When the federal government fights AT&T, it’s like trying to pick sides between Godzilla and King Kong. Still, it’s worth asking if the phone carrier might have a point when it describes the Federal Trade Commission’s latest lawsuit as “baffling.”
In case you missed it, the latest legal dustup came on Tuesday when the FTC sued AT&T for “throttling” certain customers who had signed up for unlimited data plans — in some cases, slowing down connections to dial-up speeds in order to punish heavy data users.
In the FTC’s view, “unlimited means unlimited” and [company]AT&T[/company] acted unfairly to reduce customers’ internet speeds to a trickle, and to impose hefty termination fees on those who switched to another carrier once their data was denigrated. Many seemed to agree:
Who are you and what have you done with the FTC that spent fifteen years ignoring AT&T scams and false advertising?
— Karl Bode (@KarlBode) October 28, 2014
Thank god – FTC sues AT&T over throttling, claiming it jilted millions of unlimited plan users https://t.co/dAyoJhQ3Vi
— Matt Rosenberg (@mattjrosenberg) October 28, 2014
On a conference call, however, reporters pressed FTC Chair Edith Ramirez to explain why the agency had waited till now to file the lawsuit, and whether any consumers had in fact been treated unfairly.
The questions stem from the fact that AT&T’s throttling practices, which the FTC said affected 3.5 million customers, are hardly a secret. The throttling has received loads of press coverage for years, and many affected users — who are grandfathered into unlimited plans that AT&T ended in 2010 — received text messages and emails from AT&T warning them that their service would be slowed.
This may explain why AT&T came out swinging in its response to the lawsuit, blasting it as “baffling” and saying in a statement that the agency should not interfere with practices that the company thinks allow it to manage its network for the benefit of all customers.
Ramirez, however, retorted during the call that AT&T had degraded “unlimited” users’ data even at times when its network had plenty of capacity. She also suggested that the news and notices were not enough to protect existing AT&T customers from early termination fees if they wanted to escape the throttling.
The FTC Chair also appeared confident enough that she would not rule out other legal actions against companies like T-Mobile.
“We are concerned about companies living up to commitments they make,” she said, but also stated that she would not comment as to specific companies.
As for AT&T, it appears to believe the case against it is “baffling” and “baseless” enough to go to court. Ordinarily, companies will settle in order to avoid the prospect of higher fines and losing before a judge or jury. (Indeed, that’s what AT&T did last week when it agreed to pay a whopping $105 million settlement to resolve claims that it padded bills with bogus text message charges.)
The other curious feature of the throttling case is why the FTC is leading the fight in the first place since, normally, phone carrier misdeeds fall to its sister agency, the Federal Communications Commission. The lawsuit also comes right after the FCC, for its part, fined two phone companies over poor data security — a field that usually belongs to the FTC.
All this is fueling talk of a turf war between the two agencies. According to a person familiar with the agencies, the FTC may have filed the suit in part to undermine the FCC, and show that it is capable of holding the phone carriers to account — a popular position with Republicans who argue the FCC’s rule-making powers are not needed in many aspects of telecom regulation.
Update: Public Knowledge issued a release praising the FTC action, but stating the FCC is still “the best agency for the job” when it comes to overseeing carriers.
Here’s the complaint if you want to read it for yourself (I’ve underlined some key parts)