Associated Press reports that an iPhone user in California has been awarded $850 in a small claims lawsuit filed against AT&T over throttling of data speeds. The user, who was on a grandfathered unlimited data plan, saw his data speeds drastically slashed once he reached 1.5-2 GB in a given month, even as other users on limited 3 GB plans at the same price see no similar restrictions at those levels.

Pro-tem Judge Russell Nadel found in favor of Matt Spaccarelli in Ventura Superior Court in Simi Valley. Spaccarelli filed a small claims case against AT&T last month, arguing the communications giant unfairly slows speeds on his iPhone 4's unlimited data plan. Nadel's ruling could pave the way for others to follow suit. AT&T has some 17 million customers with "unlimited data" plans that can be subject to throttling, representing just under half of the company's smartphone users.

There is no word yet on whether AT&T will appeal the decision, but the sales manager representing AT&T in the case has argued that the carrier reserved the right to "modify or cancel" or cancel customer contracts if their usage is adversely affecting the company's network capabilities. The article notes that a class action suit might be the normal evolution of such a complaint, but AT&T's subscriber contract prohibits class action or jury trials, leaving arbitration and small claims as the options.



AT&T began throttling unlimited data customers ranking in the top 5% of data users last October. But while early reports of throttling came mostly from high-volume users consuming in excess of 10 GB of data per month, reports of users being throttled at much lower levels in the neighborhood of 2 GB have been increasing. AT&T notes that the throttling is done on a case-by-case basis and only if there are network capacity issues in the customer's area, but for those who are affected, the throttled speeds are slow enough to make their devices nearly unusable.

Update: AT&T issued this statement to MacRumors: "This is a small claims matter. We are evaluating next steps, including appeal. But at the end of the day, our contract governs our relationship with our customers."