Appeals Court Tosses Data Speed Case Brought Against AT&T
August 29 2016 - 4:17PM
Dow Jones News
By Brent Kendall and Thomas Gryta
A federal appeals court threw out a government lawsuit against
AT&T Inc. that alleged the company misled wireless subscribers
by selling them unlimited data plans and then quietly slowing down
service if they consumed high amounts of data.
Monday's ruling, from the San Francisco-based Ninth U.S. Circuit
Court of Appeals, is a blow to the Federal Trade Commission, which
filed the suit in 2014 seeking potential refunds for consumers. The
commission argued AT&T didn't do enough to tell customers that
data speeds on their smartphones would be slowed considerably once
they reached certain usage amounts each billing cycle.
Over a three-year period, AT&T throttled data speeds that
affected 3.5 million customers, the FTC alleged. AT&T during
the litigation said it had implemented reasonable network
management practices that slowed speeds only to the very heaviest
users whose data consumption harmed the company's network.
Although the FTC has broad authority to police unfair and
deceptive commercial practices, it doesn't have authority over
"common carrier" phone services such as the landline services
traditionally offered by AT&T. The commission had said it could
pursue the company, however, because it involved data services, but
the appeals court rejected that argument.
The ruling means government enforcement actions targeting an
alleged lack of company transparency over internet data speeds
would have to be brought by a different agency, the Federal
Communications Commission.
The FCC brought a similar case against AT&T, announcing
plans last year to fine the company $100 million on the grounds
that the company didn't adequately inform consumers about its
program for slowing data speeds in certain circumstances. The
company is contesting the case in proceedings before the FCC.
AT&T said it was pleased with Monday's decision, while the
FTC said it was disappointed and considering its options.
The ruling further solidifies the FTC's diminishing authority in
the telecommunications space. The consumer protection agency
already was facing reduced enforcement powers thanks to
open-Internet rules the FCC put in place last year. Those rules
imposed common-carrier obligations on broadband services, including
wireless.
After years of selling unlimited data plans as customers adopted
smartphones, AT&T stopped selling them to new subscribers in
2010. It began offering them again earlier this year to customers
who also subscribe to one of its pay-television services, DirecTV,
or U-verse.
Like other carriers, the company puts limits on its unlimited
plans. Customers who use more than 22 gigabytes of data per line in
a billing cycle may see slower speeds when the network is
congested, according to posted plan details.
--John McKinnon contributed to this article.
Write to Brent Kendall at brent.kendall@wsj.com and Thomas Gryta
at thomas.gryta@wsj.com
(END) Dow Jones Newswires
August 29, 2016 16:02 ET (20:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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