On October 28, 2014, the United States Federal Trade Commission (FTC) sued AT&T’s mobile division in the Northern District of California (F.T.C. v. AT&T Mobility LLC, Case No._ [N.D. Cal., Oct. 28, 2014] “AT&T Mobility”). The FTC alleged that AT&T had signed millions of customers to “unlimited” mobile data plans from 2007 through June 2010, but that in July 2011 AT&T began reducing the data speeds, or “data throttling,” for its unlimited customers. This throttling resulted in drastically reduced service for 3.5 million AT&T customers across a total of over 25 million discrete actions. Based on these allegations, the FTC further alleged that AT&T had engaged in “unfair or deceptive acts or practices in or affecting commerce” and sought an injunction and disgorgement.
As the latest in a series of related regulatory actions, AT&T Mobility echoed an earlier FTC complaint against T-Mobile for bill “cramming” (charging customers for services not sought or understood). The AT&T Mobility allegations mirrored mid-2014 concerns raised by the United States Federal Communications Commission (FCC) regarding a similar plan with a different wireless carrier to throttle heavy data users. The FCC also recognized the AT&T Mobility filing with its own statement that (a) the FCC was coordinating with the FTC “on investigations into carriers slowing down unlimited data” and that (b) customers should “contact the FCC if they are being throttled by AT&T or other cellular providers.”
The filing of AT&T Mobility reverberated across the wireless and secondary industries. It put AT&T directly on notice regarding similar practices across its suite of commercial offerings. It also alerted directly competing carriers and other entities either providing unlimited data services or engaged in any kind of data or service throttling that the FTC might scrutinize and pursue similar and related practices. The FTC’s interest in this issue implicates every U.S. wireless carrier, and the potential impact should be measurable by customer head count and contract type. The FTC and FCC are, of course, not the only interested parties in this arena. Where the regulators tread, class actions plaintiffs are sure to follow.
Success in AT&T Mobility would not limit FTC and class action plaintiff scrutiny of wireless providers’ practices. Throttling and related advertising practices are also key components of over one hundred Internet Service Providers’ service offerings in the U.S. alone, even if they are most directly evident in those cross-platform carriers offering both mobile and cable or fiber-based internet data service.
AT&T Mobility may have even further implications for FTC enforcement and other legal actions in this arena generally. This unilateral FTC action should alert the telecom industry to the FTC’s additional interest into an area where the FCC has traditionally maintained order. This also may extend the FTC’s reach and enforcement arm into future net neutrality discussions and helps support the FCC’s present practices and rules that were challenged by another carrier in early 2014.
Legal departments across the country will carefully follow the progression of AT&T Mobility and AT&T’s inevitable motion to dismiss. AT&T has already indicated that it will fight the charges—and any additional challenges to its own Internet-based product offerings under the “AT&T U-verse” brand and the net neutrality concerns implicated by AT&T’s July 2014 Netflix deal regarding throttling streaming speeds.