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Court Puts FTC Back in Net Neutrality Mix

Carol Wilson
2/27/2018

The complex puzzle that is US federal regulation of telecom appeared to get a wee bit simpler yesterday, just ahead of new complications. The step toward simplicity: The US Court of Appeals for the Ninth Circuit ruled that the Federal Trade Commission can, in fact, regulate AT&T's services outside of its common carrier offerings. In turn, that could set up the FTC to impose some degree of net neutrality rules.

The reverse move: Senate Democrats are expected today to introduce Congressional Review Act legislation targeting the FCC's Restoring Internet Freedom Order from December 2017, which reversed the net neutrality rules imposed under the Obama administration. Under Senate rules, the CRA needs only 51 votes to pass, and with all 49 Democrats and one Republican, Sen. Susan Collins (R-Maine) already on board, only one more vote is needed. (See FCC Sets April Funeral for Net Neutrality)

At issue in the appeals court ruling was a 2014 lawsuit that the Federal Trade Commission brought against AT&T Inc. (NYSE: T) for selling unlimited wireless data plans and then throttling back speeds by up to 90%. AT&T had fought the suit by saying the FTC has no authority over common carriers. Yesterday's decision upheld the district court ruling that affirmed the FTC's jurisdiction over non-common carrier services.

"The en banc court held that the FTC Act's common carrier exemption was activity-based, and therefore the phrase 'common carriers subject to the Acts to regulate commerce' provided immunity from FTC regulation only to the extent that a common carrier was engaging in common carrier services," the ruling stated. In 2014, mobile data was not considered a common carrier service.

This means that the FTC can pursue customer refunds for those impacted by AT&T's pricing schemes in 2014. But it also means that the FTC could develop its own net neutrality rules and impose those rules on AT&T and other US operators, once the reversal of existing net neutrality rules -- the ones that made broadband services part of Title II regulations -- goes into effect in April. In pushing to roll back the Federal Communications Commission (FCC) 's net neutrality rules, Chairman Ajit Pai had long held that the FTC was the better regulator.

In a statement, Pai applauded the ruling and this potential greater impact, saying "I knew this was going to happen all along."

Well, no, that's not actually what he said. Here's what the statement actually contained: "The Ninth Circuit's decision is a significant win for American consumers. Among other things, it reaffirms that the Federal Trade Commission will once again be able to police Internet service providers after the Restoring Internet Freedom Order takes effect. In the months and years ahead, we look forward to working closely with the FTC to ensure the protection of a free and open Internet."

Separately, Pai told the MWC audience in Barcelona on Monday that the US intends to lead the world in 5G deployments by letting the market, not regulators, lead the way, and by working hard to free up the spectrum needed. On that front, he announced a spectrum auction in the 28GHz band this November, to be followed by an auction in the 24GHz band, and said the FCC will ask for public input this spring on these auctions.

In order for this to happen, Pai noted, Congress needs to pass legislation by May 13 to address handling the technical issues around upfront payments. "If we don't get the problem fixed by May 13, our efforts to realize America’s 5G future will be delayed. I'm pleased that Congress is making bipartisan progress on this issue and am hopeful that we'll be able to kick off a major spectrum auction in November," he said.

— Carol Wilson, Editor-at-Large, Light Reading

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