It is expected that the Federal Communications Commission's plan for to eliminate its network neutrality rules next week will grant a great victory for Internet service providers. But at any time, a federal court is expected to intervene in a case that could dramatically expand the scope of that deregulation, which could give the industry an even greater victory and leave the government even less prepared to handle net neutrality complaints. in the future. , According to consumer groups.
The case involves AT & T and one of the nation's leading consumer protection agencies, the Federal Trade Commission. What is at stake is the ability of the FTC to prosecute companies that act unfairly or misleadingly.
The litigation is significant as the FCC prepares to transfer more responsibility to the FTC for handling network neutrality complaints. (Network neutrality is the principle that Internet providers should not speed up some websites while slowing down others, particularly in exchange for money, a tactic that critics of the industry say could damage online innovation and prevent growth of new companies).
If AT & T makes its way into the case, the FTC's ability to persecute companies that misbehave – for reasons of network neutrality or otherwise – can be drastically reduced, redrawing the scope of the jurisdiction of the FTC.
The FTC is empowered to sue companies that lie to the public. But that power comes with one exception: it does not extend to a special class of business known as "common operators." This is a group that includes not only telecommunications companies, but also oil and gas pipelines, as well as freight and cruises. By order of Congress, the FTC is not authorized to take enforcement measures against this type of company.
So far, the so-called "common operator exemption" has been applied to a specific portion of the economy. But the case before the Ninth Circuit, FTC v. AT & T Mobility could greatly expand the number of companies that qualify for the exemption. In a previous ruling in the lawsuit, a federal judge effectively said that any company that manages a telecommunications subsidiary is a joint company in its entirety. Previously, only the subsidiary would have been considered a common operator, not the largest corporate entity. The case is being heard again, and analysts say the decision could be made at any time.
The opinion of Judge Richard Clifton in the Ninth Circuit surprised many antitrust and telecommunications experts, in part because it could have important ramifications for the net neutrality. A company that provides Internet access, such as AT & T, could request an exemption from the FTC's network neutrality application by pointing to its voice business and claiming the common operator status according to the resolution.
At the same time, it could also limit its net neutrality responsibility in the FCC, because as a result of the repeal of the net neutrality rules, the FCC would no longer recognize AT & T's broadband business as one that can be regulated as a telecommunications operator.
In that scenario, neither the FCC nor the FTC would offer consumers robust protections against alleged abuses of network neutrality, say consumer groups.
"A vote to approve [FCC’s net neutrality plan] followed by a decision favorable to AT & T Mobility by the Ninth Circuit, would create a 'regulatory gap' that would leave consumers completely unprotected," Public Knowledge wrote. in a letter this week requesting the FCC to delay their vote.
The FCC responded to the letter saying that the vote will continue as planned. , but did not address the issue of the possible regulatory gap.
"This is just evidence that supporters of Internet regulations are becoming increasingly desperate as their efforts to beat President Pai's plan to restore Internet freedom come to a halt," the agency said. a statement on Monday to Ars Technica.
Some antitrust experts say that the consequences of a ruling against the FTC could go beyond the neutrality of the network, opening the door to many more companies that try to escape the supervision of the FTC claiming that they are common companies.
"Companies whose public transportation activities represent only a minuscule portion of their business could initiate that status in an exemption from FTC supervision even from activities of uncommon operators," said Robert Cooper, an antitrust attorney at the FTC. Boies Schiller Flexner company.
According to Clifton's ruling, Alphabet, the parent company of Google, could theoretically say that it is a common operator because one of its many subsidiaries is Google Fiber, a small provider of voice and Internet access. "Any smart company" that can afford it will seek to take advantage of the gap by buying or launching a small telecommunications company, said David Vladeck, a law professor at Georgetown University and a former director of the consumer protection office of the Federal Trade Commission.
"The opinion of the Ninth Circuit threatens to forge a huge swath of the economy from the supervision of the FTC," said Vladeck. "Currently, Google has two consent decrees from the FTC, who knows if those decrees would be maintained?"
Some analysts say it is unlikely that the new Ninth Circuit audience will generate Clifton's decision, precisely because of the astonishing consequences for the US economy. UU But even if it were, they say, Congress could intervene to address the problem.
"The legislative solution here could not be simpler: it would be a one-page project to reaffirm the position taken by all FTC presidents and commissioners of any of the parties for decades," said Berin Szoka, president of the FTC. TechFreedom expert group.
The FTC and AT & T declined to comment.