In an amicus brief filed late last week with the Ninth Circuit Court of Appeals, the FCC defended the Federal Trade Commission’s (FTC) claim that the “common carrier exemption”—which prohibits the FTC from regulating the activities of common carriers because they fall under FCC jurisdiction—should not extend to the non-common carrier activities of telecommunications carriers. Urging the full, en-banc Ninth Circuit panel to reverse last year’s decision by a three-judge panel of the same court, which concluded that the common carrier exemption applies to all of the activities of common carriers, the FCC cautioned that failure to act could create a “potentially substantial regulatory gap where neither the FTC nor the FCC has regulatory authority” over the activities of telecommunications network operators or online edge service providers.
Last month, the Ninth Circuit agreed to the FTC’s request for an en banc rehearing of the court’s previous ruling that the FTC, pursuant to the common carrier exemption, lacked authority to pursue charges that AT&T misled wireless subscribers by “throttling” or slowing the data transmission speeds of customers who purchased unlimited data plans. The case at hand originated in 2014, a year before the FCC reclassified fixed and wireless broadband access services as common carrier telecommunications services under Title II of the 1934 Communications Act. Filing suit against AT&T, the FTC contended that broadband and other non-common carrier services provided by common carriers such as AT&T are not subject to the common carrier exemption. Although a California district court ruled initially in the FTC’s favor, the three-judge appellate panel ruled last August for AT&T, reasoning that “the plain language of the common carrier exemption casts the exemption in terms of status, contrary to the FTC’s position.”
Hinting at the potential consequences if a common carrier were to merge with an online edge service provider, the FCC warned that, “if the en banc court were to adopt AT&T’s position . . . the fact that AT&T provides traditional common carrier voice telephone service could potentially immunize the company from any FTC oversight of its non-common carrier offerings, even when the FCC lacks authority over those offerings.” Such a regulatory gap, argued the FCC, could persist even if the FCC restores its original regulatory classification of broadband as a non-common carrier information service as proposed in rulemaking proceedings launched by the agency last month. As such, the FCC maintained: “the issue here . . . must be addressed even if the FCC returns broadband service to the regulatory status that applied when the FTC brought this case.”