Tuesday, November 24, 2015

AT&T: Unlimited Data or Unlimited Profits? (2015)

AT&T logo

AT&T is a telephone provider with a long storied history. AT&T was the first telephone provider, as it was founded just after Alexander Graham Bell invented the telephone (Milestones), however, recently AT&T has come under fire for illegally throttling its customers "unlimited" data plans. Throttling is when a company that administers a network reduces the speed that a customer is able to access the network at (Sullivan). This is often times done when a network is overloaded and is in danger of crashing or being damaged (Sullivan). While throttling a network speed is legal for these reasons AT&T went far beyond this. In 2007 the first Apple iPhone was released with an exclusive deal for AT&T. Along with the iPhone being released AT&T also rolled out an unlimited data plan allowing it's customers to access it's network at the fastest speed on an unlimited basis. In 2011, AT&T discontinued the ability to purchase this plan, but allowed people already on the plan to be grandfathered in and got to keep the unlimited data (Reardon). However, what AT&T allowed the consumers to think this unlimited plan gave them, and what they actually got was extremely different (Lipka). When the decision was made to throttle this plan AT&T claims that they notified consumers with information in their billing statement as well as in over 2000 press releases (Lipka). However, the FCC, FTC, and consumers have long maintained that this is not true. As Delara Derakhshani, a lawyer for the Consumers Union said “Consumers have been complaining for throttling for years. ... If you charge someone for an unlimited data plan and then slow down their speeds, that sounds deceptive to us.” (Lipka). This shows that consumers have long felt lied to and betrayed by AT&T. All of these factors led to the FCC and FTC filling a class action law suit against AT&T in 2014 ("Unlimited"). This lawsuit focused on the basis that the throttling of these plans was illegal and that the consumers were illegally deceived about what this plan actually entitled them too. Additionally, the suit claimed “in some cases, users had their Internet speeds reduced by 80 to 95 percent, which often rendered customers’ devices useless for days or weeks until their billing cycles started over.” (“Unlimited”). As you can see AT&T severely reduced the capacity of the consumers phones from working. In 2015 a federal judge ruled that AT&T would have to pay a fine of $100 million for their actions (Abel). This has proven that the unfair and deceptive behavior, as well as throttling an unlimited data connection is illegal.

In this case their are three groups of stakeholders. The first two groups are primary stakeholders and the third group is a secondary group. The first group of stakeholders is the consumers. This group was affected because they purchased an "unlimited" data plan but did not receive unlimited data. The consumers were affected because their phones were often throttled so much that their phones were rendered useless. The second group of stakeholders was AT&T. AT&T was able to use the event to create a larger profit margin for themselves. This also saved them money from preventing them from having to upgrade their network to handle the capacity. This final group of stakeholders was anyone trying to get in contact with the people being throttled. This is because the phones would make communication hard to achieve, and would cause people to become frustrated or concerned when communication failed.

The goal of individualism, the first ethical theory, as stated by Friedman and Machan is to maximize the profits of a company for the stakeholders (Individualism, 12). This is interpreted to mean that the only goal of a business is to maximize the profits within the confines of the law. In the eyes of this case AT&T was not acting ethically for several reasons. First, the company was not acting ethically because they did not maximize the profits for the stockholders. When the company was hit with the $100 million dollar fine they lost a significant amount of money, and this would have a huge adverse affect on the profits. Additionally, this was not ethical because the company was not acting within the confines of the law.

The goal of Utilitarianism is to maximize the happiness of the majority of people (Utilitarianism, Slide 6). This means that in order for something to be considered ethical it most make the majority of people happy. When applied to the case of AT&T Utilitarianism also proves that the companies actions were not ethical. This is because when you look at it the majority of people were not happy. The only people who were happy was AT&T because they were making a large profit and did not have to do the harder thing that would have been right. The consumers, as well as the people trying to reach them were unhappy. This is because the consumers were not happy that they couldn't use their phones like they wanted too, and the people trying to reach them were unhappy that they couldn't reach someone.

Kantianism is an ethical theory that is based on the formula of humanity (Kantianism, Slide 8). The formula of humanity says that something must be morally right, and you must be acting rationally (Kantianism, Slide 8). When applying this theory to this case it is clear that AT&T was not acting ethically. First, no one would find deceiving consumers about what they will receive to be ethically right.This is because that is in no way right and is not fair to customers, and no one would find it to be. Secondly, the way AT&T operated was essentially stealing from customers. No morals would find stealing from consumers to be right.

Virtue TheoryVirtue Theory is an ethical theory that is based off of four main virtues. These virtues are: courage, honesty, temperance, and justice (Virtue Theory, Slide 4). When you apply this theory to the case of AT&T it is easy to see that AT&T was unethical. In the case of justice which represents the fairness of an action AT&T is clearly in the wrong. AT&T did not treat it's customers fairly at all by lying and deceiving the consumers. In terms of courage AT&T also was in the wrong. This is because they were not courageous in their actions. Rather than admitting a mistake and just getting rid of the plan they lied about it and mislead the consumers about it. In terms of honesty AT&T is absolutely wrong. They very clearly lied and deceived consumers which clearly violates this virtue. Finally, in terms of temperance which is to have reasonable expectations from consumers and the company. This was clearly violated because the company didn't have a reasonable expectation that the consumers would be okay with not getting what they are paying for.

Justified Ethical EvaluationIn my personal opinion this action was highly unethical. Their are several major issues at play. First the company was wrong in not just cancelling the plan and dealing with the consequences. This was a major issue of corporate laziness as well as corporate fear. The company was more afraid of cancelling the plan then they were of lying to the consumers. To me this is the epitome of corporate laziness in fear. Additionally, the company saw profits from lying and cheating and preferred to do that to make money. This is a huge corporate greed issue because the company saw dollar signs, and preferred to make money the wrong way. Finally the company was wrong because they didn't do the right thing and make up for it or make it right instead they did the wrong thing and hid it.

ReferencesAbel, Jennifer. "AT&T Fined $100 Million for Throttling." ConsumerAffairs. Consumer Affairs, 17 June 2014. Web. 24 Oct. 2015.
Lipka, Mitch. "AT&T Sued for Throttling Users' "unlimited" Data." CBSNews. CBS Interactive, 28 Oct. 2015. Web. 24 Oct. 2015.
"Milestones in AT&T History| History| AT&T." Milestones in AT&T History| History| AT&T. N.p., n.d. Web. 24 Oct. 2015.
"Unlimited Data Plan Lawsuit | Illegal Throttling | ClassAction.org." ClassAction.org. ClassAction.org, n.d. Web. 24 Oct. 2015.
Reardon, Marguerite. "AT&T Boosts Limit on 'unlimited' Data - CNET." CNET. CNET, 16 Sept. 2015. Web. 24 Oct. 2015.
Salazar, Heather. Individualism PowerPoint
Salazar, Heather. Universalism PowerPoint
Salazar, Heather. Kantianism PowerPoint
Salazar, Heather. Virtue Theory PowerPoint
Sullivan, Mark. "What Happens When You Get 'Throttled'?" PCWorld. PC World, n.d. Web. 24 Oct. 2015.

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