The Federal Trade Commission says it should be able to sue AT&T for throttling wireless users, even though mobile broadband -- which is now classified as a "common carrier" service -- is no longer subject to FTC regulation.
"AT&T’s unlawful practices were not common-carrier activities when they were undertaken," the agency says in papers filed late last week with the 9th Circuit Court of Appeals. "Letting AT&T off the hook for its past violation (and) depriving its victims of redress simply because another agency changed a regulatory definition would illogically undermine" the FTC Act, the agency adds.
The agency is responding to AT&T's attempt to convince the appellate court to dismiss the FTC's lawsuit. The battle between the telecom and FTC dates to October of 2014, when the agency alleged in a lawsuit that AT&T deceived consumers by offering them unlimited data, only to significantly slow their broadband connections after they exceeded a cap.
From 2011 until 2014, AT&T allegedly throttled more than 3.5 million customers who exceeded monthly allotments of 3GB or 5GB, depending on their phones. AT&T recently revised its throttling practices and now only slows down customers who exceed 22 GB in a month; the company also now only throttles those users when the network is congested.
While the lawsuit was pending in front of U.S. District Court Judge Edward Chen, the Federal Communications Commission passed net neutrality rules. Among other provisions, those rules reclassified mobile broadband as a common carrier service. (AT&T is among a group of companies that have asked a different court -- the D.C. Circuit Court of Appeals -- to vacate the net neutrality rules; if AT&T is successful mobile broadband might no longer be a common carrier service.)
Last year, AT&T unsuccessfully asked Chen to dismiss the FTC's lawsuit, arguing that the agency has no authority to bring lawsuits against common carriers. Chen, who presides in the Northern District of California, rejected AT&T's position for several reasons, including that the FTC filed suit before mobile broadband was reclassified.
AT&T is now appealing that decision to the 9th Circuit. Among other arguments, the telecom contends that the FTC lacks jurisdiction to prosecute mobile broadband providers, regardless of when the allegedly unfair conduct occurred. "It is a fundamental principle of administrative law that agencies may not take any action beyond the scope of their statutory authority. Wherever -- or whenever -- that authority ends, the agency simply has no power to act," AT&T argued in papers filed with the 9th Circuit last year.
The FTC is asking the appellate court to reject that argument. "AT&T’s approach would retroactively erase the possibility of restitution for millions of AT&T customers who were the victims of its unlawful behavior," the agency says.
In addition to the FTC's lawsuit, AT&T also is facing a potential $100 million FCC fine for allegedly violating a 2010 regulation by failing to adequately explain its throttling policies to consumers.