Judge rejects AT&T claim that FTC can’t stop unlimited data throttling



A federal judge has rejected AT&T's claim that it can't be sued by the Federal Trade Commission, which is trying to put a stop to the carrier's throttling of unlimited data plans.

The FTC sued AT&T in October 2014, saying the company deceived customers by offering unlimited data plans and then throttling data speeds once customers hit certain usage thresholds, such as 3GB or 5GB in a month. AT&T claimed in January that because it is a common carrier, it isn't subject to FTC jurisdiction.

In a decision out of US District Court in Northern California yesterday, Judge Edward Chen refused to dismiss the lawsuit.

It's true that the FTC Act exempts common carriers from the commission's oversight. But while AT&T is a common carrier for landline telephone and mobile voice service, the mobile data services at issue were not classified as common carriage at the time the lawsuit was filed. AT&T argued that it is exempt from FTC oversight "even when it is providing services other than common carriage services," Chen wrote.

"Contrary to what AT&T argues, the common carrier exception applies only where the entity has the status of common carrier and is actually engaging in common carrier activity," Chen wrote.

The Federal Communications Commission ultimately did reclassify mobile data as a common carrier service in February, a decision that takes effect 60 days after publication in the Federal Register, which hasn't happened yet. AT&T argued that this decision also strips the FTC of jurisdiction over AT&T, even for violations that occurred before the reclassification, an argument Chen rejected.

"When this suit was filed, AT&T’s mobile data service was not regulated as common carrier activity by the Federal Communications Commission," Chen wrote. "Once the Reclassification Order of the Federal Communications Commission (which now treats mobile data serve as common carrier activity) goes into effect, that will not deprive the FTC of any jurisdiction over past alleged misconduct as asserted in this pending action."

AT&T also mischaracterized the purpose of the common carrier exemption in the FTC Act, according to Chen. "Although AT&T argues the purpose of the common carrier exception is to ensure that there is no agency overlap in terms of regulation, it appears that the more precise purpose was to prevent overlap between common carrier regulations," he wrote, citing a previous case involving the FTC. "AT&T points to nothing in the legislative history suggesting that Congress intended to prevent any and all regulatory overlap (as opposed to focusing on the Interstate Commerce Commission’s regulation of common carriers as such). Indeed, it is not uncommon for any particular activity of a business to be subject to multiple sets of regulations."

For more than 100 years, going back to regulations applied to the railroad industry, an entity "deemed a common carrier [has been] regulated as such under the common law only where it was actually engaged in common carriage services," the judge wrote.

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