History was made late Friday as Kevin Martin was on the losing side of a vote for the first time in his tenure as Chairman of the FCC. And it wasn’t even close. The other four commissioners all voted on the other side as the FCC ruled 4-1 that Verizon Communications had violated consumer privacy laws with marketing efforts to keep customers from switching to telephone services provided by cable TV companies. The lopsided decision reversed an FCC staff finding which had favored Verizon.
Cable giants Comcast and Time Warner Cable, along with Bright House Networks (in which Time Warner Cable owns a stake) brought the original complaint against Verizon, claiming that Verizon was violating privacy laws by making pitches to customers who sought to “port” their phone numbers to another carrier. The incumbent phone company was reported to have offered customers discounts to stay with Verizon – and even American Express reward cards.
The FCC staff had ruled in favor of Verizon, but recommended that the Commission consider adopting rules on customer retention tactics which would apply to all platforms, wince phone service is now available from telephone, cable, wireless and Internet companies.
The lopsided vote by the four non-chairing Commissioners, however, backed the cable companies and ordered Verizon to essentially erect an internal wall – not letting its marketing department know when it had gotten a request to “port” a phone number.
Comcast hailed the decision as “standing up for fair plan and against anticompetitive tactics.” And Commissioner Robert McDowell insisted that the FCC majority had carried out “Congress’ unambiguous mandate to protect consumer privacy.”
Martin disagreed. “"I am concerned that today’s decision promotes regulatory arbitrage and is outcome driven. It could thwart competition, harm rural America, and frustrate regulatory parity," he said.
For its part, Verizon called the decision a “disappointing outcome” and said it “"enables cable companies to lock in TV customers by forbidding Verizon from providing information about better voice services or prices."
RBR/TVBR observation: We have to agree with Martin on this one – let the marketplace decide. Why should the FCC block Verizon from offering consumers a better deal to hold onto its customers? How is anyone’s privacy invaded by having a company they already have a business relationship with give them a pitch to try to top that of a competitor who has convinced them to go elsewhere? The consumer certainly won’t be disadvantaged by getting the two companies to compete for his/her business.