FTC Wins Battle to Regulate AT&T ‘Data Throttling’

An 11-judge federal appeals panel has reinstated a challenge to AT&T’s practice of arbitrarily throttling speed to hurt cellphone customers with unlimited plans.

The 9th U.S. Circuit Court of Appeals voted 11-0 Monday to vacate a three-judge panel decision that had held the Federal Trade Commission lacked authority over the telecommunications giant due to its status as a common carrier.

The FTC accused AT&T back in 2007 of creating network congestion to limit the speed of broadband data customers’ service, without regard to actual network congestion. That quickly because a legal fight over the FTC’s regulatory authority.

The new ruling does not determine if AT&T is guilty of the FTC accusation of data throttling, only that the FTC may proceed and the court rejected AT&T’s effort to dismiss the case on jurisdiction grounds.

In 2011, AT&T began reducing the data speed for its unlimited mobile data plan customers, a practice known as “data throttling,” according to the FTC claims. For example, once a customer reached a certain usage limit, AT&T would substantially reduce the speed the customer’s device would receive data for the remainder of the billing cycle. AT&T did not apply the throttling practice to customers one tiered plans that charged more for increased use.

The FTC sued AT&T alleging unfair business practices.

The unanimous appeals court said AT&T is exempt from FTC regulation only when it is engaged in common carrier services. The legislative history of the law shows the exemption from FTC regulation is “activity-based,” wrote Judge Margaret McKeown for the court.

“The transformation of information services and the ubiquity of digital technology mean that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security and more,” she said.

For this reason, tasking the FTC with oversight of AT&T’s non-common-carrier operations is “common sense,” she said.

It would allow the FTC to oversee unfair and deceptive practices that are not part of AT&T’s common-carrier function, the judge found.

The judges joining her included; Chief Judge Sidney Thomas, Judges Stephen Reinhard, Susan Graber, William Fletcher, Johnnie Rawlinson, Milan Smith, Randy Smith, Jacqueline Nguyen, Paul Watford and Michelle Friedland.

Case: FTC v. AT&T, “no. 15-16585

 

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