Asia, based on July 2014 download speeds rankings by broadband testing firm Ookla: 3.4 Mbps on broadband, slower than Laos’ 3.76 Mbps and just a 20th of Singapore’s blazing 69.69 net connection; and 3.8 Mbps on mobile, behind neighboring Malaysia, Thailand, Brunei and Indonesia.

“… FUP renders the unlimited promo deceptive or misleading with throttled data access, the service fails to deliver performance, quality and value,” the DOJ said.

Originally posted: 5:17 PM | Friday, December 12th, 2014