February 11, 2009, 9:20 AM — An appeals court judge agreed with an earlier Federal Communications Commission ruling that found Verizon used illegal tactics in trying to retain phone customers who decide to switch to another service provider.
Bright House Networks, Comcast and Time Warner filed the initial complaint against Verizon, arguing that the operator runs afoul of the Telecommunications Act when it contacts customers to offer them incentives to stay rather than switch operators.
At issue is how Verizon knows the customers are going to switch. When a customer decides to cancel service and go with another provider, the two providers work together to port the user's phone number to the new operator. The Telecommunications Act specifies that any information operators share with each other in order to provide telecommunications services must be kept private and not used for marketing purposes.
While Verizon already had contact details for its customers, the information exchange tipped the carrier off that the customers had decided to switch to another service provider. Verizon argued that it was receiving that information so the other operator, not Verizon, could offer telecommunications services. Thus, the information wasn't subject to the rule set in the Telecommunications Act and could be used for marketing purposes, Verizon argued.
But the judge agreed with the earlier FCC ruling that the Act meant to protect all exchanged information between carriers in this kind of situation.
Verizon said it is reviewing the order. "This looks like a loss for consumers, who now will have less information available when choosing between different competitors," David Fish, a Verizon spokesman, said in a statement.