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Verizon Claims First Amendment Foul

Verizon Communications Inc. (NYSE: VZ) isn't about to let a little overturned ruling at the Federal Communications Commission (FCC) spoil its ability to win back home phone subscribers who have defected to cable.

In a petition filed Friday (June 27) with the U.S. Court of Appeals for the District of Columbia, Verizon is seeking to stay a decision handed down late last month by the FCC, which found that the telco was using illegal methods to retain phone customers. (See FCC Orders Verizon to Dial Back Win Back Tactics.)

That majority vote (FCC Chairman Kevin Martin was the lone dissenter) overturned an earlier agency Enforcement Bureau staff decision. (See FCC Sides With Verizon .) Verizon noted in the document that it was forced to seek court action after the telco attempted to seek a stay directly with the agency, but the FCC failed to act by June 26.

Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks filed the original complaint with the FCC in mid-February, holding that Verizon was trying to lure phone customers back while number ports were still pending. (See MSOs Sue Verizon.)

In its court brief, Verizon argues that it does not delay the pending cancellation process, but contacts the customer "typically by overnight letter, to encourage the customer to call Verizon." If that call comes, the telco then proceeds to relay info about service packages, pricing, and "incentives," such as gift cards. [Ed. note: You know you're doing a great job when you have to pay customers to stay.]

The telco also argues that the FCC order violates Verizon's First Amendment rights and runs afoul of section 222(b) of the Communications Act of 1996, which prevents telecom carriers from using proprietary information obtained from another carrier for its own marketing efforts. Verizon argues that its role in the local number porting (LNP) process is not a "telecommunications service" as defined by the Act.

"The resulting cease-and-desist order, which bars Verizon from engaging in – and customers from receiving – truthful speech, is contrary to the statue and violates the First Amendment," the telco claims, adding that cable operators are allowed to use "equivalent" retention marketing when a customer cancels video service.

Cable operators have countered that it's an apples and oranges argument because Verizon doesn't depend on a porting handshake with the incumbent cable operator when customers defect to FiOS TV. (See Apples & Oranges and Verizon Asks FCC for FiOS Help.)

— Jeff Baumgartner, Site Editor, Cable Digital News

Kreskin 12/5/2012 | 3:37:31 PM
re: Verizon Claims First Amendment Foul
... against Verizon?

They will win this in court.

I always get a kick out of declared false victories against an ILEC. You don't beat an ILEC until any and all legal remedies have been exhausted.

Great example - Comptel the competitive industry group for CLECs. They win some sob story with the FCC which gets turned over in court.

How many times has Comptel won over the ILEC after challenging them countless times?

The answer is: ZERO!

Why Comptel members keep paying dues for the wrong mission and focus of Comptel is amazing.

When taking on the ILEC only go from your expertise. In the case of Comptel, they have proven for years that they are inept at regulatory matters, yet they keep burning membership money.

Keep an eye on this ... Verizon will prevail.
Kreskin 12/5/2012 | 3:37:29 PM
re: Verizon Claims First Amendment Foul
Gentleman's bet.

You are underestimating the lack of integrity of our Justice system ...

When it comes to legal proceedings in the USA, you have to bet on the illogical side of things ... rarely does common sense apply to the law.
reisenstein 12/5/2012 | 3:37:29 PM
re: Verizon Claims First Amendment Foul Verizon really needs to be on a very short leash. I have thrown Verizon out of every client's office. They wanted to run Fiber in NJ in 1985 and wanted us to pay for it. The BPU turned down their request so they decided not to do it. BAD move on their part because now they can't support a crumbling copper infrastructure. They provide poor to horrible customer service and it seems to be getting worse every day. We need the BPU to force them out of the landline business in NJ.
fgoldstein 12/5/2012 | 3:37:29 PM
re: Verizon Claims First Amendment Foul Okay, I'll take you up, gentleman's bet.

Verizon's behavior in this case is egregious. It's obvious and flagrant misuse of information that they only received for a specific purpose. It's like insider trading: Is your free speech violated when an insider leaks a company secret to a friend to get them to buy or sell a stock? Of course not.

Yes, the ILECs have magical power over some courts. But McDowell's ruling is pretty clear, and has far less tortured logic than the Enforcement Bureau draft that K-Mart dictated. Verizon was basically slamming. You can't port out a number without their finding out, but the reason for their finding out is technical necessity (to put in the 10-digit trigger), not designed to give them a win-back opportunity.

If somehow Comcast had done the same thing to Verizon, K-Mart would have been all over the place screaming like a banshee. And his prejudice has gone from obvious to almost comical. So even the DC Circuit is likely to side against Martin and Verizon.
thebulk 12/5/2012 | 3:37:28 PM
re: Verizon Claims First Amendment Foul Is Verizon able to continue this practice while they are fighting it in court? Or has that been put on hold giving the FCC decision?

Either way Verizon has so much money to toss at this that they can keep it tied up in court for so long it wont matter when the decision comes down.
fgoldstein 12/5/2012 | 3:37:25 PM
re: Verizon Claims First Amendment Foul The FCC issued an injunction, effective immediately, to prevent Verizon from continuing the practice in question. I do not think that the courts have suspended that injunction, so it remains in effect unless/until a court overturns it.

Yes, I know how bad the courts have been in this area; some of their rulings, especially from the DC Circuit, have literally been written by Verizon staff and/or lobbyists and rubber-stamped by judges who clearly either didn't understand the issues or worse... But Verizon's claim is pretty far-fetched this time, and I just don't see the FCC (McDowell's majority, not Martin) losing.
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