Verizon Might Lose FCC Marketing Ruling

The Federal Communications Commission is set to rule against Verizon (VZ Quote - Cramer on VZ - Stock Picks) in a case that questions its marketing methods for retaining customers, but the telecom giant isn't going away without a fight.

The FCC is expected to side Friday with cable operators who complained about Verizon's use of customer information in order to keep subscribers from deserting its telephone service in favor of those included in many cable companies' triple-play bundles, according to sources quoted in a report by The Associated Press.

In the summer of 2007, Verizon started a retention marketing program where the company would identify retail customers who were ending their service. Verizon generated a list of all customers porting their phone number from Verizon to cable operators. Verizon would then contact customers on the list and encourage them to remain with the company, offering price discounts and American Express (AXP Quote - Cramer on AXP - Stock Picks) reward cards.

On Feb. 11, Comcast (CMCSA Quote - Cramer on CMCSA - Stock Picks), privately held Bright House Networks and Time Warner Cable (TWC Quote - Cramer on TWC - Stock Picks) filed a complaint with the FCC, alleging that Verizon's practices violated existing standards. The three cable operators complained that Verizon was conducting this retention marketing while the number-porting request was still pending, before the cable providers had established a service to the customer.

In April, the FCC's Enforcement Bureau recommended that the Commission deny the complaint filed against Verizon by Bright House Networks and Time Warner Cable, agreeing with Verizon's argument that the rule being questioned applies only "when a carrier receives another carrier's proprietary information so that the receiving carrier can provide a telecommunications service."

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