An appeals court has dismissed an FTC lawsuit against AT&T for throttling its customers, then lying about the nature of the throttling.
In October of 2014, the FTC sued AT&T for the company’s now well-established war on the company’s grandfathered unlimited data users. Specifically, the FTC accused AT&T of falsely claiming user connections were “unlimited,” despite the fact these lines were throttled after as little as 2 GB Of usage. The FTC complaint says AT&T violated the FTC Act by changing the terms of customers unlimited data plans while those customers were still under contract, and by “failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.”
Last year, AT&T appealed the lawsuit with a unique legal argument: that the FCC’s attempts to classify ISPs as Title II technically stripped the FTC of its authority over AT&T. In other words, AT&T was fiercely opposed to Title II reclassification, but was still happy to use it when it helped it avoid accountability.
“It is rich to see AT&T in two different appellate courts at once, simultaneously arguing in this case that its mobile broadband is a common carriage service — and therefore not subject to FTC jurisdiction — while telling the DC Circuit that AT&T’s mobile broadband cannot be treated as a common carrier service,” consumer group Free Press said at the time.
Except this week, AT&T’s legal tap dancing paid big dividends.
A federal appeals court in California today dismissed FTC’s lawsuit against AT&T, siding with the company’s logic that AT&T didn’t technically qualify as a “common carrier” under the FTC Act at the time of the throttling offenses. More specifically, the court approved of AT&T’s argument that because it’s now classified as a common carrier under the Communications Act, it is shielded it from liability under section 5 of the FTC Act.
“It is undisputed that AT&T is and was a common carrier subject to the Acts to regulate commerce” for a substantial part of its activity, but prior to the FCC s Reclassification Order, its mobile date service was not identified and regulated by the FCC as a common carrier service,” ruled the court in its ruling (pdf).
That directly contradicts what a lower court declared last year.
“Contrary to what AT&T argues, the common carrier exception applies only where the entity has the status of common carrier and is actually engaging in common carrier activity,” Judge Chen argued at the time.
Just so it’s clear, AT&T fought tooth and nail against being reclassified as a common carrier under Title II of the Communications Act, a move made by the FCC last year to legally support its new net neutrality rules. But AT&T is now using the same Title II regulation it aggressively opposed to prevent it from being held accountable by the FTC. In addition to the FTC lawsuit, AT&T was also fined $100 million by the FCC for misleading consumers, something AT&T lawyers are also busy fighting in the courts. Throttling is just one of many tricks used by AT&T to drive these grandfathered users to more expensive plans.
“We are disappointed with the ruling and are considering our options for moving forward,” the FTC told Reuters in a statement.