Jun 22, 2017

How the FCC's $100 million fine against AT&T faded away

Alan Diaz / AP

Just over two years ago, the FCC proposed a $100 million fine against AT&T for misleading consumers, the largest penalty the agency had ever recommended. Now that headline-grabbing fine appears all but dead.

Why it matters: If finalized, the fine would have set significant precedent for the size of FCC enforcement actions and the treatment of internet service providers' promises about broadband speed and access. But the agency's new leader — Republican Ajit Pai — is likely to avoid pursuing the fine, as he's long contended it was "drawn out of thin air" and should never have been proposed in the first place.

The setup: When AT&T discontinued its unlimited wireless data plans for new customers in 2010, it said millions of the people with the plans could keep them. But it later drastically slowed down the speed at which they could access that data once they'd hit a certain cap. The FCC said that AT&T hadn't properly disclosed that practice, and proposed in June of 2015 that the carrier face a $100 million fine.

The counterpoint: AT&T said its conduct was legal. "We have been fully transparent with our customers, providing notice in multiple ways and going well beyond the FCC's disclosure requirements," the company said at the time. It later filed a formal response to the agency's allegations.

Since then — crickets from the FCC.

Why it happened: Former Democratic Chairman Tom Wheeler could have acted on the fine proposal by reaching a settlement with AT&T or bringing an order on the case to a vote. Neither happened. Wheeler indicated to Axios that the decision to proceed with the fine would have started with the Enforcement Bureau at the agency, led at the time by Travis LeBlanc.

"The way I believed in managing, and I think that the essence of good management, is to get good smart people and give them responsibility and tell them to exercise that," Wheeler said.

In addition, the Federal Trade Commission has also been locked in unresolved litigation related to this particular practice at AT&T — a case with big implications for the agency's jurisdiction.

All but dead? Pai just announced a new enforcement chief, Rosemary Harold. "I expect that this will not be put to a vote and that the chairman will just not move it or will find some mechanism at the bureau level to dismiss it," LeBlanc told Axios.

The FCC declined to comment on a pending enforcement action. A spokesman for AT&T declined to comment beyond the company's previous statement.

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