FTC Can Move Forward With Lawsuit Against Internet Provider

A federal court of appeals ruled that the Federal Trade Commission (FTC) could move forward with its lawsuit against internet service provider AT&T alleging that the company slowed data for some of its internet customers.  The FTC sued AT&T back in 2014 stating it had deceived its subscribers of unlimited data plans by slowing their download speeds once they reached a certain threshold. The lawsuit is seeking reimbursement for the AT&T customers affected by these business practices.

The court’s most recent decision reaffirms the FTC’s authority to police internet service providers.  This is an issue that came up in the Federal Communications Commission’s (FCC) repeal of its net neutrality rules.  The FCC’s repeal handed oversight of internet service providers to the FTC.

“I welcome the 9th Circuit’s ruling as good news for consumers,” said Maureen Ohlhausen, the FTC’s acting chairwoman. “It ensures that 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.”

In 2016, a partial 9th Circuit Court of Appeals panel initially ruled in AT&T’s favor, saying that the FTC did not have the authority to take enforcement actions. When the FTC appealed the court’s decision, the FCC filed an amicus brief in support of the FTC.

In the brief, the agency said, “A majority of the FCC’s current commissioners dissented from the decision to issue the NAL and no further action has been taken on it.”  The court then vacated its original decision and agreed with the FTC’s argument that the lawsuit was valid because the commission was challenging AT&T for providing mobile data services that were not part of its status as a common carrier of traditional phone services.

“The 9th Circuit’s decision is a significant win for American consumers,” FCC Chairman Ajit Pai said. “Among other things, it reaffirms that the Federal Trade Commission will once again be able to police Internet service providers after the Restoring Internet Freedom Order takes effect.”

Circuit Judge M. Margaret McKeown noted in submitting the panel’s decision, “Permitting the FTC to oversee unfair and deceptive non-common-carriage practices of telecommunications companies has practical ramifications.  New technologies have spawned new regulatory challenges…Reaffirming FTC jurisdiction over activities that fall outside of common-carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement.”

Not all believe the court’s ruling against the service provider is a step in the right direction, however. “Some have tried to portray today’s decision as somehow lessening the disastrous effects of the FCC’s recent net neutrality repeal,” said Harold Feld, senior vice president of Public Knowledge. “This is entirely backward.  This case illustrates the problem of having the Federal Trade Commission try to do alone what it should do in partnership with the FCC.”

AT&T, who had been previously successful in the case, submitted a statement affirming it believes victory is still possible for the service provider.  “Today’s decision on jurisdiction does not address the merits of the case,” an AT&T spokesperson said. “We are reviewing the opinion and continue to believe we ultimately will prevail.”

Sources:

The FTC’s lawsuit against AT&T’s throttling on ‘unlimited’ data plans will go ahead