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Verizon cleared of violating privacy – for now

Mon, 04/14/2008 - 9:42am
Brian Santo

The Federal Communications Commission (FCC) cleared Verizon of violating privacy laws when it attempts to retain phone customers who want to switch to other carriers, as the cable industry has charged. But that will not be the end of the matter.

The Commission punted on another charge leveled by cable – that Verizon’s retention activities are unjust or unreasonable.

Ordinarily, if a phone subscriber wants to switch providers, the two providers automatically perform the switch. Beginning last year, Verizon began to call subscribers who were about to switch and offered them incentives to remain with Verizon.

Bright House Networks, Comcast and Time Warner Cable complained that Verizon’s actions constituted a violation of privacy, and also that the practice was unjust and unreasonable, each charge deriving from a specific section of communications law.

The FCC’s decision was that Verizon did not violate the relevant section of privacy law – as the section is written. The report says the wording of that section is unclear and recommends that the section be rewritten to be more specific.

Verizon has suggested a rewrite that would favor its position. The cable industry has suggested a rewrite that favors its position. Public advocacy groups have suggested a third rewrite.

As to whether Verizon’s retention program is unjust or unreasonable, the FCC deferred a decision on a technicality. For procedural reasons, the Commission had to address the privacy accusation immediately, but does not have to rule on the fairness charge until later.

A ruling was not possible, anyway. The report said that the FCC “does not yet have a consistent policy with regard to retention marketing,” and that the Commission should create a policy that is consistent for everyone in the communications industry.

Verizon spun the non-decision as a clear victory. “The cable industry's effort in this complaint to suppress communications would reduce consumer choice, and the bureau's recommendation to reject it is legally correct and good policy,” said Verizon EVP Tom Tauke.

“It is important that we do everything we can to maximize consumer choice and reduce rates,” said FCC Chairman Kevin Martin on Friday, in a statement that addressed the public relations issues but ignored the legal issues.

The FCC has yet to rule on a countercharge filed by Verizon against several cable companies that they are impeding the process of cable video subscribers switching to video services provided by Verizon (story here).

More Broadband Direct:

• Verizon cleared of violating privacy – for now 

• RGB Networks snags $20M in funding 

• SES Americom certifies Harmonic’s compression encoders 

• MobiTV unveils upgraded Optimized Delivery Server 

• Signiant aggregating online video for Hulu 

• Blockbuster offers $1B+ to takeover Circuit City 

• Broadband Briefs for 4/14/08

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