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Data-Throttling Case Breaks FTC’s Rules: AT&T

SAN FRANCISCO (CN) - The Federal Trade Commission's case against AT&T Mobility for throttling the broadband speeds of its unlimited data customers has no legislative legs to stand on, the carrier claimed in a document filed Wednesday.

This past October, the FTC sued AT&T Mobility for deceiving its smartphone customers by promising unlimited data plans and then throttling network speeds for consumers using as little as two gigabytes of data a month.

Although AT&T has not offered unlimited data plans for new customers since 2010, it has always offered to grandfather in existing customers' unlimited plans each time they upgrade to a new smartphone. The grandfathered customers continue to enjoy unlimited data for $30 a month, while new AT&T users have to pick one of the company's tiered plans.

But beginning in July 2011, AT&T allegedly began data throttling for users on its unlimited plans, according to the FTC. Initially, the company set the data usage threshold at 2 gigabytes in dense markets like New York and San Francisco - capping the data speed at just 128 kilobytes per second in those cities.

The carrier adjusted its throttle in March 2012, setting its usage threshold at three gigs per billing cycle for customers on slower networks and five gigs for those on its premium LTE network. The FTC claims big data users on the slow networks see speeds of 256 kilobytes per second, while LTE customers enjoy 512 kps speeds.

AT&T has allegedly used its data throttle over 25 million times since 2011 on 3.5 million unique customers, the agency says.

In response, AT&T asked U.S. District Judge Edward Chen to dismiss the FTC's suit for lack of jurisdiction, claiming it is a common carrier for the purposes of the agency's own Communcations Act and outside its regulatory purview.

But the FTC told Chen earlier this month that the Communications Act makes "unambiguously clear" that AT&T is not a common carrier, since mobile data is not a common-carrier service. And while the Federal Communications Commission has plans to make broadband data a common carrier service, it hasn't yet - so the FTC retains authority over AT&T's mobile data practices, the agency says.

But on Wednesday, AT&T fired back that because it is a common carrier in some aspects, it is a common carrier in all ways for the purposes of the FTC Act.

"In the 100 years since Congress created the FTC, no court has ever authorized the agency to assert jurisdiction over a common carrier," AT&T lawyers wrote. "There is a good reason for that: the language of the statute forbids it. To suggest otherwise, the FTC must rewrite its own enabling statute, ignore the structure, history, and purpose of that statute, and disavow decades of prior statements acknowledging this congressional limit on its authority."

The list of Congressional exceptions for common carriers involves entities, not a list of their specific activities and services, AT&T added. And while lawmakers modified the exception as it relates to meatpackers and stockyards, it never did so to the so-called common carriers, the company said.

"What the Communications Act actually makes clear is that AT&T and its mobile data services are unquestionably 'subject to' the Act's coverage," the company said. "In other words, the FTC lacks jurisdiction even on an 'activity-based' analysis: AT&T is a common carrier, and the activities at issue here are 'subject to' the Communications Act."

It added: "If the FTC wants jurisdiction over common carriers, it must take it up with Congress. In the meantime, despite the parade of (hypothetical) horribles in its opposition, the FTC has identified no instance in the last 100 years in which adhering to the text of the Act has allowed an entity to avoid regulatory scrutiny, and there will certainly not be any such avoidance here if the court grants this motion." [Parentheses in original.]

A hearing on AT&T's motion to dismiss for lack of jurisdiction is slated for March 12 in Chen's courtroom.

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