FCC, Defying Martin, Cracks Down on Verizon Marketing

The U.S. Federal Communications Commission, rejecting the recommendation of its own Enforcement Bureau, has blocked Verizon Communications marketing efforts aimed at keeping customers from switching to a cable operator for their phone service.

The FCC voted Friday to stop Verizon from using number-porting information to target special last-minute marketing efforts at customers who are trying to switch from traditional landlines to VoIP (Voice over Internet Protocol) services. Comcast, Time Warner Cable and Bright House Networks had complained to the agency, asking for an injunction against Verizon. They also asked for damages against Verizon, but deferred that decision to a later proceeding.

With the decision, the five-member agency went against the wishes of its chairman, Kevin Martin, who said on Monday that the members should have followed the Enforcement Bureau's recommendation.

Cable operators have made significant inroads against carriers in the U.S. market for fixed-line phone service. Selling bundles of video, broadband data and VoIP, the cable companies have convinced many customers to give up their traditional phone service. Along with households that have dropped their landlines to rely entirely on mobile phones, this shift has contributed to a decline in traditional phone users, once the carriers' bread and butter.

The complaint involved Verizon's actions during the period after its customers asked for their phone numbers to be ported to a cable company's VoIP service and when the porting would actually take place. Verizon used information that cable companies had to provide for the switch, such as name, address and Verizon account number, to deliver marketing pitches aimed at retaining those customers, the FCC said. The carrier immediately contacted the departing subscribers via e-mail, express mail or automated phone messages, and offered discounts and other incentives. The agency objected to Verizon's using proprietary customer information for this purpose.

"This entire situation arises only because incumbents control the technical process -- which still takes inexplicably up to four days, in distinct contrast to the switch between wireless carriers, which takes as little as four hours -- that allows a customer to retain his or her phone number while switching to a competitive carrier," Commissioner Michael Copps wrote in an individual statement on the case. The Friday order will help ensure Verizon treats all of its customers well, not just those that are about to leave, he wrote.

In his dissent, Martin said cable operators used similar marketing techniques and that customer-retention marketing benefits consumers through lower prices. He also slammed the other commissioners for treating Bright House and Comcast as telecommunications carriers in some respects and not others. Both Martin and Copps decried the ongoing uncertainty about treatment of the two types of service providers as they increasingly intrude on each others' businesses.

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