iPhone-Related ‘Throttling’ Lawsuit Against AT&T Gets Quashed

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A government agency cannot proceed against AT&T in a lawsuit that relates to a controversial program in which the company slowed, or “throttled,” the speeds of iPhone customers who had subscribed to the carrier’s unlimited mobile data plan.

AT&T Mobility failed to adequately reveal to customers that they would suffer a reduction in data speeds if they used a certain amount of data in a billing cycle, the Federal Trade Commission alleged in a 2014 complaint.

But in an opinion filed Monday, a federal appeals court dismissed the lawsuit because it found AT&T is a “common carrier” that is exempt from section 5 of the FTC Act upon which the government based its complaint.{ad}

The FTC had argued AT&T’s exemption from the statute was dependent on the activity in which it was engaged and didn’t extend to mobile data service, a non-common carrier service. AT&T, on the other hand, reasoned that its common-carrier status broadly protected it from liability.

The U.S. Court of Appeals in San Francisco sided with the wireless giant.

“We conclude, based on the language and structure of the FTC Act, that the common-carrier exception is a status-based exemption and that AT&T, as a common carrier, is not covered by section 5,” federal judge Richard Clifton of the Ninth Circuit wrote in the opinion.

AT&T said it was “pleased” with the ruling. The FTC is “disappointed with the ruling and are considering our options for moving forward,” FTC spokesman Jay Mayfield said in an email to USA Today.

The FTC claimed AT&T’s throttling program that commenced in 2011 – slowing down the speeds of iPhone customers on unlimited plans – was unfair and deceptive in part because the carrier failed to reveal that it would impose restrictions in a given billing cycle. AT&T reduced the speeds of 3.5 million subscribers on unlimited plans more than 25 million times, according to the government agency.

AT&T characterized FTC’s allegations as “baseless” and said the company had been honest with its customers from the get-go.

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