AT&T® Claims On Court That FTC Has No Power To Regulate Internet Providers

Internet Providers
FTC To Regulate Providers

AT&T® recently claimed in federal court that the Federal Trade Commission does not have any power to police the wireless provider in case some of the activities of the internet providers go unregulated. AT&T® said to the judges in the Ninth Circuit Court of Appeals that FTC couldn’t enforce a 2014 fine that was leveled against the company for throttling the customers with unlimited data plans without any notice, as they does not fall under the jurisdiction of FTC anymore. This is due to the reclassification of the internet providers as ‘common carriers’ by FTC’s Net Neutrality rules of 2015.

A ‘common carrier’ is a public utility designation that cannot be regulated by FTC. Last year, a small panel of judges on the court agreed with AT&T®. Their ruling resulted in many warning that it could leave any business acting as an internet service provider free of any regulations over the activities like collection of data and privacy policies that are usually overseen by the FTC. FTC appealed the case and the court agreed on re-hearing it.

However, when the lawyer of AT&T®, Michael Kellogg, tried to repeat the argument of AT&T®, the judges asked details on the extension of the regulatory immunity that AT&T® is seeking. The full court judges raised hypothetical situations such as if AT&T® took over General Motors or Mercedes, would the company be free of regulations due to the common carrier status of AT&T®, or could companies like Procter & Gamble buy a business with the status of common carrier to avoid FTC enforcement.

“I’m regulated by the FTC and I don’t like it,” Judge Alex Kozinski said. “I go out and I buy a small, money-losing common carrier. Do I say, ‘bye bye FTC,’ under your reading of the statute?”

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The lawyer of AT&T® replied that in such situations FTC will be able to force Procter & Gamble to run the service falling under the ‘common carrier’ category under a different subsidiary. This will leave the ‘common carrier’ service to be regulated by FCC and the rest of the company will be subjected to the oversight of FTC.

“The FCC can say, ‘no, these activities you just bought, they’re too far outside the ordinary activities covered under the Communications Act, and you’re going to have to provide those in a separate subsidiary,’” Kellogg said to judges.

The lawyer arguing the case of FTC, Joel Marcus, countered the solution offered by Kellogg, claiming that it solely depends “on the FCC’s willingness to do this.” He, however, acknowledged that the FCC does have the power to intervene.

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