AT&T: FTC Ruling Doesn't Create Privacy Regulation Gap

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By Tim McElgunn

Nov. 9 — AT&T Mobility LLC told the U.S. Court of Appeals for the Ninth Circuit not to revisit its earlier ruling that the Federal Trade Commission has said could risk creating a consumer privacy “enforcement gap,” according to a Nov. 8 court filing ( FTC v. AT&T Mobility LLC (9th Cir. opposition to petition for en banc rehearing filed 11/8/2016 ).

AT&T said it opposes the FTC's request for the court's full bench to revisit an Aug. 10 decision by a three-judge Ninth Circuit panel, (2016 TLN 20, 10/1/16) contending the panel correctly found that AT&T is exempt from FTC regulation under Section 5 of the FTC Act.

That section of the act exempts “common carriers,” including telecom companies, freight carriers and some financial institutions from FTC oversight. AT&T's broadband ISP unit is now classified as a common carrier and subject to Federal Communications Commission regulation. The FTC is asking for the rehearing, and said the Aug. 10 ruling would leave privacy violations by broadband companies or their subsidiaries outside the reach of either the FTC or the FCC.

The FCC, Sen. Richard Blumenthal (D-Conn.) and a number of consumer and public interest groups have filed briefs supporting the FTC’s petition (2016 TLN 20, 11/1/16) .

The agencies and their supporters in the case fear that companies seeking to avoid FTC oversight of privacy and other consumer protection matters will game the system by acquiring small telecom companies. The court's “literalist approach” to the Federal Trade Commission Act, they contend, sidelines the FTC’s role in regulating privacy practices of websites and apps operated and sold by companies including Alphabet Inc.'s Google, Facebook Inc. or Snap Inc.'s Snapchat.

Both the FTC and FCC argue that the Ninth Circuit panel's interpretation would exempt those entities from FTC oversight and create an enforcement gap “at odds with the realities of the marketplace, in which entities that provide communications common carrier services have expanded their lines of business to include non-common-carrier offerings (or vice versa).” AT&T said any company that buys a common carrier to avoid the FTC's jurisdiction would simply substitute one regulator for another.

AT&T said that nothing in the panel decision suggested that members of a common carrier's corporate family providing other products and services are exempted from FTC authority. The telco argued that by emphasizing that AT&T Mobility's status as a common carrier is based on a substantial part of its activity, “The panel thus left ample room for future courts (or the FTC) to conclude that the status-based common-carrier exemption is not triggered by de minimis acquisitions.”

To contact the reporter on this story: Tim McElgunn in Cherry Hill, N.J. at tmcelgunn@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

For More Information

Text of AT&T's filing is at http://src.bna.com/jZt

Text of the FCC's filing is at http://src.bna.com/jBR.

Text of Sen. Blumenthal's filing is at http://src.bna.com/jB1.

Text of the consumer groups' filing is at http://src.bna.com/jBZ.

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