A federal appeals court has ruled against AT&T, allowing the Federal Trade Commission (FTC) to move ahead with its case against the telecommunications company that alleges AT&T throttled data speeds for millions of customers who purchased unlimited data plans.

The case began formally as an FTC clampdown on the way AT&T was marketing its unlimited data plans. That then escalated to examinations about how much power the FTC has in holding corporations to account over their practices. Though the FTC Act gives the Commission enforcement authority over “unfair or deceptive acts or practices,” it exempts “common carriers.” AT&T argued it is a common carrier, and that the FTC has no jurisdiction over it, but that notion was dismissed by the court.

The ruling was made by the Ninth US Circuit Court of Appeals and is significant because it upholds the FTC’s regulatory authority over large ISPs even when they provide separate carrier services as well. Common carrier services include mobile phone or landline services.

In a court summary published, Circuit Judge M. Margaret McKeown noted:

Permitting the FTC to oversee unfair and deceptive non-common-carriage practices of telecommunications companies has practical ramifications. New technologies have spawned new regulatory challenges...Reaffirming FTC jurisdiction over activities that fall outside of common-carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement

Federal Communications Commission (FCC) Chairman Ajit Pai, in a statement, also welcomed the result. “The Ninth Circuit’s decision...reaffirms that the Federal Trade Commission will once again be able to police Internet service providers after the Restoring Internet Freedom Order takes effect,” Pai said. “In the months and years ahead, we look forward to working closely with the FTC to ensure the protection of a free and open internet.”

“To ensure the protection of a free and open internet.”

The FTC’s lawsuit against AT&T alleges that the telecommunications company throttled speeds once customers hit particular thresholds such as 5GB within a month. According to ArsTechnica, customers who passed those thresholds experienced reduced speeds for 24 hours a day until the end of their billing cycle each month. AT&T told ArsTechnica that the court decision “does not address the merits of the case” and that it’s “reviewing opinion and continue to believe we ultimately will prevail.”

The FCC killed net neutrality rules in December. AT&T did not have any further comment.