The Federal Trade Commission cannot prevent AT&T from throttling unlimited data customers because of AT&T’s status as a common carrier, the company claimed in a motion to dismiss an FTC lawsuit this week.
Mobile voice is a common carrier service—similar to the utility status of the traditional wireline telephone network—placing it under the Federal Communications Commission’s jurisdiction. The FTC’s October 2014 lawsuit against AT&T applied to mobile broadband, which is not a common carrier service. However, AT&T claims that mobile voice’s common carrier status prevents the FTC from taking action against the cellular data portion of its business.
AT&T pointed to a provision in Section 5 of the FTC Act which exempts common carriers from the commission’s jurisdiction.
“AT&T plainly qualifies as a ‘common carrier’ for purposes of Section 5 because it provides mobile voice services subject to common-carrier regulation under Title II of the Communications Act,” AT&T wrote. “The fact that AT&T’s mobile data services are not regulated as common-carrier services under the Communications Act is irrelevant. The text, structure, history, and purpose of Section 5 leave no doubt that its common-carrier exemption turns on an entity’s ‘status as a common carrier subject to [an Act to regulate commerce],’ not its ‘activities subject to regulation under that Act.’”
"The FTC cannot rewrite the statute to expand its own jurisdiction," AT&T also wrote.
Despite this argument, in October AT&T settled a lawsuit filed against it by the FTC over alleged bill cramming, agreeing to pay $105 million to refund customers billed for unauthorized premium text message services. We’ve asked AT&T why it accepted the FTC’s jurisdiction in the text messaging case but not the data one, and the company said it would provide a response today. (The FCC was also involved in that case and invoked its authority over common carriers despite never classifying text messaging as a common carrier service—AT&T did not object to that, either, TechDirt wrote at the time.)
UPDATE: AT&T did not directly answer our question but pointed to a statement the company made on the day of its cramming settlement, which said, "We reached a settlement today to resolve claims that some of our wireless customers were billed for charges they did not authorize. Although these charges were made by other companies, we take seriously claims that charges on our customers’ bills were not accurate. This settlement gives our customers who believe they were wrongfully billed for PSMS [premium short messaging service] services the ability to get a refund."
AT&T's filing in the unlimited data case this week pointed to previous statements by FTC commissioners on the commission's jurisdiction over the non-common carrier portions of a common carrier's business:
In 2002, an FTC commissioner stated that the Section 5 exemption hinders its ability to regulate “business activities of telecommunications firms [that] have now expanded far beyond common carriage,” such as “Internet services,” and urged Congress to repeal the exemption so the agency would not be “forced to” “litigat[e] this issue” in court. In 2003, the FTC informed a House subcommittee that the exemption “hamper[s] the FTC’s oversight of the non-common-carrier activities” of common carriers. And in November 2011, FTC Commissioner J. Thomas Rosch acknowledged the strong arguments that “constrain[]” the agency’s jurisdiction over mobile data. The FCC’s decision not to classify data services as common carriage, Commissioner Rosch explained, “does not necessarily mean that the service is therefore subject to regulation by... the FTC.” “[W]e get our jurisdiction directly from Congress . . . not from another agency.”
As for the data throttling suit, the FTC complained about AT&T’s practice of slowing the data speeds of unlimited customers after they use a certain amount of data each month. AT&T is still throttling unlimited data users with LTE devices after they exceed 5GB each month. These customers see their speeds dramatically reduced even when AT&T’s network is not congested. Later this year, AT&T claims it will stop throttling these customers except in cases when cell towers are congested. AT&T already applies this less strict policy to non-LTE devices.
AT&T awaits FCC rulings over throttling and common carrier status
Even if the FTC data throttling suit is thrown out, AT&T could face punishment from the FCC.
“The FCC’s Enforcement Bureau is now actively considering whether to issue a Notice of Apparent Liability against AT&T alleging that AT&T’s public disclosures of its MBR [maximum bit rate] program failed to satisfy the FCC’s transparency rule and proposing statutory forfeitures,” AT&T wrote in its motion to dismiss. “The FTC seeks to litigate the very same issues in an inappropriate parallel proceeding.” Although mobile data is not a common carrier service, it does face some regulations under Title III of the Communications Act and Section 706 of the Telecommunications Act, AT&T wrote.
We asked the FTC for a response to AT&T’s claim. A spokesperson answered, "we can't comment since the case is in active litigation." The FTC has not yet filed a formal response in the court proceeding.
AT&T could end up winning its argument, but not in a manner the company would like. As reported yesterday, FCC Chairman Tom Wheeler signaled that he will propose reclassifying Internet service providers as common carriers in order to enforce net neutrality rules. That status could be applied both to fixed and mobile broadband. AT&T and other large ISPs have urged the FCC not to do this.
FTC Chairwoman Edith Ramirez acknowledged in an interview with Ars that such a move would reduce the FTC’s jurisdiction over Internet providers, but she did not argue against the potential reclassification. "The FCC is of course looking at the issue of net neutrality,” Ramirez said. “I also believe that there needs to be an open Internet, that the Internet needs to be an open platform. How one goes about achieving that is obviously something that we’re going to see and that the FCC is considering with a whole host of very complicated legal, technical, and economic questions attached to that issue. So I’m looking forward to see how the FCC ends up handling it, and I know that we’re supposed to be hearing some news, some proposed rules fairly soon."
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