The Federal Communications Commission (FCC) confirmed today that a majority of the agency's Commissioners had voted to overturn an earlier staff decision to dismiss a complaint by three major MSOs alleging that Verizon Communications Inc. (NYSE: VZ) was using illegal methods to retain phone customers. (See FCC Sides With Verizon .)



News of the vote began to surface on Friday and sparked a blog-alicious debate between Tom Tauke, Verizon's EVP of public affairs, policy, and communications; and National Cable & Telecommunications Association (NCTA) president and CEO Kyle McSlarrow.

Tauke took the first swipe via the telco's policy blog, arguing in part that cable is already "fully engaged in 'win-back' marketing directed toward any customer who decides to switch to Verizon's FIOS video." (See Verizon Asks FCC for FiOS Help.) His blog headline asked the question: "Will Cable and FCC Thwart Consumer Choice?"

McSlarrow quickly shot back, holding that "when customers make a decision to leave you [Verizon], you are obligated to honor their decision to request that their phone number be transferred to their new provider, and respect their privacy by porting their current number within four days without harassing them with marketing retention calls."

Political jabs and uppercuts aside, what's clear now is that cable won this round, as detailed in the order (Word document) issued Monday by the FCC.

But first, some quick history. Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks filed a complaint with the FCC on Feb. 11, alleging that Verizon was using illegal tactics to win back phone subs. Chief among them: The MSOs claimed Verizon was inducing customers to cancel their orders and stay with the carrier while customer number ports were still pending. Although LECs are authorized to execute "win-back" campaigns after the change, it's unlawful to try it before the change is made, the MSOs argued. (See MSOs Sue Verizon.)

On Monday, the FCC formally rejected the Enforcement Bureau's recommended decision of April 11, concluding that Verizon was in violation of section 222(b) of the Communications Act "by using, for customer retention marketing purposes, proprietary information of other carriers that it receives in the local number porting process." Further, the Commission ordered the telco "to cease and desist from such unlawful conduct."

FCC Chairman Martin, long a thorn in the cable industry's side, dissented from the decision. The decision "could thwart competition, harm rural America, and frustrate regulatory parity," Martin said in a statement. "Customer retention marketing is a form of aggressive competition that has the potential to benefit consumers through lower prices and expanded service offerings."

"FCC Commissioners regularly champion consumer choice, transparency of information, and competition on a level playing field. But this decision creates less of each," Verizon's Tauke said in a statement issued Monday. "This disappointing outcome takes a step back from the market toward full competition."

The NCTA issued a statement Monday before it had seen the final decision, but noted that it is encouraging the FCC "to take another pro-consumer step by shortening the current four-day number porting interval."

— Jeff Baumgartner, Site Editor, Cable Digital News