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In Latest Twist in Net Neutrality Battle, Court Rules FTC Can Regulate Internet Providers

WASHINGTON — A federal appeals court ruled that the Federal Trade Commission has jurisdiction over internet providers, a decision that has ramifications for the future of net neutrality.

When the FCC repealed most of its existing net neutrality rules in December, it left it to the FTC to take up oversight of consumer complaints over internet service as well as the privacy practices of broadband providers.

But the plan had a potential hitch: A lawsuit playing out in the Ninth Circuit Court of Appeals raised doubts about the future of the FTC’s authority to bring a lawsuit against certain broadband providers over their traffic management practices. After the FTC brought suit against AT&T Mobility over its data throttling practices, calling it “unfair and deceptive,” AT&T claimed that it was exempt from oversight.

FCC Chairman Ajit Pai said the Ninth Circuit decision was “a significant win for American consumers.”

“Among other things, it reaffirms that the Federal Trade Commission will once again be able to police internet service providers” after the FCC’s latest action on net neutrality, Pai said. “In the months and years ahead, we look forward to working closely with the FTC to ensure the protection of a free and open internet.”

In the ruling, written by Judge Margaret McKeown on behalf of an en banc panel of the Ninth Circuit, the judges wrote that “permitting the FTC to oversee unfair and deceptive non-common-carriage practices of telecommunications companies has practical ramifications.”

“New technologies have spawned new regulatory challenges,” the judges wrote. “A phone company is no longer just a phone company. The transformation of information services and the ubiquity of digital technology mean that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security, and more. Reaffirming FTC jurisdiction over activities that fall outside of common-carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement.”

An AT&T spokesperson said, “Today’s decision on jurisdiction does not address the merits of the case. We are reviewing the opinion and continue to believe we ultimately will prevail.”

Consumer advocates praised the decision, but they still oppose the FCC’s move to repeal many of its net neutrality rules. They doubt that the FTC will be able to police the internet because its authority, while affirmed by the court, will still be much more limited than the FCC’s oversight.

“This is the right result for the FTC and consumers, allowing the FTC to continue to protect consumers in what would otherwise be a vast regulatory gap,” said Jessica Rich, vice president of advocacy for Consumer Reports and former director of the FTC’s Bureau of Consumer Protection.

“However, this decision only restores the limited jurisdiction the FTC previously had over internet service providers,” Rich added. “Despite what the telecom industry says, this ruling is no substitute for the critical net neutrality protections that the FCC has rolled back under Chairman Pai, which is why we’re urging Congress to restore the rules to protect the open internet.”

The lawsuit was brought long before this latest battle over the net neutrality issue.

Net neutrality activists are planning a “day of action” on Tuesday in an effort to secure one more Senate vote to restore the FCC’s rules.

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