Cable companies cry foul on Verizon
The battle between phone and cable companies is getting uglier.
Three cable giants are accusing Verizon of illegally using proprietary information it obtains as a wholesale telecom provider to retain customers who had planned to switch to the cable providers for their phone service.
Since last June, Verizon has deployed the tactic to hold on to "thousands" of subscribers in the Northeast and Mid-Atlantic, as well as parts of the Midwest, South, Texas and California, allege Comcast, Time Warner and Bright House. In a recent Federal Communications Commission filing, the companies asked the agency to crack down on the practice.
Verizon says it's doing nothing illegal and its marketing is good for consumers.
Phone and cable companies are locked in a bruising battle to serve customers with bundles of voice, TV and broadband services. Cable companies have signed up about 14 million phone customers, luring most with Voice over Internet Protocol services, research firm In-Stat says. Verizon lost 1.6 million phone lines in the second half of 2007.
Meanwhile, Verizon has signed up about 1 million subscribers for its FiOS video service.
The dispute stems from Verizon's control of the phone network. A cable company that wrests a phone customer from Verizon must contact the telecom company to transfer the customer's phone number. Most customers want to keep their phone numbers when they switch carriers.
Such number transfers can take several days. During that period, Verizon has illegally used information about the transfer to entice subscribers to stay by offering service discounts and gift cards of $50 to $200, the cable companies say.
The companies cite a federal law that prohibits a phone carrier that gets "proprietary information" from another carrier in order to provide phone service from using it "for its own marketing efforts." That information "is confidential between companies," says Comcast's Sena Fitzmaurice.
The cable companies argue Verizon can make its pitch only if the customer calls to cancel service. Otherwise, it must wait until after the service is switched over.
But Verizon says constraints on the use of proprietary information were not meant to apply to phone-number transfers. In those cases, it says, the cable company is acting on the customer's behalf - that's how Verizon is notified to cancel the service. If it can't respond and try to retain the customer, cable would have an unfair advantage, Verizon says. Why? A cable customer who switches to Verizon for TV must call to cancel cable service, giving the cable company a chance to try to keep its customer.
Verizon's David Fish says the cable companies are trying to "block consumer choice."
The cable giants say Verizon has the unfair edge because they don't get a chance to outdo the carrier's pitch with a better offer until after a customer has nixed its new service.
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