Decision May Embolden FCC but Only Congress Can Close Gap

SAN FRANCISCO — Today, the Ninth Circuit tossed out the Federal Trade Commission’s (FTC) enforcement action against AT&T for allegedly throttling the data of unlimited plan customers who used the largest amounts of data, and penalizing customers who canceled their subscriptions after their unlimited data was throttled to 2G speeds. The appeals court rejected the FTC’s longstanding position that the FTC Act covers the non-common carrier activities of common carriers. Instead, the court ruled that a company’s legal status determines whether it is excluded from the FTC Act.

Today’s decision may create a significant gap in federal consumer protection law,” said Berin Szoka, President of TechFreedom. “This is just another unintended consequence of the FCC’s 2015 reclassification of broadband. Flip-flopping on Title II at the President’s command meant depriving the FTC of jurisdiction over broadband service. But the FCC assured everyone that it would work with the FTC to coordinate the two agencies’ approaches, assuming that the FTC would continue to be able to police the non-common carrier activities of broadband providers. Today’s decision proves the FCC wrong. Reclassifying broadband means the FTC can’t police any practices of common carriers, at least in the Ninth Circuit.”

At a minimum, this means the FCC will try to police what broadband companies do beyond providing broadband — especially privacy and data security,” continued Szoka. “But the FCC is also constrained in what it can do. Thanks to Public Knowledge’s lawsuit over the broadcast flag a decade ago, we know the FCC’s authority ends with the act of communication — physical transmission. So companies like Yahoo! and AOL, all based in the Ninth Circuit, may fall into a no man’s land of consumer protection, policed by neither agency.”

The FCC has opened a Pandora’s box of unintended consequences,” concluded Szóka. “The court practically begged Congress to act, extensively citing the legislative response to a similar decision in the 1950s. The best solution to this problem is to do what the FTC has long requested: repeal the common carrier exemption. We’d support that, and the idea has had bipartisan support for a decade, but there’s no way it’s going to pass without process reforms at the FTC and a legislative compromise on net neutrality that takes Title II off the table. If Hillary wins and wants to build bipartisan consensus — and a legacy on tech — this is a golden opportunity. Today’s decision may be the impetus for much-needed broader reform of both agencies and how they regulate the Internet.”


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