Court Urged To Restore FTC's Power To Prosecute AT&T

Last year, three judges on a federal appellate court issued a stunning ruling that blocked the Federal Trade Commission from prosecuting AT&T for allegedly duping customers.

The judges said in their opinion that the FTC couldn't proceed against AT&T because the agency lacks jurisdiction against common carriers. The ruling stemmed from what appeared to have been a straightforward deception claim: The FTC argued that AT&T misled consumers by selling them unlimited data, but throttling their broadband connections after they used between 3 and 5 GB a month.

The most surprising thing about the appellate judges' ruling was that the alleged deception occurred between 2011 and 2014 -- before mobile broadband was considered a common carrier service.

The FTC is now asking for a new hearing in front of at least 11 of the 9th Circuit's judges. That request is backed by lawmakers, public interest groups and a different federal agency -- the Federal Communications Commission.



Late last week, the FCC filed a new round of papers with the 9th Circuit, arguing that the three judges who issued the original opinion incorrectly interpreted the law.

The FCC's latest argument centers on the concept of "common carrier." The agency points out that the Communications Act ties the definition of common carrier to specific activities. "A company is 'subject to' the Communications Act 'only to the extent that it is engaged in providing telecommunications services,'" the FCC writes, citing the Communications Act's definition of telecommunications carrier.

The appellate judges, by contrast, said the most important factor in determining whether a company was exempt from FTC authority was the company's "status." AT&T has the status of a common carrier, the judges suggested, because of its longstanding role in providing telephone service.

Questions about whether the FTC can police AT&T have taken on a new importance this year, given the recent repeal of the broadband privacy rules. Those regulations, passed last year by the FCC, would have prohibited carriers from drawing on subscribers' Web-browsing history to serve them ads, without their opt-in consent. Lawmakers revoked the rules under the Congressional Review Act, which means the FCC isn't allowed to replace the privacy rules with substantially similar ones in the future.

AT&T, like other broadband carriers, argued in favor of the repeal. AT&T publicly said the FTC would be able to police broadband carriers after the repeal. "The adequacy of the FTC to police privacy has never been questioned before this fact-free debate," Senior Executive Vice President Bob Quinn wrote late last month on the company's public policy blog.

At the same time that AT&T sought to reassure the public about the FTC's power, the company was telling the 9th Circuit that the FTC should never regain jurisdiction.

On Monday, AT&T filed papers arguing that the FCC's most recent argument is "untimely," because the agency could have made the same points earlier in the proceeding.

AT&T added that the recent repeal of the privacy rules is "irrelevant" to the case.

"If anything," AT&T wrote, the repeal "shows that Congress knows how to alter a federal agency’s authority when it sees fit."

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