AT&T case sheds light on future of common carrier exemption

23 May 2017 9:57am

By Claude R. Marx . Originally published on FTC:Watch on May 19, 2017.

A federal appeals court decision to rehear the Federal Trade Commission's case against AT&T Mobility draws attention to a perennial debate. Will the law exempting the agency from overseeing common carriers be repealed?

The agency's commissioners, a Republican and a Democrat who disagree on other issues, favor the repeal. But Congress has been reluctant to act due to pressure from telecom companies.

The litigation and the controversy over Congress' repeal of the Federal Communications Commission's privacy rules may change the equation.

A spokesman for Senate Commerce Committee Chairman John Thune wrote in an e-mail that the South Dakota Republican is "open" to dealing with the common carrier issue in legislation, but declined to elaborate. An aide on the House Energy and Commerce Committee said it's too early to know how the issue will play out.

An amendment to repeal the exemption, sponsored by several Democratic lawmakers, was defeated along party lines last July during a House Energy and Commerce Committee markup on changing some of the rules governing how the FTC operates.

Last week, the US Court of Appeals for the Ninth Circuit agreed to take another look at whether the FTC can regulate any aspect of a company that offers common carrier telecom services. The move permits a rarely granted rehearing of a decision in the agency's litigation against AT&T.

The decision nullified a 2016 Ninth Circuit ruling that removed the FTC's jurisdiction to oversee net neutrality promises, privacy practices or other functions of companies like AT&T that offer telephone, cable television or consumer broadband use.

With the FCC heading toward rescinding its 2015 Open Internet Order that declared fixed and wireless broadband to be a common carrier service under Title II of the Communications Act, the rehearing could give the FTC power to regulate Internet service providers' conduct.

The FTC is blocked from regulating common carriers because of a specific exemption in the FTC Act. The question in the AT&T case was whether the agency could police other practices such as the company touting its "unlimited" data plans. The agency called the marketing ploy deceptive.

FCC Chairman Ajit Pai wants the FTC, rather than his agency, to regulate ISPs. But net neutrality rules, which the FCC has started repealing, consider ISPs to be common carriers.

FTC acting Chairman Maureen Ohlhausen told FTC:WATCH last year that she wants to see "Congress clarify FTC privacy/data security authority over the Internet. This could be done through a repeal of the common carrier exemption, which the commission has long supported on a bipartisan basis. Such clarity is even more important following the FCC's reclassification of broadband as a common carrier service." 

She has praised Congress' action to repeal the FCC's privacy rules and supported the FCC's efforts to repeal net neutrality.

FTC Commissioner Terrell McSweeny also supports Congress repealing the common carrier exemption. McSweeny told FTC:WATCH earlier this month that until that occurs, the FCC's efforts to shift some of the regulatory authority to the FTC are disingenuous. She also noted that neither agency has jurisdiction over consumer broadband privacy.

Register your interest in FTC Watch, sign up via the form on the right.