AT&T’s Hopes Throttled by 9th Circuit In En Banc Opinion

Well-known telecom giant AT&T has spent years attempting to evade repercussions stemming from their practice of “throttling back” data speeds for consumers paying for unlimited data plans. Sued back in 2014 by the Federal Trade Commission (FTC), AT&T claimed that the FTC lacked jurisdiction over common carriers after claims arose that it had dialed back service speeds up to 90%.

Heard and re-heard since 2014, courts have issued decision no less than three times, but the significance of the latest cannot be understated;

the 9th circuit held that immunity from FTC regulation extends “only [insofar as] a common carrier was engaging in common-carrier services….”

Unsurprisingly, this decision allows the lawsuit to proceed, but it also validates the FTC’s power to regulate other services provided by common carriers, in addition to their “common carrier services.”

Judge McKeown, in her opinion issued en banc, wrote,

AT&T repackages the failed arguments made by regulated parties in such cases: it claims company-wide protection from the FTC because it engaged in some activities performed by an exempted party—in this case, a common carrier. Courts routinely rejected such arguments in these cases, instead favoring the FTC’s broad enforcement authority.

The opinion validates a test for immunity based on the activity being undertaken, rather than the status of the entity as a common carrier.

Coming quickly on the heels of the repeal of net neutrality by the Federal Communications Commission (FCC), this decision reinforces the theory, held by some, that the FTC would pick up where the FCC left off. Judge McKeown suggests that this case presents a “classic example” of administrative overlap between two federal agencies that are both responsible for the regulatory oversight of entities like AT&T. “In the administrative context,” she writes, “two cops on the beat is nothing unusual.” However, unlike the net neutrality rules previously enforced by the FCC, the FTC’s mandate appears to only extend when a service provider advertises (or suggests it will provide) neutral service and then delivers something else. So, the role fulfilled by the FTC moving forward will undoubtedly be somewhat different from its predecessor.

As a new opinion, it’s unclear so far how the case will proceed, with predictably happy responses from the federal executive branch and equally predictable defiant responses from AT&T pinning its hopes on the merits of the case. Regardless of this particular case, this opinion will allow for much more clarity of regulation for broadband providers after the regulatory vacuum left after the FCC chose to forego its authority over internet service providers.