News

Lose Customers, Retain Marketing Rights

4/19/2008 2:00 AM Eastern

The Federal Communications Commission ruled April 11 that Verizon can continue to use information gleaned from cable operators who submit requests to transfer a user's number away from Verizon in order to try and retain the customer.

But in response to complaints from cable companies, FCC enforcement bureau chief Kris Anne Monteith has recommended the agency establish rules to make the allowable retention marketing practices consistent for all providers.

Comcast, Time Warner Cable and Bright House Networks filed a formal complaint against the telco in February, alleging that Verizon's practices violate a section of the Communications Act of 1934. That section prevents the use of information provided by one provider to another for a specific purpose, such as transferring a number, to be used for a different purpose, such as marketing.

Since 2007, the operators alleged, when they have submitted a request to Verizon to move the number of one of the telco's subscribers to their telephone operation, Verizon uses the information to create a lead list. Those consumers are then contacted and offered discounts or premiums — such as American Express gift cards — to get them to stay with Verizon, according to the complaint.

But Verizon successfully argued that Section 222 of the federal act is unclear whether it is protecting the company which is to provide the new service or the company receiving the information.

American Cable Association CEO Matt Polka said he was disappointed with the FCC's decision.

“Verizon has made a practice out of operating in the grey area of the law in an effort to stymie the growth of new entrants in the marketplace,” he said in a statement.

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Separately, Verizon settled a lawsuit with a New York marketing firm that had accused the telecommunications giant of fraudulently including FiOS TV subscribers not yet connected as part of the total number of viewers quoted for advertising rates.

Verizon and Digital Art Services, based in Great River, N.Y., on Long Island, notified the U.S. District Court for the Southern District of New York of the settlement in a stipulation of dismissal dated March 31.

Digital Art Services, which filed suit in October, purchased $916,000 in advertising for the FiOS TV service based on subscriber data Verizon provided through advertising rep firm Viamedia, which Digital Art Services also named in the suit.

“All parties to the litigation agreed to dismiss and release any claims they may have had arising out of the advertising agreement between Digital Art Services and Viamedia,” Verizon media relations director Bobbi Henson said in a statement. “That agreement is terminated. No money exchanged hands as a result of this settlement.”

Andrew Hayes, the lawyer representing Digital Art Services, did not respond to a request for comment.

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