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AT&T faces a $1 billion payout for unjust mobile Internet fees

Posted: , by Ken N.

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AT&T faces a $1 billion payout for unjust mobile Internet fees
The U.S. District Court of Northern Illinois has approved a settlement, in which AT&T will repay $956.16 million in unfair taxes. Those taxes were mobile Internet access fees charged to wireless customers from November, 2005 to September, 2010.

So here's a breakdown of the unfair taxes. Let's say the plan as a whole cost $100 per month, and $30 of that was for mobile Internet access. AT&T was charging taxes on the $100, rather than only $70. And that is in violation of the Internet Tax Freedom Act, which prevents taxes from being imposed on Internet access between November 1, 2003, and November 1, 2014.

While AT&T probably could have put up more of a fight, the plaintiffs' lawyers have been impressed with AT&T's candor and willingness to settle: "AT&T was really forthcoming about it and did an unprecedented job of working with us," said the plaintiffs' lead counsel.

We have to commend AT&T for being so agreeable, but we wonder if their willingness to settle might be tied to their potential T-Mobile acquisition. With customer satisfaction waning, and public opinion stacked against the merger, AT&T might have figured that it would be better to take the nearly $1 billion loss, and keep their attorneys focused on the T-Mobile deal.

source: Dayton Business Journal via FierceWireless

23 Comments
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posted on 07 Jun 2011, 13:24

1. TheFunnyMan (Posts: 77; Member since: 26 Jan 2011)


Interesting. How long before someone decides it would be a good idea to audit Sprint, T-Mobile, and Verizon?

posted on 07 Jun 2011, 13:50 1

2. CPGustafson511 (Posts: 4; Member since: 06 Jan 2011)


Not sure about Sprint or T-Mobile, But i do know that Verizon hasn't taxed my unlimited data plan.

posted on 07 Jun 2011, 13:53 3

3. anon123 (unregistered)


no, but vzw just TAXES THE SHIT out of your base calling plan :/

posted on 07 Jun 2011, 14:17 2

6. edbdroid (Posts: 6; Member since: 16 May 2011)


vzw (or any other carrier) doesn't tax *anything*. the government does. if the carrier incorrectly applies taxes they think you owe to the account, that's a different matter...

posted on 07 Jun 2011, 14:38 3

8. anon123 (unregistered)


I worded that incorrectly, vzw's *surcharges* are rediculous

posted on 07 Jun 2011, 15:09 1

9. nb2six (Posts: 298; Member since: 27 Apr 2011)


with great coverage and customer service you pay a higher price. I don't know I see VZW and AT&T like the HBO or Showtime package of Cable while Sprint and T-Mobile are the basic. However VZW also includes the Playboy channel as a bonus feature. Much like how VZW has less dropped calls vs. At&T

posted on 08 Jun 2011, 10:12

20. omg (unregistered)


that would be correct the goverment taxes your cell bill

posted on 08 Jun 2011, 09:43

19. DontHateOnS60 (Posts: 863; Member since: 20 Apr 2009)


And who do you think is responsible for pretty much all of that?? I'll give you a hint, they aren't Verizon taxes.

posted on 07 Jun 2011, 16:29

10. BobbyTaba (Posts: 316; Member since: 11 Aug 2010)


I had at&t and paid 23 dollars extra compared to when I switched to verizon. We had them from 2005 to july of 2010 They have taken over 1000 extra dollars from me over 5 years

posted on 11 Jun 2011, 19:36

23. TheBrizz (Posts: 18; Member since: 24 Sep 2010)


Are you saying your monthly service charges were the same but your bill with AT&T was $23 a month higher because of taxes and/or surcharges? If that's your claim, I'm calling BS; I simply don't believe it.

posted on 08 Jun 2011, 09:32

18. corps1089 (Posts: 492; Member since: 20 Jan 2010)


@: TheFunnyMan

Sprint is too smart recently: including unlimited data in a plan and not charging separate for it like ATT did means they can justify charging fees based on the full plan amount to pay the required taxes.

posted on 07 Jun 2011, 13:55

4. TKFox007 (Posts: 303; Member since: 02 Nov 2010)


They probably knew that they couldn't win it since it was no way for them to deny it as it was written in stone and you can't fudge those numbers. I'm surprised that AT&T didn't try to get around it or may excuses.

posted on 07 Jun 2011, 13:58 4

5. bubba78 (Posts: 54; Member since: 23 May 2011)


The last paragraph says " AT&T might have figured that it would be better to take the nearly $1 billion loss" but I am wondering how this is considered taking a loss if they never should have been charging it in the first place? Wouldn't this just be giving back what they should have never taken in the first place?

posted on 07 Jun 2011, 14:23

7. Immolate (unregistered)


That money collected did not go into escrow. It was either paid to the government, which doesn't sound like it's the case, or it was logged as revenue and used that way. It may have been unearned, but it will still hurt coming back out the same as if it was.

posted on 07 Jun 2011, 18:24

13. Droidlova (unregistered)


Strange this hasnt gotten a lot of press. I would have expected a furry of ATT customer in here complaining big time. Maybe case ATT is mostly liberals and apparently they dont mind paying up the booty in taxes....just a thought.

posted on 07 Jun 2011, 18:53

14. codymws (Posts: 237; Member since: 17 Jun 2010)


Verizon has already had to pay for unjust data charges, for those who were wondering...

posted on 07 Jun 2011, 23:52 1

16. Fanboys Suck (Posts: 609; Member since: 12 Dec 2008)


1/10th of what AT&T has to pay!

posted on 07 Jun 2011, 21:40

15. rwolf1984 (Posts: 518; Member since: 06 Jun 2009)


Verizon did the same shit...wtf...i am sure sprint and t-mo will get hit up next
its hot out, but there are other beverages available besides ignorance and hater-ade

posted on 08 Jun 2011, 15:05

22. Geeksarebest (unregistered)


For those of you who are posting about AT&T and Verizon price difference and trying to attribute it to taxes, you're talking about stuff like a few dollars here and there. Not tens or so of dollars every bill. Someone (I forget who) said "Blah blah blah $23 difference between AT&T and verizon, blah blah $1000 over 5 years." That wasn't taxes. That's your companies discount. Verizon gets less small benefits from FAN discounts, so they charge less for base %. So they can take %19 off the full bill vs AT&T's that gives you %19 off the base plan and applicable data features as well as giving you a greater (than Verizon) discount off accessories and assorted other goodies.

posted on 21 Jun 2011, 01:48

24. attcustomer2009 (unregistered)


Okay......
1. When are we going to get our money back?
2. There's 2.3 android updates for atrix 4G and inspire 4G?
3. Verizon wireless didn't just over tax you the customer but the government employees to just saying.
4. Not just Verizon or at&t having a cap Sprint will as well.
5. at&t cost less then Verizon!

posted on 21 Jun 2011, 01:52

25. sprint_salesrep (unregistered)


Verizon cap date July 7. Sprint cap date Aug 18 of this year. Sorry the network is getin cloged up. On the plus side were getting the iPhone 4.

posted on 21 Jun 2011, 01:55

26. jonny (unregistered)


So everything the CEO of Sprint said was a lie? I call BS. He would do that to the customers. Sprint is truly unlimited....

posted on 21 Jun 2011, 02:03

27. sprint_salesrep (unregistered)


Think about it. The deal between at&t and t-mobile are looking good they have Google and other big names backing the deal Thats going to sink us due to customers all on Verizon and at&t . Are towers are jamed up now Nextel system are crashing were selling boost to gain some money the cap is smart free up the network and get little more money to better our network clearwire really messed up our network now put more money for LTE we will never see the Wimax money back. I put out my resume. Sprint won't last past next year. Good luck.

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