New attention is being paid to a class action lawsuit against AT&T. The suit claims that the company's billing system records data use up to three times the actual use, including "phantom" charges that occur when the phone is not in use. AT&T says the issue is just a misunderstanding about how data is used and billed.

The lawsuit was originally filed in late January in US District Court in Northern California, but received renewed attention this week when one of the lead attorneys, Barry Davis, appeared on Today on Thursday. The segment was then rebroadcast on MSNBC's Morning Joe.

The complaint cites independent research that tested how data is charged after some iPhone users noted charges that exceeded the 200MB limit of AT&T's $15 per month data plan. In addition to data usage that exceeded expectations, some users also noticed data charges that were recorded at odd hours of the night when the phone was not in active use.

The independent tests were conducted with multiple devices over a period of four months, and allegedly show that AT&T's billing system regularly recorded data use that exceeded actual use by 7-14 percent, on average. In some cases, AT&T reportedly recorded data use as much as 300 percent of the actual use.

To confirm the "phantom" data charges, a computer engineer hired by the law firms involved in the case took a brand new iPhone, turned off all push notifications and location services, did not set up any e-mail accounts, and made sure no applications were running. After 10 days of sitting idle, AT&T recorded 35 instances of data use totaling over 2MB.

The lawsuit also claims that AT&T's billing system doesn't accurately record the date and time that data is used. This can result in data use showing up on the wrong billing cycle, and if an extra megabyte tacked on the wrong month pushes you over your monthly allotment, you could end up paying an extra $10-15. Incorrect timestamps can also make it difficult to accurately track data usage to make sure you stay under your limit.

The lawyers liken the practice to a gas station using a "rigged gas tank" that shows a gallon of gas pumped for every nine-tenths it actually dispenses. Customers may not notice an extra kilobyte recorded here or there, but in aggregate it could result in extra fees on your bill. Multiply that by millions of customers, and AT&T could unfairly "boost its revenues," according to the lawsuit.

Normal behavior



AT&T, for its part, says the allegations are "without merit."

"Unfortunately, there have been some incorrect claims about our data usage billing practices," spokesperson Seth Bloom told Ars. "We properly charge for all data that our customers send and receive, including data activity that runs in the background on smartphones and other powerful data devices."

AT&T says that all activity, including checking e-mail, Web browsing, and streaming music, uses data. But so do many mobile apps, such as weather apps and stock tickers, which update using data from the network. Games connect to networks like Game Center, and visual voicemail services download data from the network. The company also claims data could be transmitted or received by background processes that users simply aren't aware of.

Regarding the "phantom" charges, AT&T noted that devices don't always transmit information about data use to its billing system in real time. "AT&T captures your data activity nightly to create a bill record in our systems," Bloom said. "This will appear on your bill to be a late night 'charge,' but in fact, the time stamp reflects the time that your device established a connection to the [billing system], not the time that you sent or received data."

Some carriers round data usage to the nearest kilobyte. If you send small chunks of data, say 3.2KB, the billing system could round that up to 4KB—a 25 percent difference. Bloom could not confirm to Ars whether or not AT&T's system worked on a similar principle.

How the test was done

We contacted Davis to verify the methodology used by the independent consulting firm whose tests showed the billing discrepancies.

He explained how tests were able to determine that AT&T's system was recording more data use than expected. The computer engineer retained by Davis' firm set up a special Web server configured to log how much data was sent or received from a particular device, using timestamps and IP addresses. The engineer then bought a range of devices, including an iPhone and iPad, and used the devices to view webpages and download files on the server.

The server's logs were then compared to the detailed list of data transmissions which are included in AT&T customers' bills. Those comparisons allegedly found that AT&T's system recorded discrepancies in the amount of data used, and in some cases counted the data on the wrong billing cycle.

Davis confirmed to Ars that no analysis was done to determine what background OS processes, if any, were responsible for the "phantom data." Other devices, including BlackBerrys and Android smartphones, also showed some unknown data use, while others showed none.

AT&T's explanation that background processes are responsible for the "phantom" data may well be true, but Davis still doesn't believe it's fair to consumers who can't control those background processes.

"If AT&T is going to cap users' data, they should only have to pay for data they actually request," Davis told Ars.