FTC: Suit on AT&T data speeds to be reheard by Ninth Circuit
A federal appeals court agreed Tuesday to consider reviving the Federal Trade Commission’s lawsuit against AT&T for reducing the data speed of iPhone customers with unlimited-data plans after their use exceeds a certain amount.
A three-judge panel of the Ninth U.S. Circuit Court of Appeals in San Francisco had ordered dismissal of the suit in August, reversing a federal judge’s ruling to let the case proceed. The panel said the FTC lacked authority over AT&T because the telecommunications company is a “common carrier,” exempt from the commission’s regulations of business practices.
On Tuesday, the court said a majority of its 25 judges had voted to set the August ruling aside and grant the FTC a new hearing before an 11-judge panel.
As a common carrier, AT&T remains subject to regulation by
the Federal Communications Commission, which has filed its own case against the company, seeking $100 million. However, new FCC Chairman Ajit Pai, an appointee of President Trump, rejects the commission’s 2015 classification of AT&T and other Internet providers as common carriers.
Pai is leading an effort to repeal the FCC’s rules for net neutrality, which requires equal treatment for online data regardless of source and bans “fast lanes” for companies that pay higher prices.
Pai called the Ninth Circuit’s decision to rehear the AT&T case “a big win for American consumers.” In a statement, he said that the court’s action “strengthens the case” for his commission to reverse its 2015 order assuming oversight of Internet providers. That task, he said, belongs to the FTC, which can better protect online privacy.
The court case stemmed from accusations by the FTC that AT&T had misled iPhone customers who signed up for mobile data plans that were advertised as “unlimited” when they were sold between 2007 and 2010.
The company stopped selling unlimited data contracts in June 2010 but, to avoid losing customers, allowed those who already had unlimited plans to keep them.
Starting in July 2011, however, AT&T began “throttling” those customers, or substantially reducing their transmission speed, once they reached a certain threshold of use in their billing cycle. That was initially 5 gigabytes of data, but AT&T announced in the fall of 2015 that it was raising the limit to 22 GB.
The Federal Trade Commission’s regulations do not apply to common carriers. But U.S. District Judge Edward Chen of San Francisco agreed with the FTC in 2015 that it could still regulate mobile phone data service, which was not classified as a common carrier activity.
In August, the appeals court panel overruled Chen, saying the centuryold law that established the FTC exempted common carriers from the commission’s regulations for all their activities. The 11-judge panel will reconsider that issue in a hearing that has not yet been scheduled.