Today the FCC proposes to fine AT&T US$100 million for its practice of selling its customers “unlimited” data plans which it subsequently limited by throttling back data speeds as much as 90% (sometimes, to dial-up levels) without being clear about the extent of the throttling. This proposed fine is based upon the FCC’s “Open Internet Transparency Rule,” which says that companies must communicate clearly about the terms on which they make Internet access available. This is related to, but a little different from, the very controversial “Net Neutrality” rules. The Net Neutrality rules are substantive; the Open Internet Transparency Rule is about clarity (or lack thereof) with which communications companies communicate with their customers and its related concepts: fraud and misrepresentation.
The proposal provides some information about AT&T’s practices, but undoubtedly the story is more complex and we do not currently have all the information. But if we stay at the surface level, the FCC says that AT&T offered to sell a Camry that could run forever and, when it suited AT&T, AT&T remotely shut down five of the six engine cylinders and said, well, “the car can still run forever.” And it is true. The problem is that in reality no one will drive a Camry that can go only 20 miles per hour. So, is that a misrepresentation or not?
Two Republican Commissioners dissented, complaining that the Open Internet Transparency Rule is not very specific, and therefore if the Camry is still capable of running forever, the representations made by AT&T are in fact true, even if the car doesn’t really work for its intended purpose. As lawyers, we have some sympathy for this argument, as it is logic-based. But is it good enough?
Assuming AT&T’s statements are factually accurate, does that make them true? It would seem that we decided that question 50 or more years ago when the legal system dealt with “fitness for purpose” and “implied warranty” questions. And what we concluded was that accurate information about products is not enough when, ultimately, the product was not actually fit for the purpose for which it was sold. In other words, you don’t make a bad product good by describing parts of it accurately.
A broader, more philosophical objection to the dissents is that the main argument against regulation in the communications sector for 15 years has been that highly specific and prescriptive ex ante (before the fact) regulation is outdated; it is more socially useful to develop broad general rules and to enforce them ex post (after the fact). Indeed, that idea is the core of the current Republican ideology against government regulations. And yet here the FCC is applying fairly general rules (requiring transparency) to what appears to be a fairly extreme set of facts. And now the Republican argument is that you shouldn’t establish specific binding ex ante rules, and you can’t enforce fairly general rules because they aren’t specific enough.
If we are right in this analysis, the dissents are not just cynical, they are unprincipled.