An appeals court has determined that the Federal Trade Commission (FTC) has the authority to carry out its case against AT&T for allegedly throttling data on unlimited data plans of millions of consumers.
The issue began back in October 2014 when the FTC filed a lawsuit against AT&T claiming that the company marketed its data plans as “unlimited”, but ultimately throttled speeds once customers hit certain thresholds such as 5GB within a month.
"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,” the FTC said.
“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 agency added.
The wireless company countered that the FTC didn’t have the power to regulate the practices of common carrier services.
‘Unfair and deceptive’
The Ninth U.S. Circuit Court of Appeals reached its decision to grant the FTC authority to punish AT&T on the basis that the carrier’s acts were “unfair and deceptive” to consumers, Reuters reported.
The ruling, however, exempts “common carriers,” which AT&T argued that it is. That notion was dismissed by the court.
“Permitting the FTC to oversee unfair and deceptive non-common-carriage practices of telecommunications companies has practical ramifications,” said Circuit Judge M. Margaret McKeown in a published court summary.
“New technologies have spawned new regulatory challenges,” McKeown continued. “Reaffirming FTC jurisdiction over activities that fall outside of common-carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement.”
FTC Chair Maureen Ohlhausen called the ruling “good news for consumers” and Federal Communications Commission (FCC) Chairman Ajit Pai said the decision “reaffirms that the Federal Trade Commission will once again be able to police Internet service providers after the Restoring Internet Freedom Order takes effect."
“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,” Pai said in a statement.
An AT&T spokesman said the court decision “does not address the merits of the case” and that it is “reviewing opinion and continues to believe we ultimately will prevail.”