• by Wendy Davis , Staff Writer @wendyndavis, August 29, 2016

Siding against the Federal Trade Commission, a federal appellate court said today that agency can't sue AT&T over broadband slowdowns.

The FTC alleged in an October 2014 lawsuit that AT&T duped consumers by promising them unlimited data, but slowing their broadband connections after they exceeded a monthly data cap.

But a three-judge panel of the 9th Circuit Court of Appeals said the case must be dismissed because AT&T is a "common carrier." That decision reversed a ruling issued last year by U.S. District Court Judge Edward Chen in the Northern District of California.

The legal battle stems from AT&T's 2011 decision to throttle users with "unlimited" data plans. From 2011 until 2014, AT&T allegedly slowed down the connections of more than 3.5 million customers who exceeded monthly allotments of 3GB or 5GB, depending on their phones. AT&T recently revised its throttling practices and now only slows down customers who exceed 22 GB in a month; the company also now only throttles those users when the network is congested.

The agency alleged in its lawsuit that AT&T duped consumers by selling them "unlimited" service, only to throttle their Web connections. AT&T argued that the case should be dismissed for several reasons, including that it's a common carrier.

The FTC generally has the power to bring cases against companies that dupe consumers via deceptive advertising. But the agency isn't authorized to bring enforcement actions against common carriers. Last year, a different agency -- the Federal Communications Commission -- classified mobile broadband as a common carrier service.

Chen rejected AT&T's argument, noting that the FTC's complaint dealt with activity that occurred before the FCC reclassified mobile broadband.

But the 9th Circuit reached the opposite conclusion. That court said that AT&T should have the benefit of the common-carrier exemption, even for activity that took place before mobile broadband service was considered a common-carrier service.

While AT&T won its battle with the FTC, the company still faces other problems as a result of the throttling. The FCC is seeking to fine AT&T $100 million for allegedly violating a 2010 regulation by failing to explain its throttling policies to consumers.