Already Fined, AT&T Ducks FTC Data-Throttling Suit

     SAN FRANCISCO (CN) — Sidelining charges against AT&T over data throttling, the Ninth Circuit found the carrier exempt Monday from the Federal Trade Commission’s authority.
     The FTC sued AT&T in 2014, claiming the telecommunications giant was slowing down the data speed of customers with unlimited data plans after they reached certain data thresholds independent of network congestion.
     AT&T sought dismissal of the case, however, based on its status as a common carrier. Now synonymous with telecommunications companies, the term has been used to define any person or company that transports goods or services at a set rate.
     Complicating the matter further, a different federal agency, the Federal Communications Commission, fined AT&T $100 million in an administrative proceeding last year.
     The FCC now classifies mobile data service as a common-carrier activity, but U.S. District Judge Edward Chen refused to let this change upend the FTC’s case against AT&T.
     Finding that the data-throttling activity occurred prior to the reclassification, Chen said AT&T could claim common-carrier exemptions only with regard to any of its activities related to common carriers — namely the transportation of goods or telecommunication services, not merely its status.
     A three-judge panel heard AT&T’s appeal of this ruling in June and reversed for the telecom on Monday.
     “We conclude, based on the language and structure of the FTC Act, that the common carrier exception is a status-based exemption and that AT&T, as a common carrier, is not covered by section 5,” U.S. Circuit Judge Richard Clifton wrote for the court. “The plain language of the common carrier exemption casts the exemption in terms of status, contrary to the FTC’s position.”
     AT&T began its data-throttling practices in 2011. As laid out in the FTC’s complaint,, the company offered unlimited data plans but deliberately reduced data speeds of customers once they surpassed certain data thresholds, making smartphone app services like GPS and video streaming difficult.
     This was done independent of any network congestion and was not accompanied by appropriate disclosures, the FTC claimed.
     While the FTC initiated its action in 2014, the FCC reclassified mobile data service as a common carrier status, essentially asserting its jurisdiction.
     The FCC said millions of customers were affected, and the intentional throttling slowed data speed to as much as 12 days per billing cycle.
     AT&T told the Ninth Circuit this summer that it was willing to argue over the merits of the accusations put forward by both federal agencies, but did not want to have to fight the battle on two fronts.
     The Ninth Circuit’s decision today makes no mention of the overlapping claims of both agencies, instead focusing narrowly on whether the common carrier exemption in the FTC Act is status or activity based.
     Reacting to the reversal, the FTC indicated an appeal of the decision is possible.
     “We are disappointed with the ruling and are considering our options for moving forward,” a representative for the FTC said in an email.
     AT&T has not returned a request for comment.

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