Not So “Unlimited” Data: Should AT&T Be Worried by the TracFone Settlement?

The FTC has announced that TracFone, the largest prepaid mobile provider in the United States, has agreed to pay the $40 million to the FTC settle charges alleging the company engaged inn a practice known as data “throttling.” In the FTC’s complaint, the FTC alleges that TracFone would prohibitively slow customer data speeds or cut off data services all together once a customer reached a certain fixed data limit within a 30-day period. However, it’s the FTC’s reasoning as to why TracFone has to pay that should make other larger mobile carriers like AT&T nervous. The FTC takes the position that “unlimited” data means exactly that, and that falsely marketed their data services to consumers

In the fall of 2014, the FTC sued AT&T alleging that AT&T engaged in data throttling. AT&T has vehemently opposed the FTC’s charges, arguing that the claims are baseless and that the FTC has no jurisdiction over AT&T’s network management. In early January 2015, AT&T filed a motion to dismiss the FTC’s case claiming that the FTC Act prevents the FTC from imposing rules on “common carriers” subject to the Communications Act of 1934. AT&T asserts that the “the mobile data activities that the FTC is seeking to regulate are already subject to regulation by the [FCC].” The FTC, in its response, contends that the “data” portion of AT&T’s service is not protected under the Communications Act because data services are not common carrier services.

However, even if AT&T is able to escape the FTC’s jurisdiction, AT&T admits in its motion to dismiss that the FCC is already considering suing AT&T for the same reasons. Thus while AT&T’s data throttling might be outside the FTC’s grasp, it may be squarely in the sights of the FCC.


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