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Federal appeals court rules with FTC against AT&T in common carrier case

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Federal appeals court rules with FTC against AT&T in common carrier case

In a ruling that reasserts the U.S. Federal Trade Commission's authority to regulate certain practices from communications companies, a federal appeals court ruled Feb. 26 that the FTC can pursue its speed-throttling enforcement action against AT&T Inc.

The case, Federal Trade Commission v. AT&T Mobility LLC, goes back to 2014 when the FTC filed a complaint against AT&T accusing the company of "unfair or deceptive" behavior with regards to its unlimited data customers. According to the FTC, AT&T throttled the speeds on its unlimited data plans once customers reached a certain threshold of data usage each month, without giving customers prior notice or warning.

AT&T sought to dismiss the case, arguing it was exempt from FTC regulation given its status as a common carrier. The Federal Trade Commission Act, adopted more than a century ago, exempts common carriers like public utilities and telecom companies from FTC jurisdiction. The FTC, though, countered that despite the company's overall common carrier status, AT&T's mobile data services were not classified as common carrier services at the time of the infraction.

Initially, AT&T succeeded in its argument, with a three-judge panel for the U.S. Court of Appeals for the 9th Circuit ruling in August 2016 that the common carrier exemption is based on the "status" of a company rather than the activity being performed. That decision went against the historical working relationship between the FTC and the FCC, under which the FCC regulated the telecommunications services provided by common carriers, while the FTC regulated the non-common carrier activities performed by the very same companies.

On Feb. 26, however, the full 9th Circuit court ruled that the Federal Trade Commission Act's common carrier exemption is in fact activity-based. As a result, since AT&T's mobile broadband service is not classified as a common carrier service despite the telecom's overall status as such, the court denied AT&T's motion to dismiss the FTC's complaint.

Following the ruling, Acting FTC Chairman Maureen Ohlhausen said the decision "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."