SAN FRANCISCO (Northern California Record) — A federal appeals court recently uphelp the Federal Trade Commission's regulatory authority over large Internet service providers and allowed the commission to move ahead in its case against AT&T for allegedly throttling the data speeds of millions of unlimited data plan customers.

In its appeal before the U.S. Ninth Circuit, AT&T had hoped to exempted from FTC action because of a March 2015 Federal Communications Commission order that reclassified mobile data service from a non-common carriage service to a common carriage service. The Ninth Circuit, instead, affirmed a lower court decision that denied AT&T's motion to dismiss, saying the reclassification order does not remove the FTC's regulatory authority, according to the appeals court's opinion handed down Feb. 26.

"Contrary to AT&T’s position, the prospective reclassification order does not rob the FTC of its jurisdiction or authority over conduct occurring before the order," Ninth District Court Judge M. Margaret McKeown wrote in the court's 34-page en banc opinion. "The FTC's power to bring enforcement lawsuits in federal court derives from the FTC Act, which authorizes the agency to sue in any case involving 'any provision of law enforced by' the FTC."

Prior to the reclassification order, the FTC had the authority to pursue its case against AT&T, McKeown wrote in the opinion. "The prospective reclassification can hardly be viewed to retrospectively strip the FTC of that enforcement authority," the opinion said. "Nor does the reclassification order render this suit moot, as the FTC can still potentially achieve monetary relief for AT&T's past violations."

Acting FTC chairwoman Maureen K. Ohlhausen said she welcomed Ninth Circuit's ruling "as good news for consumers," according to a statement issued by the FTC the same day. "It ensures the FTC can and will continue to play its vital role in safeguarding consumer interests including privacy protection, as well as stopping anticompetitive market behavior," Ohlhausen was quoted in the FTC statement.

The FTC originally brought the case against AT&T in October 2014 under Section 5 of the FTC Act, alleging AT&T's data-throttling plan to be "unfair and deceptive", according to the appeals court's opinion. AT&T misled millions of its customers with so-called "unlimited" data plans when the company failed to disclose that data speeds would be reduced, or "throttled", if a data limit was reached during a billing cycle, the FTC said in its original complaint and in a press release at the time.

AT&T appealed the California's Northern U.S. District Court ruling that the common carrier exemption in the FTC Act is activity-based and that immunity is allowed "only to the extent that a common carrier was engaging in common carrier services," the appeals court ruling said.

In reaching its conclusion, the district court had considered text of the FTC Act, what 'common carrier' meant in the courts "around the time the statute was passed in 1914," decades of court rulings, "the expertise of the FTC and Federal Communications Commission and legislative history," the appeals court ruling said. 

Although the FTC began its case to address alleged AT&T data throttling, the central issue currently is about "agency jurisdiction and statutory construction," the appeals court ruling said. The FTC holds its enforcement authority over unfair or deceptive acts or practices from the FTC Act, the appeals court ruling said.

"The question is whether the common carrier exemption is activity-based, meaning that a common carrier is exempt from FTC jurisdiction only with respect to its common carrier activities, or status-based, such that an entity engaged in common carrier activities is entirely exempt from FTC jurisdiction," the ruling said.

Want to get notified whenever we write about any of these organizations ?
Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

U.S. Court of Appeals for the Ninth Circuit U.S. District Court for the Northern District of California U.S. Federal Communications Commission U.S. Federal Trade Commission

More News