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Focus on Regulation

U.S. Internet Regulatory Debate Goes Beyond the Federal Communications Commission

An ongoing debate about the authority of the U.S. Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) to regulate broadband may soon come to a head.  AT&T recently asked a U.S. district court to dismiss a complaint filed against it by the FTC.  The motion to dismiss challenges the FTC’s authority to regulate telephone companies providing broadband and raises complicated jurisdictional issues the resolution of which may depend on the outcome of the high-profile Open Internet proceeding currently pending at the FCC.

In its complaint, the FTC alleged that AT&T misled customers who were grandfathered into unlimited data plans by “throttling,” or slowing, their data speeds, by up to 90%.  On the same day that the FTC filed its complaint, the FCC’s Enforcement Bureau also initiated an investigation into AT&T’s practices, sending a Letter of Inquiry to AT&T alleging that the carrier was not sufficiently transparent in disclosing its data management practices.  In its response to the FCC, AT&T acknowledged slowing customer data speeds but contends that the throttling was part of its reasonable network management efforts and necessary to prevent its network from being overwhelmed.  AT&T has denied any violation of the FCC’s rules or principles.

In its motion to dismiss the FTC’s complaint, AT&T argues that the FTC is trying to litigate the same issues raised in the FCC’s proceeding while lacking authority to do so.  As a provider of commercial mobile radio voice services, AT&T is generally subject to “common carrier” regulation by the FCC under Title II of the Communications Act.  Significantly, the FTC does not have authority over communications “common carriers.”  AT&T notes that in filing a complaint against a mobile voice provider, some have said the FTC is “stepping onto the turf” of the FCC and attempting to unilaterally expand its jurisdiction.

The wrinkle in this case is that the FTC’s complaint concerns mobile data, not mobile voice, services.  The FCC has historically taken the position that mobile data services are not regulated as a common carrier service, although they are subject to other FCC regulatory authority.  Thus, the question presented by AT&T’s motion is whether the status of the provider—AT&T’s position—or the type of service provided should determine which agency has jurisdiction, or whether the FCC and FTC both have valid jurisdictional claims.

Oral argument on AT&T’s motion is scheduled for mid-March 2015, almost a month after the FCC is anticipated to adopt new Open Internet rules that could include reclassifying mobile broadband offerings as common carrier services.  Depending on the direction the FCC takes, its new Open Internet rules could moot the debate regarding AT&T’s important jurisdictional argument, or create important new questions regarding U.S. federal regulatory authority.

The authors wish to thank Greg Oshel for his assistance.