Click here for Adobe Acrobat version
Click here for Microsoft Word version
This document was converted from Microsoft Word.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
Microsoft Word or Adobe Acrobat version.
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
Bright House Networks, LLC, et al., )
Complainants, ) File No. EB-08-MD-002
Verizon California, Inc., et al., )
Adopted: April 11, 2008 Released: April 11, 2008
By the Chief, Enforcement Bureau:
1. In this Recommended Decision, we recommend that the Commission deny in
part a formal complaint filed against Defendants (collectively,
"Verizon") pursuant to section 208 of the Communications Act of 1934,
as amended ("Act"). For the reasons explained below, we recommend that
the Commission deny Complainants' claims that Verizon is violating
section 222(b) of the Act (Count I) and section 222(a) of the Act
(Count II) by allegedly using, for customer retention marketing
purposes, proprietary information of other carriers that it receives
in the local number porting process. Because it is unclear whether
this conduct violates section 201(b), and for other reasons described
below, we do not reach a conclusion on Complainants' claim that this
same conduct constitutes a violation of section 201(b). We further
recommend that the Commission promptly issue a Notice of Proposed
Rulemaking ("NPRM") regarding consumer and competitive benefits of
customer retention marketing practices. Given the prevalence of
intermodal and bundled service competition, we recommend that such an
NPRM conclude that customer retention marketing practices be made
consistent across all platforms.
A. The Parties
2. Defendants are telecommunications carriers that operate as incumbent
local exchange carriers (incumbent "LECs") in a number of states.
Complainants Bright House Networks, LLC ("Bright House"), Comcast
Corporation ("Comcast"), and Time Warner Cable Inc. ("Time Warner")
(collectively, "Complainants") provide facilities-based voice services
to retail customers using Voice over Internet Protocol ("VoIP") in
competition with Verizon's local voice services. Complainants provide
those services by relying on wholesale carriers ("Competitive
Carriers") to interconnect with incumbent LECs and to provide
transmission services, local number portability ("LNP") functions, and
other functionalities. Bright House and Comcast rely on Competitive
Carriers that are affiliated with them, while Time Warner relies on
Sprint Communications Company L.P. ("Sprint").
A. Local Number Portability and Verizon's Retention Marketing Program
3. The Communications Act requires local exchange carriers to provide
number portability, i.e., the ability to retain one's phone number
when switching from one telecommunications carrier to another. Thus,
when customers decide to switch voice service from Verizon to one of
the Complainants, they may choose to retain their telephone numbers.
Such a choice triggers an inter-carrier process -- developed mainly by
the industry -- by which the customer's telephone number is "ported"
from Verizon to the Complainant's Competitive Carrier.
4. The number porting process begins with a Competitive Carrier, at the
direction of a Complainant, submitting a "Local Service Request"
("LSR") to Verizon. The LSR serves as both a request to cancel the
customer's Verizon service and a request to port the customer's
telephone number to the Competitive Carrier. Under current industry
practices, the LSR includes at least the following information: the
identity of the submitting carrier; the date and time for the
disconnection of Verizon's retail service (and, by implication, the
date and time for the initiation of Complainant's service); the name
and location of the retail customer whose service is being switched;
the Verizon retail account number; and whether the port involves one
or more numbers. Thus, the LSR informs Verizon that, at a particular
date and time, the customer's telephone number is to be ported to the
Competitive Carrier, and the customer's existing Verizon voice service
is to be disconnected, so that the Complainant served by the
Competitive Carrier may initiate retail service using the customer's
existing telephone number. After submitting the LSR to Verizon, the
Complainant or Competitive Carrier sends the Number Portability
Administration Center ("NPAC") a "create message" that is used to
enter a pending subscription record with the necessary routing data
for the number to be ported.
5. Upon receiving the LSR, Verizon confirms that it contains sufficient
information to accomplish the port, and then creates an internal
service order, which it transmits to the appropriate downstream
Operations Support Systems. The transmittal of the internal service
order initiates several work steps for Verizon. First, Verizon's
automated systems send the Complainant or Competitive Carrier a Local
Service Request Confirmation (also known as a Firm Order Confirmation)
that contains information specific to the individual request. In
addition, Verizon creates a disconnect order scheduling a retail
service disconnect on the requested due date. Moreover, Verizon
establishes a "10-digit trigger" in the switch serving the retail
customer to prevent the misrouting of certain calls in the short
interval after the number has been ported but before disconnection of
the customer's Verizon retail service has been completed. Finally,
Verizon confirms the pending subscription record that the new provider
previously created in the NPAC database. Meanwhile, the Complainant
and/or Competitive Carrier perform any necessary work on their own
networks to turn up the customer's service.
6. Beginning around the summer of 2007, Verizon started a program of
retention marketing. The program's first step is generating a
marketing "lead list" of Verizon customers. To generate the lead list,
Verizon begins with the universe of customers for whom there are
retail-service disconnect orders pending, including disconnect orders
that were prompted by the submission of an LSR. Verizon then
eliminates from the lead list all those customers who are not
switching their phone service and porting their telephone numbers from
Verizon to a facilities-based service provider, such as Complainants.
Verizon then contacts customers on the lead list and encourages them
to remain with Verizon, offering price incentives such as discounts
and American Express reward cards. Verizon conducts this marketing
while the number-porting request is still pending, i.e., before the
new provider (such as Complainants) has established service to the
7. If Verizon is successful in persuading a customer to cancel his or her
order with the new service provider, Verizon cancels the internal
service order relating to the port request, and Verizon's systems
issue a "jeopardy notice" to the provider that submitted the port
request. Verizon also puts the new provider's port request "into
conflict" by sending a conflict code to NPAC. If the new service
provider persuades the customer to switch after all, it can either
seek resolution of the conflict code or, what is much more common,
submit a new LSR.
A. The Complaint
8. On February 11, 2008, Complainants filed the Complaint, alleging that
the Verizon customer retention marketing practices described above
violate sections 222(b), 222(a), and 201(b) of the Act. Complainants
seek an order enjoining Verizon from continuing such customer
retention marketing. Complainants also seek an award of damages, but
deferred that determination to a separate, subsequent proceeding
pursuant to section 1.722(d) of the Commission's rules.
III. LEGAL ANALYSIS
A. Complainants Have Not Established a Violation of Section 222(b).
1. Verizon Does Not Receive the Proprietary Information for
"Purposes of Providing Any Telecommunications Service"
Within the Meaning of Section 222(b).
9. Section 222(b) provides that "[a] telecommunications carrier that
receives or obtains proprietary information from another carrier for
purposes of providing any telecommunications service shall use such
information only for such purpose, and shall not use such information
for its own marketing efforts." Section 222(b) thus prohibits a
telecommunications carrier from using for its own marketing efforts
any proprietary information that it receives from another carrier "for
purposes of providing any telecommunications service...." Section
222(b) does not expressly state whose provision of telecommunications
services is covered. Specifically, section 222(b) does not expressly
state whether its marketing ban applies when the receipt of
proprietary information is for purposes of (i) the receiving carrier
(here, Verizon) "providing any telecommunications service," or (ii)
the submitting carrier (here, a Competitive Carrier) "providing any
telecommunications service," or (iii) either the submitting carrier or
the receiving carrier "providing any telecommunications service."
Verizon contends that the first construction is the correct one,
arguing that section 222(b) applies only when a carrier receives
another carrier's proprietary information so that the receiving
carrier can provide a telecommunications service. Complainants
advocate the third construction, asserting that "section 222(b)
encompasses any carrier-to-carrier service regardless of which carrier
is providing it or to whom."
10. We recommend that the Commission adopt the construction advocated by
Verizon, because that construction provides the most natural,
grammatically consistent reading of the statute. Under section 222(b),
a carrier that receives proprietary information "for the purposes of
providing any telecommunications service . . . shall use such
information only for such purpose." Section 222(b) thus includes both
an affirmative requirement and a prohibition. The requirement is that
the carrier that receives information "shall use such information only
for such purpose" - that is, "for purposes of providing any
telecommunications service." If the receiving carrier is not using the
information that it "receives" to provide "any telecommunications
service," then section 222(b)'s affirmative requirement - that the
information be used only for that purpose - cannot apply. The
prohibition in the last clause of section 222(b) - which provides that
a receiving carrier "shall not use such information for its own
marketing efforts," - applies only in the same circumstance in which
the affirmative requirement applies - to the receiving carrier's
provision of telecommunications service. Section 222(b)'s marketing
ban thus applies only when a carrier receives another carrier's
proprietary information so that the receiving carrier can provide a
11. In turn, we also recommend that the Commission reject Complainants'
alternative interpretation of section 222(b), which makes the
marketing ban applicable even where the submitting carrier is the one
providing the telecommunications service. Complainants would have us
read section 222(b) to mean here that Verizon shall use the
proprietary information it receives only "for purposes of" the
Competitive Carriers' provision of service. This reading is
grammatically awkward, as it suggests that Verizon would be using the
information it receives "for purposes" of another carrier's service.
The only textual support Complainants offer for this reading of
section 222(b) is the use of the word "any" in the phrase "any
telecommunications service." The word, "any," however, addresses what
is provided, not who provides it. Moreover, Complainants have not
cited a single Commission order that has construed section 222(b) to
mean that the submitting carrier is the one who is "providing any
telecommunications service...." Indeed, although several prior orders
apply section 222(b) to customer retention practices, none of them
focuses on the specific question of statutory interpretation that
concerns us here, i.e., which carrier is the one "providing any
telecommunications service" under section 222(b). The absence of any
authority with a contrary construction of section 222(b) bolsters our
recommended conclusion that Complainants can establish a violation of
section 222(b) only if they can show that Verizon received proprietary
information for the purpose of Verizon providing a telecommunications
12. Complainants have failed to make such a showing here, because
Verizon's role in the number porting process does not constitute the
provision of a "telecommunications service" within the meaning of the
Act. Under section 153(46) of the Act, the term "telecommunications
service" means "the offering of telecommunications for a fee directly
to the public, or to such classes of users as to be effectively
available directly to the public, regardless of the facilities used."
The term "telecommunications" is defined in section 153(43) as "the
transmission, between or among points specified by the user, of
information of the user's choosing, without change in the form or
content of the information as sent and received."
13. Applying those statutory definitions here, we recommend concluding
that Verizon's role in the numbering porting process does not involve
the provision of a "telecommunications service," for two distinct
reasons. First, number porting does not involve transmission of a
customer's information; rather, it entails carrier-to-carrier
arrangements, coordinated with the NPAC, to ensure that future calls
are properly routed to the customer's chosen carrier. In other words,
although number portability requires carrier-to-carrier coordination,
it does not involve the provision of a carrier-to-carrier
"telecommunications service." By contrast, Verizon plainly provides
telecommunications service to another carrier when, for example, it
provides another carrier with unbundled network elements (UNEs),
switched access service, or resale service. Second, Verizon does not
charge a fee for its role in porting numbers.
14. Because Complainants cannot show that Verizon provides any
"telecommunications service" when it handles their Competitive
Carriers' number porting requests, they cannot show that section
222(b) applies, or was violated here. Accordingly, we recommend that
the Commission deny Complainants' claim (i.e., Count I) alleging a
violation of section 222(b).
1. Bright House and Comcast Cannot Prove a Violation of Section 222(b)
Even Under Their Own Construction of the Statute Because They Have
Not Shown That Their Affiliated Competitive Carriers are
"Telecommunications Carriers" Offering "Telecommunications Service."
15. Even assuming, arguendo, that section 222(b) refers to the submitting
carrier's provision of "telecommunications service," section 222(b)'s
marketing ban would not apply to Verizon's receipt of information from
Comcast's and Bright House's affiliated Competitive Carriers. That is
because, as explained below, we recommend that the Commission conclude
that the record lacks evidence that those Competitive Carriers provide
"telecommunications service" to Comcast and Bright House.
16. The Act defines "telecommunications service" as "the offering of
telecommunications for a fee directly to the public, or to such
classes of users as to be effectively available directly to the
public, regardless of the facilities used." This definition largely,
if not entirely, incorporates the common law rule that, to be a common
carrier, an entity must publicly "hold itself out" as offering
telecommunications indiscriminately to whatever similarly situated
customers might have use for such telecommunications.
17. Here, Bright House and Comcast have failed to show by a preponderance
of the evidence that, with respect to the telecommunications provided
to Bright House and Comcast, their affiliated Competitive Carriers
publicly hold themselves out as offering those telecommunications
indiscriminately to any and all potential customers. The record
contains no evidence that the Competitive Carriers affiliated with
Bright House and Comcast have ever provided the telecommunications at
issue to any entity other than Bright House and Comcast, respectively.
The record also lacks any evidence that the Competitive Carriers
affiliated with Bright House and Comcast have ever offered the
telecommunications at issue in any public written or oral
communication, such as a tariff, an advertisement, a brochure, a
hand-out, a press release, an industry trade-show presentation, or a
website posting. This absence of any public written or oral offering,
coupled with the absence of any non-affiliated customers, is
18. Bright House and Comcast rely heavily on the facts that their
affiliated Competitive Carriers have obtained state certificates and
interconnection agreements, arguing that those documents constitute
public declarations of their willingness to provide telecommunications
indiscriminately to all potential customers. Their arguments overlook
the black-letter proposition that an entity may be a common carrier
(i.e., an entity that provides "telecommunications service") with
respect to some forms of telecommunications and not others. The
Competitive Carriers' state certificates and interconnection
agreements may suggest that the Competitive Carriers publicly offer
some forms of telecommunications, but there is no evidence in the
record that those documents constitute a public offering of the
particular telecommunications provided by the Competitive Carriers to
Bright House and Comcast.
19. Bright House and Comcast also rely heavily on declarations filed in
this proceeding of corporate officers asserting that their Competitive
Carriers will serve all similarly situated customers indiscriminately.
This post-hoc attempt to "self-certify" their common carrier status,
though not inconsequential, falls short. Objective evidence regarding
the substance of the Competitive Carrier's conduct trumps these
belated characterizations of the Competitive Carriers' alleged
20. Thus, in sum, we recommend that the Commission conclude that the
record fails to demonstrate that, with respect to the
telecommunications provided to Bright House and Comcast, the
Competitive Carriers affiliated with Bright House and Comcast provide
"telecommunications service" under the Act. Accordingly, even if
section 222(b) referred to the submitting carrier's provision of
telecommunications service, section 222(b)'s marketing ban would not
apply to Verizon's receipt of information from Comcast's and Bright
House's affiliated Competitive Carriers.
A. Verizon's Customer Retention Marketing Practices Do Not Violate
21. Section 222(a) of the Act provides, in pertinent part, that "[e]very
telecommunications carrier has a duty to protect the confidentiality
of proprietary information of, and relating to, other
telecommunications carriers...." Complainants assert that, inherent in
the "duty to protect" the confidentiality of proprietary information
of other telecommunications carriers is the duty not to use the
proprietary information for any purpose other than the purpose for
which the proprietary information was provided. Applying that
interpretation of section 222(a) to the facts here, Complainants
contend that Verizon can use the information contained in the LSRs
only to port the customer's number and terminate the customer's
existing Verizon service, and may not use the information to market
the customer. Complainants argue, therefore, that Verizon's customer
retention marketing practices violate section 222(a).
22. We recommend that the Commission reject Complainants' construction of
section 222(a). In our view, the more natural reading of section
222(a) is that the "duty to protect" the confidentiality of
proprietary information creates only a duty not to disclose the
information to any third party. Section 222(a) simply does not address
how a carrier may "use" such information internally. Instead, the
usage issue is expressly addressed by section 222(b). Here,
Complainants do not contend that Verizon discloses the information
contained in the LSRs to any third party. Therefore, Complainants have
not shown that Verizon's customer retention marketing practices
violate section 222(a). Accordingly, we recommend denial of
Complainants' claim (i.e., Count II) under section 222(a).
A. Complainants' Claim that Verizon's Customer Retention Marketing
Practices Violate Section 201(b) of the Act, and Other Retention
Marketing Issues, Should be Addressed in a Subsequent Order and NPRM.
23. Complainants also assert, in cursory fashion, that Verizon is
violating section 201(b) of the Act because Verizon's customer
retention marketing activities are "unjust and unreasonable." The
staff order accepting this case onto the Accelerated Docket, however,
referred only to claims under section 222, not 201(b). Thus, the
section 201(b) claim was not accepted onto the Accelerated Docket, and
is not subject to the 60-day deadline for staff rulings or
recommendations in Accelerated Docket cases. That claim will be
addressed in the ordinary course in a subsequent order.
24. Although we defer addressing the claims that Verizon violated section
201(b), the Bureau recommends that the Commission examine the claims
therein further, and more broadly.
25. The Commission does not yet have a consistent policy with regard to
retention marketing. The Commission has, in the past, found certain
retention marketing practices - but not others - to violate section
222(b). Specifically, the Commission has found that a
telecommunications carrier violates section 222(b) when it "exploits
advance notice of a customer change by virtue of its status as the
underlying network-facilities or service provider to market to that
customer." By contrast, the Commission has also found that "section
222(b) is not violated if the carrier has independently learned from
its retail operations that a customer is switching to another
carrier." Thus, section 222, standing alone, may create an environment
where retention marketing to customers of non-facilities-based
competitive LECs is unlawful, while retention marketing to customers
of facilities-based providers is permitted. While this distinction may
have been of less import several years ago, the Bureau suggests that
the Commission consider whether it fairly promotes facilities-based
competition of the sort the Commission has repeatedly said is likely
to result in the greatest consumer benefits.
26. Indeed, the market for all types of communications services differs
significantly from what we saw only a few years ago. Customers have
more choices among competing facilities-based providers of several
different types of services, and, more and more, competitors are
offering bundles of services, such as voice, video, and data, and are
competing for customers across different delivery platforms. And
today, the rules defining fair competition are not equivalent among
27. For example, in the video context, customers now have opportunities to
switch to new, facilities-based providers of video services, such as
legacy telephone companies that are deploying fiber to the home. One
such provider, Verizon, has filed a petition for declaratory ruling
regarding certain cable operators' retention marketing activities. In
its petition, Verizon alleges that it has encountered a problem when
it acquires new customers for its video service. Specifically, Verizon
states that when it acquires a new video customer, it may obtain
authorization from its new customer to do two things: (1) submit a
cancellation request on behalf of its new customer to the customer's
old video provider, and (2) return any of its customer's equipment
belonging to the old video provider back to that provider. Verizon
alleges, however, that when it acts upon this authorization and
submits a cancellation request to its customer's old provider, some
old providers refuse to accept the cancellation order. As a result,
the customer must contact the old provider personally to cancel
service. If the customer does not do this promptly or does not
understand its obligation to do so, the customer may be double-billed
during the period when the new service is operational yet the old
service has not been canceled. Verizon asks the Commission to declare
that "it constitutes an unfair method of competition or an unfair
practice for an incumbent cable operator to refuse to accept its
subscriber's order to cancel video service when such a cancellation
request is communicated by a competing video provider as the
subscriber's lawful agent." Verizon argues that the conduct it
describes violates section 628(b) of the Act, which says that it is
"unlawful for a cable operator . . . to engage in unfair methods of
competition or unfair or deceptive acts or practices, the purpose or
effect of which is to hinder significantly or to prevent any
multichannel video programming distributor from providing [certain]
programming to subscribers or consumers." Verizon further argues that
this conduct thwarts the purposes of the Act as expressed in section
706's mandate to promote the deployment of advanced telecommunications
capability to all Americans, section 601's instruction to "promote
competition in cable communications," and the overall purpose of the
Act expressed in section 1.
28. In the situation Verizon describes - where two facilities-based
providers are competing for the same customer - it is not at all clear
to the Bureau whether retention marketing should be allowed, or even
encouraged as a form of vigorous competition, or whether it is a form
of anticompetitive conduct. In fact, one could argue that, when the
customer's existing provider offers to lower prices or expand services
to prevent the customer from switching providers, the customer
benefits. This type of aggressive competition to win and to keep
customers can result in lower prices for consumers, the introduction
of new services and technologies, and improved quality of service as
carriers compete in the open marketplace.
29. Many providers - such as "legacy" telephone companies, cable
operators, and new entrants - compete not on the basis of individual
services, but for bundles of services, including voice, video, and
broadband. In fact, today's competitive marketplace for bundled
services, and intermodal competition of providers of services within
the bundle, may reduce the need for regulation. It is reasonable even
to ask whether further deregulation would allow for even more vigorous
competition for customers and bring with it the associated benefits of
such competition. On the other hand, the application of our current
rules, which may serve to restrict the activities of some competitors
but not others, may provide an unfair advantage to the historically
less regulated entity. For example, in the Verizon Petition, Verizon
argues that certain cable providers refuse to respect Verizon's status
and authority as the customer's agent to request disconnection of the
customer's service. In contrast, the Complainants in the instant case
do not dispute that Verizon, as it is required by our rules, respects
the status of their affiliated competitive carriers to act as an agent
for the customer in ordering the switch and associated disconnection
of service. The Bureau strongly urges the Commission, in reviewing the
actions at issue in the instant case, to consider whether such conduct
is desirable by any provider of service; the same rules of conduct
should apply in every retention marketing situation.
30. Regulatory parity, whether by increased regulation or deregulation, is
important to ensure a level playing field, despite possible historic
differences in regulation of the various services in the bundle. When
an old provider interferes with a customer's choice to switch to a new
provider of bundled services, its interference with regard to any one
service affects the new provider's ability and likelihood of providing
all the services in the bundle. For example, in the voice context, the
Commission has noted that where a service provider has no choice but
to share proprietary information with a competitor, the receiving
carrier gets the chance to use that proprietary information for its
own marketing purposes and possibly persuade the customer not to
switch providers. A cable operator has a similar opportunity to retain
its customer if it requires the customer to call personally to cancel
service, to stay home to wait for a technician to arrive to disconnect
service, or if it requires that the customer personally return
equipment to the cable provider's offices. Yet these practices affect
not just the customer's choice of provider for a single service. In a
market of bundles they affect the customer's choice of provider for
all services. Indeed, as most of these bundles include broadband
services, practices that affect competition for any one of the
included services necessarily affect competition for broadband
services - an issue of special interest for the Commission.
31. It is not clear at all whether the conduct complained of in this case
- or in the Verizon Petition, for that matter - warrants increased
oversight and regulation. In fact, the Bureau suggests that, given the
benefits of competition, the Commission should consider whether this
conduct should be restricted at all. One thing, however, is very
clear: this type of aggressive retention marketing behavior, whether
engaged in by the incumbent telephony provider or by the cable
provider, should be treated consistently.
32. The Bureau therefore recommends that the Commission adopt a Notice of
Proposed Rulemaking to seek comment on whether the Commission should
adopt specific rules addressing certain practices, and, if so, what
form those rules should take. Whatever form they take, the Bureau
recommends that they be consistent across various service platforms.
The Commission has acted in several areas to create parity across
different platforms, and the Bureau suggests that the current market
for bundled, facilities-based service requires consistency.
33. As the Commission has stated on numerous occasions, the Act provides
ample authority to impose rules on providers of all types of services
under the Commission's jurisdiction. The Commission has authority
under section 201(b) and other sections in Title II of the Act to
prohibit unjust or unreasonable practices by common carriers. The
Commission also has authority under section 628(b) to prohibit certain
unfair methods of competition by cable operators. In addition, the
Supreme Court has affirmed the Commission's authority to impose
regulations on providers of information services, such as broadband
Internet access services. The Bureau recommends that the Commission
seek comment on the strongest source of authority to use to promulgate
any rules in this area.
34. The Bureau also recommends that the Commission seek comment on what
services and service providers should be addressed. For example,
should the Commission fashion rules for voice services, broadband
Internet access services, any video services not addressed in section
628, or any other services subject to the Commission's jurisdiction?
Finally, the Bureau recommends that the Commission seek comment on
whether it should require (as it already does in the voice context)
that any service provider accept a cancellation request from a
customer's authorized agent.
IV. Conclusion and REcommendationS
35. In sum, for all of the foregoing reasons, and pursuant to sections
4(i), 4(j), 201(b), 208, 222, and 303(r) of the Act, and sections
1.720-1.736 of the Commission's rules, we recommend that the
Commission (i) DENY Complainants' claim (i.e., Count I) that Verizon's
customer retention marketing practices violate section 222(b) of the
Act; and (ii) DENY Complainants' claim (i.e., Count II) that Verizon's
customer retention marketing practices violate section 222(a) of the
Act. Complainants' claim (i.e., Count III) that Verizon's customer
retention marketing practices violate section 201(b) of the Act will
be addressed in due course in a subsequent order. We also recommend
that the Commission promptly issue a Notice of Proposed Rulemaking
regarding customer retention marketing practices.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
Formal Complaint, File No. EB-08-MD-002 (filed Feb. 11, 2008)
47 U.S.C. S: 208. Before the Complaint was filed, the Enforcement Bureau
issued a letter order, pursuant to section 1.730 of the Commission's
rules, 47 C.F.R. S: 1.730, granting Complainants' request to file a
Complaint against Verizon alleging violations of section 222 of the Act on
the Commission's Accelerated Docket. See Complaint at Ex. T.
See, e.g., Joint Statement, File No. EB-08-MD-002 (filed Feb. 29, 2009)
("Joint Statement") at 3-4, P: 4. The Defendants are: Verizon California
Inc.; Verizon Delaware LLC; Verizon Florida LLC; Contel of the South,
Inc.; Verizon South Inc.; Verizon New England Inc.; Verizon Maryland Inc.;
Verizon New Jersey Inc.; Verizon New York Inc.; Verizon Northwest Inc.;
Verizon North Inc.; Verizon Pennsylvania Inc.; GTE Southwest Incorporated
d/b/a Verizon Southwest; Verizon Virginia Inc.; and Verizon Washington,
D.C. Inc. See, e.g., id. at 3-5, P:P: 4-5.
See, e.g., Joint Statement at 2-3, P:P: 1-3; Complaint at 3-4, P:P: 2-3.
Complainants provide their retail VoIP service through affiliated
entities. See, e.g., Joint Statement at 1-3, P:P: 1-3. For convenience, we
include those affiliates when we refer to "Complainants" herein.
See, e.g., Joint Statement at 5, P: 6.
See, e.g., Joint Statement at 6, P:P: 8-9.
See, e.g., Joint Statement at 6, P: 7.
See, e.g., 47 U.S.C. S: 251(b)(2); 47 U.S.C. S: 153(30) (providing that
"number portability" means the ability of users of telecommunications
services to retain, at the same location, existing telecommunications
numbers without impairment of quality, reliability, or convenience when
switching from one telecommunications carrier to another). See also 47
C.F.R. S:S: 52.11, 52.21-26.
See, e.g., Complaint at 8, P: 10, and at Ex. E; Answer of Verizon, File
No. EB-08-MD-002 (filed Feb. 21, 2008) ("Answer") at Exs. 22-27; In the
Matter of Telephone Number Portability, Second Report and Order, 12 FCC
Rcd 12281, 12315-16 at P:P: 55-56 (1997).
See, e.g., Joint Statement at 9, P: 20. The Competitive Carrier may
submit the LSR directly to Verizon, or through a contractor. Id.
See, e.g., Joint Statement at 9, P: 18.
See, e.g., Joint Statement at 11, P: 25.
See, e.g., Joint Statement at 9, P: 20.
The Number Portability Administration Center, or NPAC, was created to
support the implementation of local number portability by operating
regional number portability databases. See generally www.npac.com.
See, e.g., Joint Statement at 11, P: 28.
See, e.g., Joint Statement at 10, P: 23.
See, e.g., Joint Statement at 10, P: 24.
See, e.g., Joint Statement at 12, P: 29.
See, e.g., Joint Statement at 12-13, P:P: 30-31.
See, e.g., Joint Statement at 13, P: 32.
See, e.g., Joint Statement at 11-12, P: 28.
See, e.g., Joint Statement at 14-17, P:P: 35-45.
See, e.g., Joint Statement at 15, P:P: 37-38. .
See, e.g., Joint Statement at 15, P: 37; Supp. Joint Statement at 2, P: 1
(stating that Verizon's retention marketing lead list is generated from
disconnect orders, including disconnect orders that are generated as a
result of receiving LSRs). Of course, disconnect orders may stem from
circumstances other than an LSR, such as a customer move out of the local
service area. See, e.g., Reply Brief of Verizon, File No. EB-08-MD-002
(filed Mar. 14, 2008) at 1.
See, e.g., Joint Statement at 15, P: 37. Toward that end, Verizon
eliminates from the lead list customers who (i) are switching to a service
provider that is either a Verizon wholesale customer (such as a reseller
of Verizon service or a customer of Verizon's Wholesale Advantage product)
or a Verizon affiliate (e.g., Verizon Wireless), or (ii) contacted Verizon
directly to terminate service. Verizon also excludes those disconnecting
customers who are on do-not-call, do-not-solicit, do-not-mail, or
do-not-email lists. Id.
See, e.g., Joint Statement at 15-16, P:P: 39-40.
See, e.g., Joint Statement at 16, P: 41. Any marketing that Verizon
conducts after the number port and disconnect of Verizon service have
occurred is not at issue here. See, e.g., Complaint at 13-14; Answer at
See, e.g., Joint Statement at 17, P: 44.
See, e.g., Joint Statement at 17, P: 45.
47 U.S.C. S:S: 222(b), 222(a), 201(b).
Complaint at 31, P: 59 (asking the Commission to "enjoin Verizon from
continuing its retention marketing based on carrier change information").
The Commission generally labels as "retention marketing" any marketing to
a customer by the customer's existing provider that occurs while the
carrier-change/number-porting request applicable to that customer is
pending; the Commission generally labels as "winback marketing" any
marketing to a customer by the customer's former provider that occurs
after the carrier-change/number-porting request applicable to that
customer has been effectuated. See, e.g., In the Matter of
Telecommunications Carriers' Use of Customer Proprietary Network
Information and Other Customer Information, Order on Reconsideration and
Petitions for Forbearance, 14 FCC Rcd 14409, 14443-4, P: 65 (1999) ("CPNI
Reconsideration Order"). The Complaint challenges only Verizon's retention
marketing, and only Verizon's retention marketing that stems, directly or
indirectly, from the submission of an LSR. See, e.g., Complaint at 14.
Thus, this Recommended Decision applies only to such retention marketing,
and not to any winback marketing.
Complaint at 31, P: 59 (citing 47 C.F.R. S: 1.722(d)).
47 U.S.C. S: 222(b).
47 U.S.C. S: 222(b).
Answer at 39.
Complainants' Reply to Defendants' Answer and Separate Statement, File No.
EB-08-MD-001 (filed Feb. 29, 2008) ("Reply") at 32. See, e.g., Complaint
at 19-20; Reply at 33; Complainants' Supplemental Reply Brief, File No.
EB-08-MD-001 (filed Mar. 14, 2008) at 2.
47 U.S.C. S: 222(b) (emphases added).
47 U.S.C. S: 222(b) (emphasis added).
Complaint at 19-20; Reply at 32, 33: Complainants' Supplemental Reply
Brief at 2.
Policies and Rules Concerning Unauthorized Changes of Consumers Long
Distance Carriers, Second Report and Order and Further Notice of Proposed
Rulemaking, 14 FCC Rcd 1508, 1572, 1575-76, P:P: 106-111 (1998) ("1998
Slamming Order"); CPNI Reconsideration Order, 14 FCC Rcd at 14449-50, P:
77-79; In the Matter of Implementation of the Telecommunications Act of
1996: Telecommunications Carriers' Use of Customer Proprietary Network
Information and Other Customer Information, Third Report and Order and
Third Further Notice of Proposed Rulemaking, 17 FCC Rcd 14860, 14918-19,
P:P: 131-134 (2002) ("CPNI 3rd Report & Order"); Implementation of the
Subscriber Carrier Selection Changes Provisions of the Telecommunications
Act of 1996; Policies and Rules Concerning Unauthorized Changes of
Consumers' Long Distance Carriers, Third Order on Reconsideration and
Second Further Notice of Proposed Rulemaking, 18 FCC Rcd 5099, 5109-10,
P:P: 25-28 (2003) ("Third Slamming Reconsideration Order").
47 U.S.C. S: 153(46).
47 U.S.C. S: 153(43).
Further Supplemental Joint Statement, File No. EB-08-MD-002 (filed Mar.
10, 2008) at 4, P: 3.
47 U.S.C. S: 153(46). See 47 U.S.C. S: 153(43) (providing that "[t]he term
`telecommunications' means the transmission, between or among points
specified by the user, of information of the user's choosing, without
change in the form or content of the information as sent and received");
47 U.S.C. S: 153(44) (providing that "[t]he term `telecommunications
carrier' means any provider of telecommunications services").
See, e.g., Virgin Islands Telephone Corp. v. FCC, 198 F.3d 921 (D.C. Cir.
1999) (affirming the Commission's use of the "common carrier" test in
National Association of Regulatory Utility Commissioners v. FCC, 525 F.2d
630 (D.C. Cir. 1976) ("NARUC I") to help ascertain the meaning of the term
"telecommunications service" in 47 U.S.C. S: 153(46)). See also, United
States Telecom Ass'n. v. FCC, 295 F.3d 1326 (D.C. Cir. 2002); Southwestern
Bell Telephone Co. v. FCC, 19 F.3d 1475 (D.C. Cir. 1994); National
Association of Regulatory Utility Commissioners v. FCC, 533 F.2d 601 (D.C.
Cir. 1976) ("NARUC II").
We recognize that "[o]ne may be a common carrier though the nature of the
service rendered is sufficiently specialized as to be of possible use to
only a fraction of the total population." NARUC I, 525 F.2d at 608.
Nevertheless, the fact that the Competitive Carriers have, to date,
provided telecommunications only to their own affiliates has significant
probative value concerning whether the Competitive Carriers have held
themselves out publicly to all potential customers.
There apparently is one exception: Comcast's Competitive Carrier in
Pennsylvania did file a tariff regarding the telecommunications at issue
here. Comcast's Supplemental Statement, File No. EB-08-MD-002 (filed Mar.
10, 2008) at 5, 12 n.41 (and attachments referenced therein). That tariff
has yet to be approved by the Pennsylvania Public Service Commission,
however, and Comcast's 16 other Competitive Carriers lack such tariffs.
See, e.g., Comcast's Supplemental Statement at 4-5, 12 n.41, 14-15 (and
attachments referenced therein). Moreover, Comcast did not submit this
evidence with the Complaint or the Reply, as it should have. See 47 C.F.R.
S:S: 1.721(a)(5), 1.726(e); Complainants' Reply to Defendant's Answer and
Separate Statement, File No. EB-08-MD-002 (filed Feb. 29, 2008) ("Reply").
Therefore, we accord little significance to this evidence.
See generally Appropriate Framework for Broadband Access to the Internet
Over Wireline Facilities, Report and Order and Notice of Proposed
Rulemaking, 20 FCC Rcd 14853, 14901, P: 90 (2005) (subsequent history
omitted) (holding that wireline broadband providers that choose to offer
the transmission component of a wireline broadband Internet access service
as a telecommunications service may do so without filing tariffs setting
forth the rates, terms, and conditions under which they will provide that
transmission, but only if the providers "include those rates, terms, and
conditions in generally available offerings posted on their websites");
Consolidated Communications of Fort Bend Co. v. Public Utility Commission
of Texas, 497 F.Supp.2d 836, 845-46 (W.D. Tex. 2007) (holding that Sprint
provided "telecommunications services," based, in part, on the fact that
Sprint advertised its wholesale interconnection service "over the
Internet, through product brochures, and at relevant industry trade
See, e.g., Complaint at 2-4; Complaint at Ex. B, P:P: 8-27, 45-61;
Complaint at Ex. E, P:P: 2-3; Comcast's Supplemental Statement at 2-15
(and attachments referenced therein); Bright House Network's Supplemental
Statement, File No. EB-08-MD-002 (filed Mar. 10, 2008) at 6-10 (and
attachments referenced therein).
See, e.g., 47 U.S.C. S:153(44) ("A telecommunications carrier shall be
treated as a common carrier under this Act only to the extent that it is
engaged in providing telecommunications services...."); Southwestern Bell
v. FCC, 19 F.3d at 1481.
The Comcast Competitive Carriers have tariffs, but those tariffs do not
pertain to the telecommunications at issue here, so they lack probative
value for the same reasons applicable to the state certificates and
interconnection agreements. See, e.g., Comcast's Supplemental Statement at
Comcast's Supplemental Statement at 2-15 (and attachments referenced
therein); Bright House Network's Supplemental Statement at 6-10 (and
attachments referenced therein).
See generally Thibodeaux v. Executive Jet Int'l, Inc., 328 F.3d 742, 750
(5th Cir. 2003) (noting that the test for common-carrier status "is an
objective one, relying upon what the carrier actually does rather than
upon the label which the carrier attaches to its activity or the purpose
which motivates it") (internal quotation marks omitted).
47 U.S.C. S: 222(a).
See, e.g., Complaint at 28-30; Reply at 42-43.
We need not and do not reach whether the LSRs contain "proprietary
information" within the meaning of section 222(a).
Complaint at 30-31; Reply at 44-45. See 47 U.S.C. S: 201(b) (providing
that "any charge, practice, classification, or regulation that is unjust
or unreasonable is hereby declared to be unlawful").
Complaint Ex. T; see Answer at 56.
See In the Matter of Implementation of the Telecommunications Act of 1996,
Amendment of Rules Governing Procedures to Be Followed When Formal
Complaints are Filed Against Common Carriers, Second Report and Order, 13
FCC Rcd 17018 (1998).
CPNI Reconsideration Order, 14 FCC Rcd at 14450, P: 78.
Id. at 14450, P: 79
See, e.g., Promotion of Competitive Networks in Local Telecommunications
Markets, Report and Order, 2008 WL 762860 (Mar. 21, 2008) at P: 2 (noting
that 1996 Telecommunications Act was designed to eliminate barriers to
facilities-based competition); In the Matter of Unbundled Access to
Network Elements, Order on Remand, 20 FCC Rcd 2533, 2535, P: 3 (2005)
(subsequent history omitted) (adopting rules intended to "spread the
benefits of facilities-based competition to all consumers"); Review of the
Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers,
Report and Order on Remand and Further Notice of Proposed Rulemaking, 18
FCC Rcd 16978, 17025, P: 70 (2003) (noting that facilities-based
competition serves the Act's overall goals) (subsequent history omitted);
In the Matter of Performance Measurements and Standards for Unbundled
Network Elements and Interconnection, Notice of Proposed Rulemaking, 16
FCC Rcd 20641, 20644-45, P: 5 (2001) (subsequent history omitted) (stating
that "facilities-based competition, of the three methods of entry mandated
by the Act, is most likely to bring consumers the benefits of competition
in the long run"); Time Warner Wholesale Services Order, 22 FCC Rcd at
3519, P: 13 (referring to Commission's goal of promoting facilities-based
Indeed, the rules we have relied on in the transition from a monopoly
environment to a competitive environment may not apply, or even make
sense, in a vigorously competitive environment where the former monopoly
may even find itself dealing with potential "bottlenecks" caused by
incumbent providers of other services in the bundled offering.
See Petition of Verizon for Declaratory Ruling Confirming That Incumbent
Cable Companies Must Accept Subscriber Cancellation Orders When Delivered
by Competitive Multichannel Video Programming Distributors as Lawful
Agents (filed Mar. 26, 2008) ("Verizon Petition").
See Verizon Petition at 5.
Verizon Petition at 11.
47 U.S.C. S: 548(b).
47 U.S.C. S: 157 nt.
47 U.S.C. S: 521(6).
47 U.S.C. S: 151.
See, e.g., MDU Video Nonexclusivity Order at P: 19; Promotion of
Competitive Networks in Local Telecommunications Markets, WT Docket No.
99-217, FCC 08-87, Report and Order, P:P: 5, 9 (rel. Mar. 21, 2008) ("MTE
1998 Slamming Order, 14 FCC Rcd at 1572, 1575-76, P:P: 106, 109; CPNI
Reconsideration Order, 14 FCC Rcd at 14449-50, P: 77-8; CPNI 3rd Report &
Order, 17 FCC Rcd at 14918-19, P:P: 131, 134; Third Slamming
Reconsideration Order, 18 FCC Rcd at 5110, P:P: 26, 28.
Compare Exclusive Service Contracts for Provision of Video Services in
Multiple Dwelling Units and Other Real Estate Developments, Report and
Order and Further Notice of Proposed Rulemaking, 22 FCC Rcd 20235, P: 44
(2007) ("MDU Video Nonexclusivity Order"), appeal pending sub nom.
National Cable & Telecommunications Ass'n v. FCC, No. 08-1016 (D.C. Cir.)
with MTE Nonexclusivity Order; see also note 78, infra (citing four orders
establishing similar regulatory frameworks for broadband provided over
four different platforms).
47 U.S.C. S: 548(b).
See 47 U.S.C. S: 151; National Cable & Telecommunications Ass'n v. Brand X
Internet Servs., 545 U.S. 967, 976 (2005) ("Brand X") ("Information
service providers, by contrast, are not subject to mandatory
common-carrier regulation under Title II, though the Commission has
jurisdiction to impose additional regulatory obligations under its Title I
ancillary jurisdiction to regulate interstate and foreign communications .
. . .").
As to one particular type of voice service, the Commission has not
determined whether interconnected VoIP is a telecommunications service or
an information service, but has found in either event that it is subject
to the Commission's jurisdiction under Title I or also Title II. See,
e.g., Implementation of the Telecommunications Act of 1996:
Telecommunications Carrier's Use of Customer Proprietary Network
Information and Other Customer Information, Report and Order and Further
Notice of Proposed Rulemaking, 22 FCC Rcd 6927 P: 54 (2007), pet. for
review pending sub nom. National Cable & Telecommunications Ass'n v. FCC,
No. 07-1312 (D.C. Cir.).
The Commission has held that several different types of broadband Internet
access services are information services, including wireline, cable modem,
powerline, and wireless-based services. See Appropriate Regulatory
Treatment for Broadband Access to the Internet Over Wireless Networks,
Declaratory Ruling, 22 FCC Rcd 5901 (2007); Appropriate Framework for
Broadband Access to the Internet over Wireline Facilities, Report and
Order and Notice of Proposed Rulemaking, 20 FCC Rcd 14853 (2005) (Wireline
Broadband Internet Access Services Order), aff'd, Time Warner Telecomms.
Inc. v. FCC, 507 F.3d 205 (3d Cir. 2007); Inquiry Concerning High-Speed
Access to the Internet Over Cable and Other Facilities; Internet Over
Cable Declaratory Ruling; Appropriate Regulatory Treatment for Broadband
Access to the Internet Over Cable Facilities, Declaratory Ruling and
Notice of Proposed Rulemaking, 17 FCC Rcd 4798 (2002) (Cable Modem
Declaratory Ruling), aff'd, Brand X, 545 U.S. at 967; United Power Line
Council's Petition for Declaratory Ruling Regarding the Classification of
Broadband over Power Line Internet Access Service as an Information
Service, Memorandum Opinion and Order, 21 FCC Rcd 13281 (2006). These
services are subject to Commission jurisdiction. See supra note 76.
Cf. 47 C.F.R. S: 64.1120(a)(1) ("No submitting carrier shall submit a
change on the behalf of a subscriber in the subscriber's selection of a
provider of telecommunications service prior to obtaining . . .
[a]uthorization from the subscriber; and . . . [v]erification of that
authorization . . . ."); id. S: 64.1130(a) ("A telecommunications carrier
may use a written or electronically signed letter of agency to obtain
authorization . . . ."); see also Verizon Petition.
47 U.S.C. S:S: 154(i), 154(j), 201(b), 208, 222, and 303(r).
47 C.F.R. S:S: 1.720-1.736.
(Continued from previous page)
Federal Communications Commission DA 08-860
Federal Communications Commission DA 08-860