Verizon Could Take FCC to Court over Order on Retention Marketing Practices

Verizon is considering an appeal, a spokesman for the Bell said. “If a majority falls for cable’s absurd request to block consumers from receiving information on available choices, we certainly wouldn’t rule that out,” he said.

Commissioner Robert McDowell was believed to be the swing vote against Martin, with Commissioners Jonathan Adelstein and Michael Copps also disagreeing with the chairman, the officials said. Only Commissioner Deborah Tate initially supported Martin, they said. An FCC spokesman declined to comment.

As of late Friday, Tate hadn’t made up her mind, and still could vote against Martin, FCC officials said. Copps, Adelstein and McDowell have told colleagues they think Verizon broke section 222(b) of the 1996 Telecom Act by using customer material from the cable operators to try to woo departing phone subscribers, they said. Commissioners are discussing whether to seek comment on whether cable operators are defined as carriers in a rulemaking notice on customer retention marketing practices that Martin circulated June 2, said the officials. But FCC members might not vote on the notice at the same time that they vote on the Enforcement Bureau order against Verizon, since there’s no deadline for the notice to go out, they said.

The FCC’s two Democrats and McDowell, a Republican, concluded the complaint demonstrated that Verizon broke rules when it used subscriber information from the cable operators to try to win back phone customers departing the telco to those companies, said the officials. Verizon has contended it broke no rules when pitching discounts and other offers to try to lure back departing customers before switching their phone numbers to the cable operators. An FCC official cautioned that a vote to uphold the cable companies’ complaint against Verizon could lead to more regulation of the telecom industry.

Earlier this week, the Enforcement Bureau began revising Martin’s May 30 order to reverse course and find Verizon broke some rules, said four commission officials. Commissioners face a looming deadline to uphold or deny the complaint from Bright House Networks, Comcast and Time Warner Cable, they said. At around 6 p.m. Thursday night, a revised order circulated, said FCC officials. Commissioners still were discussing the order Friday afternoon and a final vote hadn’t occurred, said officials. But members faced a deadline to vote by the end of Friday, officials have said. But some FCC and industry officials think the deadline isn’t until Monday at 11:59 p.m., because the time by which the FCC had to act after getting the cable operators’ complaint expired Saturday. When deadlines fall on a weekend, the FCC and other agencies sometimes extend them to the next business day, said a commission official.

Even without an order to discuss, Verizon and cable officials responded to press reports on blogs, taking last- minute jabs and airing conspiracy theories. “While the FCC’s decisions are often associated with a bit of intra-agency intrigue, this one is really puzzling,” Verizon’s Tom Tauke, executive vice president of public affairs, policy and communications, said in the first of two blog posts Friday. In a written statement late Thursday, Tauke said commissioners “consistently” seek to promote competition and customer choice among telecom services amid rising cable rates. “It’s hard to believe a majority of the FCC believes consumers have real choice if people only get information from the cable company. Saying that consumers cannot be provided full information about competing options and prices would harm competition and create an unlevel playing field.”

Tauke’s comments are “a little over the top,” NCTA President Kyle McSlarrow responded on the NCTA blog. “Here is what is really going on. For the first time in history, Verizon’s entrenched incumbent position in the phone marketplace is being challenged successfully by cable competitors providing digital phone service.” Rejecting Verizon’s marketing practices is to consumers’ benefit, he said: “When consumers have made a choice, they deserve to have their choice implemented… That’s why there are rules preventing [Verizon] from undermining that choice by invading their privacy.”

Later in the afternoon, Tauke fired back, saying the expected order would not be “fair or right.” Verizon can’t cancel new FiOS customers’ cable service on their behalf, which lets cable companies do retention marketing when the customers call to disconnect, he said. Under the expected ruling, the FCC would give cable companies “the right to notify Verizon that a customer is terminating service,” but bar Verizon “from contacting its own customer to make a competing offer,” he said.

It’s odd the FCC would leak news about a restricted proceeding, unless there was an ulterior motive, McSlarrow noted. “No one is supposed to speak to anyone at the FCC about this proceeding unless all parties to the complaint are present,” he said. The leak appears to be “choreographed in a way that gives Verizon a shot at debating this in the press and the blogs,” he said.

Cable operators’ complaint to the FCC against Verizon is “justified,” said a spokeswoman for Bright House Networks, one of the complainants. “We hope that the commission reaches the same conclusion,” she added. Officials at Comcast and Time Warner Cable, the other complainants, didn’t respond to requests for comment. But the NCTA noted Friday that President Kyle McSlarrow has criticized the Enforcement Bureau’s recommendation (CD April 15 p3) that commissioners find Verizon broke no rules.