By Brent Kendall, Thomas Gryta and Ryan Knutson 

The Federal Trade Commission sued AT&T Inc., alleging that the company misled millions of cellphone subscribers by selling them unlimited data plans and then effectively capping those plans.

Tuesday's move, which follows a warning to Verizon Communications Inc. by the Federal Communications Commission, shows growing regulatory unease with what the carriers have described as network-management practices, but which some critics suspect have commercial motives.

The FTC claims AT&T failed to adequately inform customers that data speeds on their smartphones would be slowed by as much as 80% to 90% once they reached a certain usage threshold during a billing cycle.

Since October 2011, the FTC said, AT&T has throttled data speeds a total of more than 25 million times for at least 3.5 million customers. These bottlenecks made it difficult for customers to use common mobile-phone applications such as GPS navigation and streaming video, the agency said.

The FTC's lawsuit, filed in federal court in San Francisco, seeks to bar AT&T from misleading consumers and asks for monetary relief for the alleged harm to the company's customers. "We hope to put money back in their pockets," said FTC Chairwoman Edith Ramirez.

AT&T said the agency's allegations are baseless and the carrier, like all major wireless providers, manages its network to deliver service to all of its customers. It said it hasn't done anything wrong, and is prepared to fight the case in court.

Staff from the FTC's San Francisco office first approached AT&T about its throttling practices more than a year ago, according to a person familiar with the situation. The carrier turned down several opportunities to settle the case earlier this year, this person said, and was presented with a draft version of the FTC suit.

At its core, the carrier regards the case as a contract matter. Customers were made aware of the terms in several ways, and still decided to renew their service agreements.

An AT&T spokesman pointed to the company's website, where AT&T says that it will throttle data speeds for customers that use more than 3 gigabytes of data a month, or 5 gigabytes for users with newer LTE phones.

Michael Stancil, 25 years old, has held on to his unlimited AT&T data plan since he switched to the carrier around 2009. Mr. Stancil said he uses about 7 to 9 gigabytes of data a month, and that his speeds are throttled every month. Last month, the slower speeds began after only about nine days. "It's more annoying," Mr. Stancil said.

When throttled, he said, it takes 5 to 10 seconds to load photos on Instagram, something that normally happens in an instant. Sending pictures via Snapchat can take several minutes when being throttled, he added.

"They're not forcing me to change my plan in order to upgrade to a new phone," he said. "This is more a battle of who can hold out the longest."

The FTC said thousands of customers had submitted complaints about AT&T's data practices to government agencies, the Better Business Bureau and AT&T Mobility.

Earlier this month, Verizon backed down from a plan to throttle speeds for some 4G unlimited customers during heavy-traffic periods after FCC Chairman Tom Wheeler said he was concerned it had financial motives for the practice. Verizon defended the policy as necessary for network management.

This summer, the FCC sent letters to other major nationwide carriers inquiring about their practices. "We continue to work on this important issue, including with our partners at the FTC," an FCC spokesman said.

The regulatory assaults get at a central business strategy for big wireless carriers: Get customers to pay more as they use more wireless data to share photos, stream videos and surf the Web.

AT&T and Verizon long offered unlimited data plans, but AT&T stopped selling them to new customers in the summer of 2010 and Verizon in 2011 when it was clear the iPhone had cemented the habit of wireless Internet use. They replaced those plans with tiered offerings that charged more as usage rose. AT&T replaced its $30-a-month unlimited data plan with plans charging $15 a month for 200 megabytes or $25 a month for 2 gigabytes of usage.

Existing customers were allowed to keep their unlimited plans--and many did. In July, AT&T said as many as 10 million of its more than 74 million postpaid accounts remained on unlimited data plans. The carrier has generally allowed customers to keep those plans when upgrading to new phones.

Verizon cut off unlimited plans for subscribers who wanted discounted prices on new phones.

AT&T's strategy has worked. For the third quarter, the company reported that wireless-data billings rose 24% from a year earlier.

Other carriers manage their networks by slowing down some customers during times of congestion and, in some cases, prioritize or limit the data being used by customers that consume large amounts of data in a given period.

The FTC's Ms. Ramirez said the agency's primary objection is that AT&T continued to market the plans as providing unlimited data, without adequately disclosing to customers how much their data speeds would be reduced once they were targeted for throttling.

Gautham Nagesh contributed to this article.

Write to Brent Kendall at brent.kendall@wsj.com, Thomas Gryta at thomas.gryta@wsj.com and Ryan Knutson at ryan.knutson@wsj.com

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