CU Takes FCC’s Side vs. Verizon
Consumers Union agrees with Federal Communications Commission demand that Verizon Communications stop retention-marketing practices.
By John Eggerton -- Broadcasting & Cable, 7/8/2008 11:32:00 AM MT
While Verizon Communications has argued that the Federal Communications Commission's demand that it stop its retention-marketing practices would hurt consumers, the Consumers Union disagreed and weighed in on the side of the FCC and cable operators.
In an amicus brief to the Federal Appeals Court for the D.C. Circuit, the CU said that while Verizon's marketing program -- in the form of discounts, gift cards and information about alternatives -- "may afford some short-term savings," it does so "at the expense of the competitive process in general."
Verizon June 30 had asked the court to stay the FCC’s order that it stop using subscriber information supplied by cable companies to try to keep those customers from switching to cable phone service.
That came after the FCC commissioners voted to reverse an earlier staff decision that had found that Verizon's retention-marketing efforts passed muster.
In its request to the court, Verizon said providing customers with competitive prices and incentives was information that could benefit them. It also offered up analysis that it said showed that the "consumer-welfare benefit" the FCC was barring by blocking the practice added up to $75 million over five years.
When a customer agrees to switch from Verizon to a competing phone service, the cable company makes the request to Verizon. Verizon has been using that information to try to keep its customers.
"The competitive process can hardly be expected to function to the benefit of consumers if a carrier may use the advance notice that its competitors are forced to provide when they obtain a new customer as a means of blocking the carrier change," the CU said in its brief.
The CU was just one of the many petitioners to defend the FCC's decision. In its own defense, the FCC's brief to the court echoed that of the CU, saying, "The long-run public interest in developing robust competition in the telephone market -- which will benefit all consumers -- outweighs immediate benefits offered to individual customers" by Verizon.
Also weighing in were Bright House Networks, Comcast and Time Warner Cable, which had complained about Verizon's marketing efforts.
