FCC Sides With Verizon
But the battle is far from over. The bureau also recommended that the FCC promptly issue a Notice of Proposed Rulemaking (NPRM) regarding "consumer and competitive benefits of retention marketing practices." [Ed. note: Well, that'll learn 'em.]
On Feb. 11, Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks lodged an "Accelerated Docket Complaint" with the FCC, alleging that they had lost "thousands" of cable voice customers due to Verizon's "unlawful retention marketing practices."
The complaint claimed that the telco tries to induce customers to cancel their orders and stay with the carrier while telephone number ports are still pending. While the FCC authorizes LECs to use “win-back” campaigns after the LEC executes the carrier change, it’s unlawful to enlist them before the change is made, the MSOs argued. (See MSOs Sue Verizon.)
In its recommended decision, the FCC enforcement bureau said, in part, that it was unclear whether Verizon's actions violated section 201(b) of the Communications Act, which prohibits "unjust and unreasonable" practices.
"The Commission does not yet have a consistent policy with regard to retention marketing," the FCC noted. "In the situation Verizon describes -- where two facilities-based providers are competing for the same customer -- it is not at all clear to the Bureau whether retention marketing should be allowed."
The suggested NPRM would seek comment on whether the FCC should adopt specific rules addressing certain retention tactics and practices.
Tit for tat
Last month, Verizon filed a petition of its own with the FCC, claiming that cable operators are hindering the telco from signing up video subscribers. (See Verizon Asks FCC for FiOS Help and Tit for Tat .)
Verizon earlier had argued that the cable complaint was an attempt by MSOs to stifle or block competition, and all but repeated that position in comments following Friday's FCC staff recommendation.
Two of the MSOs involved in the case said they will weigh their options.
Although cable can still plead its case to the FCC commissioners, "we believe Verizon now has the inside track in the complaint proceeding, given the staff recommendation, which appears to have the backing of Chairman Kevin Martin," the analysts at Stifel, Nicolaus & Co. Inc. wrote, in a research note. "The full Commission decision could still be challenged in court."
Depite that possibility, the firm expects that AT&T Inc. (NYSE: T), Qwest Communications International Inc. (NYSE: Q), and other incumbent telcos could begin their own retention marketing for phone subs, "assuming Verizon does not get slapped down by [the FCC] commissioners."
— Jeff Baumgartner, Site Editor, Cable Digital News