Telecoms companies challenge ruling in AT&T data throttling case
Telecoms providers Comcast, Charter, Verizon and Cox have asked the Ninth Circuit to challenge an appeal court judgment that the Federal Trade Commission (FTC) lacks authority to prosecute AT&T. The judgment derived from a case brought against AT&T for allegedly misleading wireless customers on unlimited data plans whose broadband was allegedly "bottlenecked" once their usage exceeded 3 GB or 5 GB a month. The companies believe the FTC should be able to prosecute AT&T, despite its status as a “common carrier” in the name of customer and business protection. The appellate judges had said common carriers are exempt from being sued by the FTC.

by Wendy Davis @wendyndavis, June 27, 2017

Breaking ranks with AT&T, four other large Internet service providers are asking the 9th Circuit to rule that the Federal Trade Commission has the authority to prosecute AT&T for allegedly duping wireless consumers who purchased "unlimited" data plans.

"At first glance, [our] position might seem surprising," Charter, Comcast, Cox and Verizon write in papers submitted Monday to the 9th Circuit Court of Appeals. "On closer inspection, however, this position aligns with the companies’ desire to reinstate a predictable, uniform, and technology-neutral regulatory framework that will best serve consumers and businesses alike."

The four broadband companies are asking the 9th Circuit to reverse a decision issued last year by a three-judge panel, which ruled that the FTC couldn't prosecute AT&T due to its status as a "common carrier."

That ruling stemmed from a lawsuit filed by the FTC against AT&T in October of 2014, when the agency alleged 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 alleged deception occurred between 2011 and 2014 -- before mobile broadband was considered a common carrier service.

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The appellate judges said in their initial ruling that the FTC can't sue common carriers like AT&T -- even when the complaint centers on a non-common carrier service. Those judges suggested in their opinion that AT&T's longstanding role as a telephone carrier gave the company common carrier service for all purposes.

The FTC -- backed by consumer groups, and the Federal Communications Commission -- urged the 9th Circuit to reconsider the ruling. Last month, the court agreed to do so.

Charter, Comcast, Cox and Verizon are now siding with the FTC. The companies argue in papers submitted Monday to the 9th Circuit that Internet service providers like themselves should be subject to the FTC's authority.

"If the FTC is divested of jurisdiction over certain non-common carriage activities, it is likely that a variety of federal, state, and local government agencies that lack the appropriate reach, perspective, and experience in consumer protection matters will attempt to fill the perceived 'regulatory gaps,' thereby creating a patchwork of unreasonable, duplicative, and inconsistent rules," the companies write. "This will make it less likely that consumers are adequately protected and more likely that businesses will operate in an uncertain and uneven regulatory environment."

The broadband providers' move appears to reflect their preference to be subject to FTC authority rather than FCC rules, says Matt Wood, policy director at the advocacy group Free Press.

"They like the idea of uniform privacy rules at the FTC," Wood says. He adds that the FTC -- unlike the FCC -- lacks the authority to pass regulations about matters like privacy. Instead, the FTC can only target companies that engage in deceptive or unfair practices, such as failing to follow their privacy policies.

"Cable companies and phone companies other than AT&T seemingly prefer what they consider to be weaker oversight by the FTC, rather than either the strong rules the FCC adopted last year or various state bills instead," Wood adds. (Last year, the FCC passed rules prohibiting broadband providers from drawing on consumers' Web-browsing histories for ad targeting without their opt-in consent. Congress invalidated those rules earlier this year, sparking state lawmakers in at least 10 states to introduce new broadband privacy regulations.)

Many observers interpreted the appellate court's initial ruling as effectively depriving the FTC of authority to police any practices of broadband providers -- including their billing methods and privacy policies. Observers also said the initial ruling could leave broadband providers without federal regulatory oversight, if the FCC follows through on Chairman Ajit Pai's plan to scrap the 2015 decision classifying broadband access as a "Title II" common carrier service. That's because, the ruling suggests that even if Internet access is no longer regulated as a utility, many ISPs would nonetheless be outside the FTC's authority.

Comcast and the other ISPs may now hope to weaken the argument that Pai's plan to de-classify broadband as a utility will leave the companies without federal oversight, according to Blake Reid, director of the Samuelson-Glushko Technology Law & Policy Clinic at Colorado Law.

"My take on it is that it they're trying to head off at the pass an argument that the efforts to declassify Internet service providers under Title II will result in this regulatory gap," he says.

He adds: "It's pretty striking nevertheless to see a bunch of Internet service providers arguing that a federal regulator should have authority."