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FTC Lawsuit Against AT&T For Throttling Unlimited Data Can Now Proceed

Bad news for AT&T and good news for consumers at large—the United States Federal Trade Commission (FTC) does in fact have authority over the wireless carrier and other common carriers, an appeals court has determined. That means the FTC can dole out punishment to AT&T Mobility for throttling data on its unlimited data plan on the basis that doing so was "unfair and deceptive" to customers.

The issue dates back to a lawsuit the FTC filed against AT&T in October 2014 in the US District Court in Northern California. It was the FTC's claim that AT&T advertised unlimited data to wireless customers, but ultimately throttled speeds by up to 90 percent in some instances. AT&T countered that the FTC did not have the authority to regulate common carriers, and therefore could not be punished by the FTC.

"In 2011, AT&T began reducing the data speed for its
unlimited mobile data plan customers—a practice
commonly known as 'data throttling'. For example, if a
customer with an unlimited mobile data plan exceeded a
certain usage limit, AT&T would substantially reduce the
speed at which the customer’s device would receive data for
the balance of the customer’s billing cycle. Customers
experienced reduced speed when they exceeded the preset
limit, regardless of actual network congestion. AT&T did
not apply the data-throttling practice to customers on tiered
plans," the FTC argued (PDF).

The latest decision on the matter means the FTC can pursue legal action against AT&T. While US law does prohibit the FTC from regulating common carries, courts have found that it applies only when said carriers engages in common carrier services. There is a long-winded explanation in the lawsuit as to how that determination was ultimately made, but the end result is that AT&T could faces fines and potentially other punishments over its data throttling.

Federal Communications Chairman Ajit Pai celebrated the court's decision, spinning it confirmation that the FCC was justified in killing off net neutrality.

"The Ninth Circuit’s decision is a significant win for American consumers. Among other
things, it reaffirms that the Federal Trade Commission will once again be able to police
Internet service providers after the Restoring Internet Freedom Order takes effect," Pai (PDF). "In the months and years ahead, we look forward to working closely with the
FTC to ensure the protection of a free and open Internet."

A point that Pai leaves out is that the FTC doesn't have any rules in place, it can only punish wireless carriers and ISPs if they advertise one thing and deliver another. In other words, ISPs can choose to created paid fast lanes on the Internet and throttle traffic, they just have to be upfront about it.

Thumbnail Image Source: Wikimedia Commons via Luismt94
Top Image Source: Wikimedia Commons via Carol M. Highsmith

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