Last week AT&T filed a Reply in support of its Motion to Dismiss challenging the Federal Trade Commission’s (FTC’s) attempt to exercise jurisdiction over the company pursuant to Section 5 of the FTC Act.

As we previously reported, the FTC filed a complaint against AT&T alleging that the company misled consumers by reducing the data speeds for its unlimited mobile data plan customers (i.e., the alleged “throttling program”).  AT&T filed a Motion to Dismiss the complaint in January, arguing that the FTC lacked jurisdiction over the company because its “status” as a common carrier places it squarely within the common carrier exemption to Section 5 of the FTC Act.  The FTC responded that the common carrier exception is a narrow, “activity-based” exception that excludes an entity “only to the degree it is engaged in common carrier activities and not because of its general ‘status’ as a common carrier.”

Last week, AT&T responded to the FTC not only by reiterating its argument that Section 5 exempts entities subject to certain regulatory regimes, but also by arguing that AT&T should be exempt from FTC scrutiny even under the FTC’s own “activity-based” test.  According to AT&T, “[a]n activity test would ask not just whether AT&T as an entity is ‘subject to’ regulation under the Communications Act, but whether its [alleged ‘throttling program’] is itself the target of” regulation by the Federal Communications Commission (“FCC”).  To support its conclusion that the program “plainly is” such a target, AT&T pointed to the FCC’s assertion of “plenary authority” over wireless data providers under Title III of the Communications Act, and section 706 of the 1996 Telecommunications Act, which “specifically authorizes the FCC to promote — and, as the D.C. Circuit has confirmed, to regulate — the development of telecommunications capabilities, including wireless data.”

AT&T separately pointed out that the FTC’s construction of the common carrier exemption will “soon be satisfied” in any event because FCC Chairman Thomas Wheeler has proposed to reclassify broadband Internet as a common carrier service under Title II of the Communications Act.  Thus, AT&T argues that the “moment [mobile] broadband is reclassified,” AT&T’s alleged “throttling program” will be an activity “subject to” the Communications Act under the FTC’s own interpretation of Section 5, and the FTC will no longer have jurisdiction over AT&T and the mobile data practices at issue.

A hearing on AT&T’s Motion to Dismiss is scheduled for March 12, 2015.