AT&T: FCC Fine Is 'Indefensible,' 'Coercion'

AT&T has come out swinging at the FCC over the $100 million proposed fine for allegedly violating the transparency rule in FCC's 2010 network neutrality order, calling it "unprecedented and indefensible" — and in part unconstitutional — and saying a court will throw it out if it is imposed. AT&T wants the FCC to withdraw the proposed fine.

The FCC proposed the fine last month, and this is AT&T's chance to respond before the FCC decides whether or not to rule the apparent liability and actual one.

Signaling that slowing broadband speeds is not an acceptable business model, the FCC’s Enforcement Bureau on June 17 proposed fining AT&T Mobile $100 million over its maximum bit rate approach to what AT&T says is a small minority of unlimited plan users whose heavy use could impair others’ online experience.

Swallowing that fine was not one of the conditions on the AT&T/DirecTV deal, which was obvious from AT&T's response Monday to the FCC notice of apparent liability (NAL). It called the FCC decision arbitrary, excessive and beyond its statutory authority.

"The NAL is both unprecedented and indefensible," AT&T said in a filing at the FCC. It said the NAL shows a "startling" lack of authority or reasoned decisionmaking. Far from the moderate fine the FCC billed, and a fine AT&T said appeared plucked out of the air, it would be a "massive forfeiture," the company said, for conduct repeatedly endorsed by the commission.

AT&T said that the FCC's suggestion that consumers were harmed is bogus, and combined with the size of the fine, are meant to coerce a settlement based on a prejudgment of AT&T's liability.

The FCC, said AT&T, was "abandoning any pretext" of being an impartial arbiter. "It is absurd to suggest that AT&T intended to or actually did mislead the relevant Unlimited Data Plan customers. Those customers were repeatedly advised of AT&T’s congestion management practices, and, for nearly four years, they chose to keep their service," AT&T said.

AT&T took issue with the FCC's claim the company willfully mislead customers. "While the NAL speaks of AT&T’s 'culpability' and 'clear knowledge' that it was misleading customers," the company told the commission, "the evidence is to the contrary. AT&T made multiple disclosures by email, bill message, text message, and online posting, precisely so that potentially affected customers would be informed about the MBR policy. And, for its part, the Commission has been well aware of AT&T’s MBR website disclosures since 2011. Yet, until recently, it offered no hint that it viewed them as deficient in any respect."

AT&T said the FCC does not have the authority to require it to allow customers to evade early termination fees or stop using the term "unlimited" or to bear the "scarlet letter" of having to inform its customers that it violated the transparency rule, which it called a violation of the First Amendment.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.