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Verizon’s Last Minute Offers Halted by FCC

6:30 am on June 24, 2008 | Category: Business, Regulation, Telecom Services, Telephone

America’s second-largest telecom operator must not use databased contact information to make special offers to former customers who have signed up for cable phone services, the Federal Communications Commission ruled yesterday.

This verdict is a victory for Comcast, Time Warner, and Bright House Networks, three cable companies who complained that Verizon was contacting users who chose to switch, and offering them incentives to change their mind.

Republican Commissioner, Robert McDowell, was the swing vote in this case, announcing over the weekend that he would support the cable companies’ arguments.

“American consumers deserve the benefits that come from robust competition, especially in the telecommunications marketplace,” said McDowell said, explaining his position. “Carriers are free to initiate customer retention marketing campaigns before a consumer gives the order to switch from his or her current phone service provider to a new provider. Under the law, carriers are also permitted to launch ‘win-back’ campaigns after consumers have switched. 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.”

FCC Chairman Keven Martin (also a Republican) took the opposite position, however, arguing that a ban on last minute offers would ultimately hurt consumers. He also stated that the tactics Verizon is being banned from using are equal to those that cable companies already employ.

“Customer retention marketing is a form of aggressive competition that has the potential to benefit consumers through lower prices and expanded service offerings,” Martin commented. “Moreover, the cable companies engage in such practices to keep their video customers from switching to other providers. I am therefore disappointed that the commission would prohibit these practices, which promote competition and benefit consumers, and particularly disappointed that they would do so and prohibit practices from only one class of companies.”

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