NEW YORK (Reuters) - Three public interest groups plan to file a formal complaint accusing AT&T Inc of violating U.S. Internet rules if the wireless service provider goes ahead with a plan to limit use of Apple Inc's FaceTime application to certain customers.

The groups -- Free Press, Public Knowledge and the New America Foundation's Open Technology Institute -- gave AT&T notice in a letter on Tuesday that they plan to file a formal complaint with the Federal Communications Commission, unless the No. 2 U.S. mobile provider changes its policy.

Both AT&T and the FCC declined to comment on the letter.

Apple's FaceTime video conferencing application will work on cellular networks after the iPhone 5 hits store shelves this week. Until now, the service was only useable over Wi-Fi short range wireless connections, which are often free to use but have a limited coverage range.

AT&T's iPhone 5 customers will still be able to use the service without charge on Wi-Fi networks.

But the advocacy groups are complaining because AT&T is only allowing subscribers to its shared data plans, which include its highest rates for data, to use FaceTime on its cellular network.

In comparison, AT&T's bigger rival Verizon Wireless says all of its data customers can use FaceTime. Use of the service would be counted against their monthly data allowance rather than their voice minutes allowance.

The advocacy groups say AT&T is breaking FCC rules as they believe that it should give all customers who pay for its mobile Internet service the option to use any Internet application they want to use regardless of which data plan they buy.

"When you sign up to use the Internet, you're allowed to use the Internet," said Free Press legislative director Joel Kelsey.

He noted that some consumers may want to use FaceTime to talk without having to dip into their monthly allowance for voice minutes.

Sarah Morris, policy counsel for the New America Foundation's Open Technology Institute said the AT&T decision was a "direct contradiction" of FCC rules.

"For those rules to actually protect consumers and allow them to choose the services they use, the Commission must act quickly in reviewing complaints before it," Morris said.

Kelsey said the group sent a letter to AT&T's General Counsel Wayne Watts, as it is required to give the company 10 days notice before it files the official complaint.

(Reporting By Sinead Carew; editing by Gunna Dickson)

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  • 1. Give It To Your Kids So They Stop Taking Yours...

    Every parent, aunt and uncle knows that no toy in the history of toys has ever been as appealing to a kid as an iPhone. They are shiny, they have games and grown-ups use them for important things. More importantly, they are either off-limits or doled out in limited quantities as a reward for, say, sitting still for a minute. Load up your old iPhone with games and give it to a deserving child in your life.

  • 2. ...Or To Your Mom So She Can Finally See The Light

    Alternately, if a Luddite adult has been thinking of taking the plunge into the world of smartphones, your old iPhone may help him or her get over the hump. If you have an iPhone 4 or 4S, you might also find someone who's still hanging on to an earlier model and give them the gift of an upgrade. You may just buy a friend for life (or at least until iPhone 6 comes out).

  • 3. Use It As A Teeny-Tiny iPad

    You'll be able to watch videos, send email and search Wikipedia for random facts to end cocktail-party disagreements with your decommissioned iPhone -- as long as you have a Wi-Fi connection. There's even a camera, which means you can avoid being that guy (or gal) at the concert who's turning heads for taking photos with an iPad.

  • 4. Donate To Charity

    Several charities accept old phones for donation, though it's worth remembering that these groups likely won't physically give your old phones to people in need. Rather, they work with phone recyclers and sell your donated phones to them. A nonprofit group called Cell Phones for Soldiers will take your "gently used" phone and sell it to recycling company ReCellular. It will then use the proceeds to buy calling cards for soldiers. The National Coalition Against Domestic Violence works with another recycling group in a similar manner. About 60 percent of the phones it collects are refurbished and resold. The money goes toward supporting the coalition. The remaining 40 percent of the phones are recycled, according to the group's website. It pays for shipping if you are mailing three or more phones. There are a few more suggestions from New York's Department of Environmental Conservation at: http://www.dec.ny.gov/chemical/8818.html .

  • 5. Alarm Clock

    Do you still use that old radio alarm you bought for your college dorm room in the 20th century? Join the 21st century by turning your old iPhone into an alarm clock. Hide it in a different spot in your bed each night for an added challenge.

  • 6. Sell, Sell, Sell!

    Join the eBay hordes and sell your phone for a few hundred bucks if you can. There will likely be a flood of the gadgets soon after people start getting their new phones, so it might make sense to wait a little. A company called Gazelle, meanwhile, will make an offer for your old phone based on its condition, your phone carrier and other information. A 32 gigabyte iPhone 4S on Verizon Wireless, for example, was recently going for $237 if it's in good condition and $90 if it's broken.

  • 7. Trade In At GameStop

    The video game retailer offers cash or store credit for old iPhones (along with iPods and iPads). The service is only available in stores and not online. A 32 gigabyte iPhone 4S on Verizon will get you up to $335 in store credit or up to $268 in cash.

  • 8. Stream Music

    Stick that baby in a speaker dock, spring for a Pandora subscription ($36 per year) or Spotify ($10 per month) and bam, you have a stereo. Or try SoundCloud. Although it's meant to let you create and share music with people, it's also a good place to listen to DJs you like or discover new ones. TuneIn, meanwhile, will let you listen to online radio stations playing music, sports, news or talk shows.

  • 9. Keep As A Backup In Case You Lose Your Fancy New One.

    Nearly one-third of cellphone owners have had their gadgets lost or stolen, according to a recent survey from Pew Internet & Pew Internet & American Life Project.

  • 10. Use As A Camera

    At its core, a decommissioned iPhone is a hard drive with a camera. Snap photos with it. No Canon needed. You can also use the iPhone to move photos and other files from one computer to another.

  • 11. Recycle With Apple

    Apple Inc.'s own recycling program will give you an Apple gift card if it is determined to have a "monetary value." A 32 gigabyte iPhone 4S with some light scratches but in good working condition was recently estimated at $280. That's higher than Gazelle, but you'll have to spend the money at Apple. The company also accepts broken phones for recycling but you won't get any money for them.