The FCC, acting with unusual speed, has taken the regulatory lash to Verizon. Last year, the company launched a "retention program" designed to keep customers who were thinking about switching from Verizon landline service to phone service from Comcast, Time Warner, or Bright House. Those customers were then contacted and offered "discounts and American Express reward cards" to stay with Verizon.

That doesn't sound so bad, except that Verizon contacted customers only after a phone number transfer request was in process from the new phone company. As FCC Republican commissioner Robert McDowell put it for the majority (PDF), "Today's action underscores long-held Commission policy that using proprietary customer information for marketing efforts cannot take place during the window of time when a customer's phone number is being switched."



You don't really want to

leave Verizon, do you?

When customers attempt to switch a phone number, a complex industry-crafted process goes on behind the scenes. As part of that process, Verizon gets tipped off that one of its customers is about to jump ship. It contacts them, offers incentives, and tries to convince them to stay on—none of which it could have done without the notification. The FCC notes that such retention marketing would have been fine if done before the customer tried to switch; "win back" programs after a switch would have been acceptable, too. But doing it in the middle of the process, using proprietary information provided to Verizon only for the purpose of smoothly switching carriers, crossed the line.

Unlike some important FCC decisions, today's was a 4-1 that didn't break down along party lines. Chairman Kevin Martin found himself the odd man out.

"Customer retention marketing is a form of aggressive competition that has the potential to benefit consumers through lower prices and expanded service offerings," he said in a statement. "Moreover, the cable companies engage in such practices to keep their video customers from switching to other providers. I am therefore disappointed that the Commission would prohibit these practices, which promote competition and benefit consumers and particularly disappointed that they would do so and prohibit practices from only one class of companies."

That statement, going as it does against the other four commissioners, won't do much to help Martin overcome the widespread perception in tech policy circles that he routinely favors the telephone companies.

Commissioner Michael Copps, a Democrat, characterized the decision differently (PDF). "There is nothing pro-consumer about allowing Verizon to wait until a customer decides to terminate service before making the company's best and final offer," he said. "After today's ruling, Verizon will have additional incentive to focus on making sure that all its customers are happy with their service, rather than reserving the red carpet treatment for those who have already decided to leave but whose transfer has not yet been technically implemented."

The complaint, filed earlier this year by the cable operators, orders Verizon to halt the specific retention program in question.