A federal appeals court on Tuesday upheld a ruling by the Federal Communications Commission to prohibit some of Verizon's tactics to retain customers.
Verizon had been contacting customers upon learning they were switching phone services to make one last appeal for their business. After three cable providers offering voice over IP services objected to the marketing tactic, the FCC ruled that the practice violated the Telecommunications Act. Verizon attempted to petition the decision, but the U.S. District Court of Appeals for the District of Columbia on Tuesday agreed with the FCC ruling and denied Verizon's petition.
Bright House Networks, Comcast, and Time Warner Cable filed a complaint with the FCC in February 2008 in objection to Verizon's "retention marketing." Once Verizon was notified it needed to hand over a customer's phone number to another provider, the company attempted to retain the customers by providing incentives for them to keep Verizon as a carrier.
This action, the three cable companies argued, violated the Telecommunications Act's restrictions on carriers' use of other carriers' proprietary information for marketing purposes. The FCC sided with the cable companies in a June 2008 decision.
"Of course the receiving carrier already knows its own customer's name and phone number," the court ruling (PDF) issued Tuesday said, "but the information that a competitor has just won the customer over, which is vital to the timing of Verizon's retention marketing, is proprietary information that the competitor discloses only because it must do so in order" for the customer to keep the same phone number.
The cable industry lauded the decision.
"Today's ruling promotes competition by protecting the rights of consumers when they make the switch to a new local telephone provider," Kyle McSlarrow, president of the National Cable and Telecommunications Association, said in a statement. "We are pleased that the court upheld the FCC's decision which permits even greater numbers of consumers to seamlessly join the millions of other Americans who now enjoy the significant savings and benefits provided by our industry's competitive digital voice services."
Verizon said it is reviewing the order.
"This looks like a loss for consumers, who now will have less information available when choosing between different competitors," said Verizon spokesperson David Fish. "By denying consumers information, the FCC's order denies them choice."
In light of the recent breach of President-elect Barack Obama's cell phone records, a senator on Monday sent a letter (PDF) to the Justice Department asking how many investigations or prosecutions the department has undertaken for violations of the Telephone Records and Privacy Protection Act.
Senate Judiciary Committee Chair Patrick Leahy (D-Vt.) sent the letter to Matthew Friedrich, acting assistant attorney general, noting that "data privacy breaches involving the sensitive phone records of ordinary Americans are occurring with greater frequency."
The Telephone Records and Privacy Protection Act, which Leahy sponsored and Congress passed in 2007, prohibits telecommunications carriers from obtaining confidential phone records by accessing customer accounts through the Internet without permission. Along with information about prosecutions and investigations, the letter asks whether the department has found the law effective in protecting Americans' privacy.
Obama's cell phone records were improperly accessed earlier this month by Verizon Wireless employees who were subsequently fired.
Verizon Communications suffered a major blow in its patent battles on Monday, when a federal court ruled that cable company Cox Communications had not infringed on its patents.
The telecommunications giant has accused Cox of violating six of its patents related to Internet telephony. But a jury for the U.S. District Court for the Eastern District of Virginia decided against Verizon on all six patents.
Verizon settled a similar suit against digital-phone service provider Vonage last year, squeezing about $117.5 million from the troubled provider of voice over Internet Protocol, or VoIP. Against Cox, it had been seeking past damages of $404 million.
Many analysts and experts believed that Verizon had been emboldened by its Vonage patent battle and was looking to go after bigger players, such as cable providers. Companies such as Cablevision, Comcast, and Time Warner Cable have been offering VoIP services for the past few years. And they've been very successful in converting millions of Verizon customers to their service.
But with this latest court decision, it looks as if Verizon may have to rethink its legal strategy. The company recently reached a deal with Comcast in which both companies agreed not to sue each other for a period of five years for any patent infringement. But there had been speculation that Verizon might target Time Warner Cable and Cablevision.
"Despite the decision, we believe our patents were infringed," Verizon said in a statement. "We will continue to innovate and protect our intellectual property."
The company also told The Wall Street Journal that it hasn't decided whether to appeal the decision.
Start-up NebuAd had hoped to build a business on monitoring broadband customers' Web browsing and delivering relevant ads. Then its partners began dropping out, its chief executive resigned, and earlier this month the company suspended its business plan.
Never let it be said that politicians are quick on the uptake. The Senate Commerce Committee nevertheless is holding a hearing on Thursday morning to investigate the NebuAd-ish privacy practices of broadband providers. (Who, remember, aren't using NebuAd.)
One noteworthy development is that Verizon -- which, we should point out, has never been a NebuAd partner -- is going to suggest a plan that amounts to a self-regulatory mechanism and no new federal laws.
Some highlights from Verizon's proposal, according to a statement from executive vice president Tom Tauke:
* Consent: "Transparency involves conspicuous, clearly explained disclosure to consumers as to what types of data are collected and for what purpose that data is being used, how that data is retained and for how long, and who is permitted access to the data... a consumer's failure to consent should mean that there is no collection and use of that consumer's information."
* Security: "Any company engaged in tracking and collecting consumer online behavioral information must have appropriate access, security, and technological controls."
* Sensitive information: Sensitive details such as visiting certain medical Web sites "should not be collected and used for online behavioral advertising unless specific, affirmative consent, and customer controls are in place to limit such use."
Violations would be punished by the Federal Trade Commission under its authority to restrict unfair or deceptive trade practices.
The price of text messaging has doubled industry-wide in the last three years, and Congress wants to know why.
Sen Herb Kohl, chair of the Antitrust Subcommittee in the Senate Judiciary Committee, sent a letter Tuesday to the four major wireless carriers--AT&T, Verizon Wireless, Sprint, and T-Mobile--asking them to explain the dramatic price increases for text messaging services.
"Some industry experts contend that these increased rates do not appear to be justified by any increases in the costs associated with text messaging services, but may instead be a reflection of a decrease in competition, and an increase in market power, among your four companies," Kohl said in the letter.
The cost of text messaging since 2005 has increased 100 percent from 10 cents to 20 cents for all four providers. Mobile operators have reaped huge profits from the increased prices, CNET reported in July.
Also, the number of major carriers in the United States has shrunk from six to four in recent years, while the remaining carriers continue to acquire their regionally based competitors, Kohl said in the letter. He noted that the four carriers combined currently serve more than 90 percent of wireless subscribers in the U.S.
"I am concerned with whether this market consolidation, and increased market power by the major carriers, has contributed to this doubling of text messaging rates over the last three years," Kohl said.
The senator from Wisconsin asked the companies to provide evidence of how their respective text messaging pricing structures differs from those of their competitors, along with evidence of what factors led to price increases. He also asked the wireless carriers to provide data on the utilization of text messaging from 2005 to 2008 and a price comparison of text messaging services to other services such as Internet access over wireless devices. Kohl asked for a response by October 6.
The similar price increases, coming at similar times, Kohl said, "is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace."
- prev
- 1
- next
