US appeals court dismisses FTC’s lawsuit against AT&T

A federal appeals court has dismissed a government lawsuit against AT&T Inc  over allegations it misled millions of smartphone customers who were promised unlimited data but had their internet speeds cut by the company, making it difficult for them to open web pages or watch streaming video.

The ruling of the San Francisco-based Ninth US Circuit Court of Appeals, yesterday comes as a blow to the Federal Trade Commission, which filed the suit in 2014 seeking potential refunds for consumers (See: AT&T sued by FTC over 'throttling' unlimited-data customers). According to the commission, AT&T did not do enough to tell customers that data speeds on their smartphones would be slowed considerably on reaching certain usage amounts each billing cycle.

According to the FTC, over a three-year period, AT&T throttled data speeds affecting 3.5 million customers. The company said during the litigation that it had implemented reasonable network management practices that slowed speeds only to the very heaviest users whose data consumption harmed the company's network.

Under the ruling, government enforcement actions seeking to address alleged lack of company transparency over internet data speeds would need to be brought by a different agency, the Federal Communications Commission.

An FTC spokesman said the agency had not decided yet whether to appeal. "We are disappointed with the ruling and are considering our options for moving forward," FTC spokesman Jay Mayfield wrote in an emailed comment.

According to commentators, the company could still face action from the FCC. In June 2015, the agency proposed that the company pay a fine of $100 million for AT&T's for its alleged failure to inform customers with unlimited data plans about the speed reductions. The proposed fine had been contested by AT&T.