The U.S. Federal Trade Commission sued AT&T Tuesday for misleading subscribers that signed-up for the telecom company's unlimited-data plan, only to see their data transfer speeds slowed in a process called "throttling."

"AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," said FTC Chairwoman Edith Ramirez in a statement. "The issue here is simple: 'unlimited' means unlimited."

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AT&T has denied the claims by the FTC, however.

"The FTC's allegations are baseless and have nothing to do with the substance of our network management program," the company said in a statement.

"It's baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts."

Like Verizon Wireless, AT&T previously claimed its wireless network isn't able to handle the small number of subscribers with unlimited plans that abuse the deal and consume excessive amounts of data, either by gaming or streaming music or videos.

In July 2011, AT&T went ahead to place speed limits on unlimited plans, slowing their speed from a high-speed LTE connection to 2G, with peak speeds akin to a dial-up connection.

The company said at the time it would only limit the speed of the top five percent of heavy Internet users. It later said it meant it would throttle the speeds of subscribers that accessed five gigabytes of data in a single billing period.

The FTC complaint said AT&T put emphasis on the word "unlimited" in its marketing schemes but then didn't inform consumers of the speed throttling program.

It added that throttling reduces the speed of a connection by 80 percent to 90 percent on the network. The FTC believes AT&T violated the FTC Act by modifying the terms of the unlimited-data package while subscribers were already under contract and failed to notify them of the change.

TagsFederal Trade Commission, AT&T, Throttling, Data throttling, Data transfer, internet speed, verizon, 2G, FTC Act