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AT&T Challenges FTC Jurisdiction Over Non-Common Carrier Activities of Common Carriers

As we previously reported, in October 2014 the Federal Trade Commission (FTC) filed a complaint against AT&T in federal court alleging that AT&T’s “throttling” practices for mobile broadband subscribers who were “grandfathered” into the company’s unlimited mobile data plan were unfair and deceptive in violation of Section 5 of the FTC Act.  On Monday, AT&T filed a Motion to Dismiss this lawsuit on the basis that it is a common carrier subject to the Communications Act and thus exempt from Section 5 of the FTC Act.

 

The Motion to Dismiss requests that the court dismiss the complaint because the FTC lacks authority to bring suit against AT&T.  Section 5 of the FTC Act exempts from the Act’s coverage “common carriers subject to” the Communications Act.  The motion asserts that AT&T falls within this exception because “it offers its mobile voice plans to customers on an indiscriminate basis without modifying the content of the information that traverses its network” and thus is a common carrier under the Communications Act.  According to AT&T, that its mobile data services are not regulated as common-carrier services under the Communications Act is irrelevant.  AT&T’s motion argues that the FTC is wrong to assume that Section 5 does not prohibit the agency from regulating the non-common carrier activities of common carriers, because Section 5 defines the FTC’s jurisdiction in terms of specific entities (namely, “persons, partnerships, or corporations”) and thus the exemption turns on “the status of the regulated entity, not the particular activity in which it is engaged.”

In addition, AT&T asserts that the mobile data activities that the FTC is seeking to regulate are already regulated by the Federal Communications Commission (FCC).  According to the motion, the same practices at issue in the FTC’s complaint (i.e., reducing mobile data speeds after users reach certain monthly thresholds) were the subject of an October 2014 FCC Letter of Inquiry and the FCC is considering whether to issue a Notice of Apparent Liability alleging that AT&T’s public disclosures about these practices failed to satisfy transparency rules imposed by the FCC’s 2010 Open Internet Order.  Thus, according to AT&T, whether its throttling practices were “unfair” and whether its disclosures were “inadequate” are issues for the FCC to decide and the FTC’s complaint must be dismissed so as to avoid overlapping regulatory jurisdiction.

 

© 2019 Covington & Burling LLP

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