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US: Former Customers Off Limits To Verizon

FCC Rules Against Courting of Exes

by Cecilia KangThe Washington Post
June 24th, 2008

Verizon, it's over.

No more letters. No more presents. No more anything.

The federal government, speaking on behalf of former Verizon phone service customers, yesterday sent the communications company a stern message: Stop trying to woo back those consumers who have opted for a new provider. They've moved on.

Verizon had been using its proprietary data to contact former customers and try to persuade them to give the company another try. But a majority of members of the Federal Communications Commission yesterday said such practices are illegal and infringe a consumer's privacy.

"Today we carry out Congress's unambiguous mandate to protect consumer privacy," said Robert M. McDowell, a Republican commissioner. Two Democratic and two Republican commissioners voted against Chairman Kevin J. Martin, a Republican. The chairman had pushed for the agency to rule that Verizon's use of phone numbers to contact its departing customers was legal, despite complaints from cable service operators.

Verizon yesterday evening requested a stay on the FCC decision.

"FCC commissioners regularly champion consumer choice, transparency of information, and competition on a level playing field. But this decision creates less of each," said Tom Tauke, Verizon's executive vice president of public affairs.


The issue highlights the increasingly competitive environment of telecommunications services as cable companies race to gain more of the share of phone services. Some 16.5 million subscribers get phone services from cable companies. And cable firms have pushed to increase wireless services with recent investments in next-generation high-speed WiMax networks run by Sprint Nextel and Clearwire.

Land-line-phone and DSL providers, such as Verizon and AT&T, are fighting back against cable companies with their own paid video services.

Commissioner Michael J. Copps, a Democrat, criticized Verizon, saying the company offers its best deals to customers only when desperate to retain them. They should be offering customers lower prices and deals throughout their contracts, he said.

"After today's ruling, Verizon will have additional incentive to focus on making sure that all its customers are happy with their service, rather than reserving the red-carpet treatment for those who have already decided to leave but whose transfer has not yet been technically implemented," Copps said in a statement.

The decision yesterday was Martin's first defeat on a vote since he became chairman of the FCC in 2005. He said customers can benefit from Verizon's marketing tactics, through which they often are offered steep discounts to stay with the provider. Verizon had offered American Express gift cards of up to $200 to keep customers and sent overnight letters with promises of steep discounts, according to the complaint filed by cable operators.

If Verizon is stopped from those practices, cable companies should also be prevented from offering consumers discounts and deals to stay with them for video services, Martin said.

"I am therefore disappointed that the Commission would prohibit these practices, which promote and benefit consumers and particularly disappointed that they would do so and prohibit practices from only one class of companies," Martin said in a statement.

"Moreover, the cable companies engage in such practices to keep their video customers from switching to other providers," he said.

Cable companies disputed Martin's reasoning, saying they do not use confidential information, such as a user's phone number, in their marketing practices. They have pushed for the FCC to further reduce the four-day period telecommunications companies have to switch phone numbers of former customers to competitors.

"Customers want and deserve the ability to change providers if they so choose quickly and seamlessly. Shortening the porting interval would promote competition and choice for all consumers," said Kyle McSlarrow, president of the National Cable & Telecommunications Association, a trade group.

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