It’s official: Verizon retention plan was illegal
As anticipated, the Federal Communications Commission (FCC) ruled Verizon violates provisions of the Communications Act with some of its customer retention practices (story here).
The decision was in response to a formal complaint filed against Verizon in February by a number of cable providers, alleging the telco was marketing to customers after the time in which the subscribers chose to leave Verizon, but before the customers’ phone numbers were ported to the customers’ new service provider.
The complaint specifically cited the Communications Act of 1934, which prevents the use of information provided by one provider to another for a specific purpose to be used for a different purpose. In this case, the specific purpose was a formal cut-off notification, and the “different purpose” was retention marketing.
The FCC’s enforcement staff dismissed the complaint, but that decision was reversed by a 4-1 vote of commissioners, with FCC Chairman Kevin Martin the dissenter.
This is believed to be the first in which Chairman Kevin Martin was in the minority on a vote, although there have been multiple occasions when he has refrained from holding a vote when it appeared he would lose.
Commissioner Robert McDowell issued a statement that said, “Consistent with Congress's intent and Commission precedent in the long-distance context, today we carry out Congress's unambiguous mandate to protect consumer privacy in local markets as well.”
Martin also issued a statement. It reads: “I am concerned that today's decision promotes regulatory arbitrage and is outcome driven. It could thwart competition, harm rural America and frustrate regulatory parity.”
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