FCC Marketing Ruling Goes Against Verizon

The Federal Communications Commission has sided with cable operators who complained about Verizon's (VZ Quote - Cramer on VZ - Stock Picks) 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.

A majority of the five FCC commissioners found that Verizon's customer-retention marketing program, which uses proprietary information of other carriers that it receives in the local number porting process, is improper. The FCC ordered Verizon "immediately to cease and desist from such unlawful conduct."

Last year, Verizon began a retention program where the company would identify retail customers who were ending their service. Verizon would generate a list of all customers moving their phone number to cable providers and would then contact customers on the list and encourage them to remain with the company by offering price discounts.

The ruling rejects a recommendation made in April by the FCC's Enforcement Bureau that the Commission deny the complaint filed against Verizon by privately held Bright House Networks, Comcast (CMCSA Quote - Cramer on CMCSA - Stock Picks) and Time Warner Cable (TWC Quote - Cramer on TWC - Stock Picks). In February, the three cable providers said Verizon's practices violated existing standards. They argued that Verizon was conducting its retention marketing while the number-porting request was still pending, before the cable providers had established a service to the customer.

"Under the law, carriers are also permitted to launch 'win-back' campaigns after consumers have switched," said FCC commissioner Robert McDowell in a statement. "Today's action underscores long-held Commission policy that using proprietary customer information for marketing efforts cannot take place during the window of time when a customer's phone number is being switched to a new provider."

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