Enlarge / A Comcast service vehicle.Justin Sullivan/Getty Images
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The Federal Trade Commission is worried that it may no longer be able to regulate companies such as Comcast, Google, and Verizon unless a recent court ruling is overturned.
The FTC on Thursday petitioned the 9th US Circuit Court of Appeals for a rehearing in a case involving AT&T’s throttling of unlimited data plans.
A 9th Circuit panel previously ruled that the FTC cannot punish AT&T, and the decision raises questions about the FTC’s ability to regulate any company that operates a common carrier business such as telephone or Internet service.
While the FTC’s charter from Congress prohibits it from regulating common carriers, the agency has previously exercised authority to regulate these companies when they offer non-common carrier services.
But the recent court ruling said that AT&T is immune from FTC oversight entirely, even when it’s not acting as a common carrier.
It isn’t clear whether the ruling sets an ironclad precedent preventing the FTC from regulating any company with a common carrier business.
But the FTC’s petition for a rehearing (full text) describes that outcome as a real possibility.
The FTC wrote:
The panel’s ruling creates an enforcement gap that would leave no federal agency able to protect millions of consumers across the country from unfair or deceptive practices or obtain redress on their behalf. Many companies provide both common-carrier and non-common-carrier services—not just telephone companies like AT&T, but also cable companies like Comcast, technology companies like Google, and energy companies like ExxonMobil (which operate common carrier oil pipelines).
Companies that are not common carriers today may gain that status by offering new services or through corporate acquisitions.
For example, AOL and Yahoo, which are not common carriers, are (or soon will be) owned by Verizon.
The panel’s ruling calls into question the FTC’s ability to protect consumers from unlawful practices by such companies in any of their lines of business.
The Federal Communications Commission regulates common carriers such as landline and mobile phone companies and Internet service providers, “but it lacks authority over other products or services, such as e-mail and e-commerce” and doesn’t have the FTC’s authority to seek refunds for consumers, the petition said.
The FCC’s recent decision to reclassify broadband providers as common carriers increases the potential impact of the AT&T ruling, the FTC argued. “For example, Comcast, the nation’s largest cable provider (and the owner of NBCUniversal), is now a common carrier because it provides broadband service,” the FTC said. “Technology giant Google, which runs a variety of businesses, provides common-carrier broadband service through its Google Fiber subsidiary.
Dish Network, a satellite television provider, also provides satellite broadband.
All these companies have been subject to FTC enforcement actions—Google four times since 2011—but may now seek to shield all of their conduct from consumer protection enforcement.”
The “enforcement gap” could be particularly severe in data privacy and security. “The FTC is the nation’s primary protector of consumer data privacy, but under the panel’s ruling it could be powerless against any company that provides a common-carrier service,” the FTC said. “Consumers would have no protection from breach or misuse of their personal information or practices like false advertising or improper billing.”
The ruling that went against the FTC (full text) was issued by a panel of three judges.
The FTC’s petition last week seeks an en banc hearing in front of 11 judges; if that fails, the FTC can appeal to the US Supreme Court.
The FTC argues that the appeals court panel ruling conflicts with prior decisions of the 9th Circuit and other appeal courts. “This Court has held that the same company may be a common carrier ‘in some instances but not in others, depending on the nature of the activity which is subject to scrutiny,'” the FTC said.
The commission also argued that the FTC Act of 1914 was passed at a time when “common carrier” clearly referred to the activity of a company and not the company’s overall status.
FTC Chairwoman Edith Ramirez has also argued that Congress should remove the common carrier exemption, saying that it is an outdated relic from an era when telecommunications companies were highly regulated monopolies that didn’t also own a variety of unrelated services.