Court dismisses FTC suit against AT&T over data throttling

The Ninth Circuit yesterday dismissed a lawsuit brought by the Federal Trade Commission against AT&T Mobility, in which the FTC asserted that AT&T illegally slows internet data speed to customers with an unlimited data plan.

Section 5 of the FTC Act contains an exemption for “common carriers subject to the Acts to regulate commerce.” 15 U.S.C. § 45(a)(2). The FTC asserted two counts: First, the FTC alleged that AT&T’s imposition of data speed restrictions on customers with contracts advertised as providing access to unlimited mobile data and without terms “provid[ing] that [AT&T] may modify, diminish, or impair the service of customers who use more than a specified amount of data” is an unfair act or practice. Second, the FTC alleged that AT&T’s failure adequately to disclose that it “imposes significant and material data speed restrictions on unlimited mobile data plan customers who use more than a fixed amount of data in a given billing cycle” is a deceptive act or practice.

The court held that AT&T was excluded from the coverage of section 5 of the FTC Act. Specifically, the court held that, based on the language and structure of the FTC Act, the common carrier exception was a status-based exemption and that AT&T, as a common carrier, was not covered by section 5.

The bottom line: Regardless of whether AT&T engaged in unfair and deceptive acts and practices, it cannot be held accountable under the FTC Act.

The opinion is here.

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