Stay on Top of Enterprise Technology Trends Get updates impacting your industry from our GigaOm Research Community

Last month, AT&T(s t) fought and lost a lawsuit over whether its highly controversial throttling policy violated the terms of “unlimited” smartphone contracts. Matt Spaccarelli was awarded $850 for his efforts, but neither side is letting the issue drop.

AT&T is appealing the decision, while Spaccarelli is taking his cause to the Internet, joining up with PublikDemand in hopes of creating a viral campaign to force AT&T to stop throttling its remaining unlimited customers, all of whom were grandfathered into their plans when AT&T introduced tiered pricing in 2010. AT&T isn’t too pleased with the unwanted attention, and is seeking to settle the case to keep Spaccarelli quiet, according to the Associated Press. Spaccarelli, however, claims that AT&T’s settlement offer is more a demand and that the carrier has threatened to shut off his mobile service if he doesn’t play ball.

AT&T, however, claims that’s not true. In a letter (available on the PublikDemand site as a pdf), AT&T writes that Spaccarelli is tethering his iPhone to other devices in violation of his contract. “As the result of your tethering, AT&T has the right to terminate your service,” the letter reads. “Nevertheless, and as we discussed, AT&T is interested in hearing any concerns you would like to raise about AT&T, and AT&T wants to discuss with you the concerns it has about your data usage.”

There definitely seems to be an implied threat, though AT&T doesn’t connect the dots completely. We reached out to Ma Bell and were told by a spokesman that AT&T never threatened to shut off Spaccarelli’s service in the letter. AT&T was making the point that Spaccarelli was violating his contract, which would normally be grounds for termination, the spokesman said.

The rest of the letter is boilerplate for AT&T’s non-disclosure agreement, which AT&T would require Spaccarelli to sign if he agreed to settlement talks. In that agreement, AT&T does say it would terminate Spaccarelli’s service if he revealed any information about his negotiations with AT&T. But the spokesman said that would be the case only if Spaccarelli agreed to the legal contract and then violated the terms.

Either way, one of the stipulations of the agreement is that Spaccarelli not reveal its existence, so it’s pretty much void as it stands now. If AT&T really plans to shut off Spaccarelli’s iPhone we’ll find out soon enough. Most likely, AT&T would try to force him to change to a tiered plan or tethered data plan, which it has done with customers in the past.

A public relations and a legal nightmare

It doesn’t seem like Spaccarelli is interested in a settlement in any case. Instead he wants to publicly shame or legally force AT&T to stop its throttling practices. “I need the money, but for me, this case is not about money at all,” Spaccarelli told the The Associated Press after the original court case. “You don’t tell somebody ‘you have unlimited’ and then cut them off.”

The controversy surrounding AT&T’s throttling policies only appears to be growing ever since the initial reports surfaced that AT&T was slowing down speeds on customers after they used as little as 2 GB in their monthly cycles. Two GB might seem like a lot, but not when you consider that AT&T is selling its tiered-plan customers 3 GB for the same price as an unlimited plan. AT&T has since revised its policies so that throttling doesn’t kick in until after 3 GB of usage on HSPA+ and after 5 GB on LTE.

Meanwhile, the Spaccarelli ruling is creating new problems for AT&T. The award was only $850, but it could just be the initial crack in the dam. Here’s what my colleague Jeff Roberts wrote on our sister site PaidContent about the possible implications:

A judge’s decision in small claims court doesn’t create a legal precedent that others must follow. Ordinarily this type of case would lead to a class action suit (allowing everyone to sue at once), but AT&T short-circuited that option by banning these types of lawsuits in its customer contracts. This is a controversial tactic, but a divided Supreme Court agreed it was legal last year. … AT&T’s “no class action” rule helped to stifle consumer lawsuits, but a wave of small claims filings could open a new can of worms. To stop this, the company will likely go all out to shut down Spaccarelli as a way to deter others. … The bottom line is that new lawsuits are for now likely to be a trickle rather than a flood. This could change if Spaccarelli wins the appeal.