FCC to Court: FTC Common Carrier Exemption Is Activity Based - Broadcasting & Cable

FCC to Court: FTC Common Carrier Exemption Is Activity Based

Commission says full appeals court should overrule panel
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The FCC is standing with the Federal Trade Commission when it comes to a federal court decision that leaves a potential regulatory gap for broadband regulation, in the process taking a shot at AT&T.

The U.S. Court of Appeals for the Ninth Circuit last month agreed to an en banc (full court) review of its three-judge panel decision that left the Federal Trade Commission's authority to oversee edge-provider's protections of privacy in some circumstances very much in doubt. The court also said that in the interim that panel decision was not to be cited as precedent of the Ninth Circuit. Such en banc review is unusual, but the decision had prompted a lot of attention given that potential online privacy impact.

The three-judge panel, in overturning the FTC's action against AT&T for throttling the speeds of unlimited data customers, last August ruled that the regulatory exemption that prevents the FTC from regulating common carriers is not "activity-based," confined to common carrier "activity" by an entity that has the status of a common carrier, but is status-based, extending to noncommon carrier activity by that entity as well.

That meant that if Verizon, a common carrier, bought Yahoo!, an edge provider, the FTC could not enforce Yahoo! privacy policies, and the FCC could not either because it does not regulate edge providers, leaving a potential privacy gap.

The FTC had sought full-court review of that decision under former Democratic chair Edith Ramirez.

In its amicus brief filed with the court this week, the FCC agreed with the FTC that the court should have ruled the exemption was activity-based.

"If the en banc Court were to adopt AT&T’s position that the FTC Act’s common-carrier exception is 'status-based' rather than 'activity-based,' contrary to the reasoned analysis of the district court, 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—creating a potentially substantial regulatory gap where neither the FTC nor the FCC has regulatory authority," the FCC told the court this week.

That would be the case even if the FCC, as planned, reclassifies internet access service so that it is not a common carrier and thus returning oversight of ISP consumer privacy to the FTC, since AT&T's wireline and wireless voice service would remain a common carrier service.

"The issue here therefore must be addressed even if the FCC returns broadband service to the [information service, non-common carrier] regulatory status that applied when the FTC brought this case," the FCC said.

The sting in the tail for AT&T came in the closing line of the FCC's summary of its argument. "While AT&T may prefer to offer services in a regulatory no man’s land, the law does not dance to AT&T’s whims. The Court should reject that unsound approach and instead affirm the decision…"

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