FCC to slap Verizon for retention practices

Fri, 06/20/2008 - 8:40am
Brian Santo

The Federal Communications Commission (FCC) is expected to rule today that Verizon cannot continue to use current methods to identify customers switching to a rival phone provider.

If that is the decision, as several news outlets are reporting, it would cripple Verizon’s customer retention efforts. Verizon has been calling those customers to try to entice them to not cancel their service.

Several cable companies, including Comcast and Time Warner Cable, filed a formal complaint in February that noted that certain customer records are private and cannot be used for marketing purposes; the MSOs’ complaint was that Verizon is using those records for customer retention – a marketing activity – and that such misuse should be disallowed.

In May, the FCC's enforcement bureau recommended the agency dismiss the complaint and look further into whether customer retention efforts on all sides are pro- or anti-competitive. At least four of the five FCC commissioners were interested in reviewing the question, however.

The issue at hand is narrow, though Verizon is trying to widen it. Phone customers who want to switch carriers can do so through their new provider, which makes it nearly impossible for the old carrier to do anything to retain the customer.

But video customers who want to switch to a new service provider must first contact their current video provider, which makes it easy for that provider to offer a retention incentive. Verizon argues that that’s a competitive imbalance.

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