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FCC to Look Into Firms' Use of Customer Data

Kevin Martin
FCC Chairman Kevin Martin Source: Reuters

Staff at the Federal Communications Commission are expected to recommend that it review rules on how phone and cable companies can use customer information as they try to take business from each other, an FCC official said on Friday.

The FCC enforcement bureau will recommend that the commission reject a complaint by cable operators charging that Verizon Communications (NYSE: VZ) violated the agency's customer privacy rules by using customer information to prevent them from switching their phone service to cable, an agency official said, on condition of anonymity.

Beyond that, the enforcement bureau is expected to recommend that the FCC address more broadly the issue of "customer retention activities" by both phone companies and cable operators to make sure the rules apply equally to both, the official said.

"It is important that we do everything we can to maximize consumer choice and reduce rates." FCC Chairman Kevin Martin (above) said in a statement on Friday. "In today's competitive telecommunications market we must make sure that there is a level playing field for all companies to compete."

Both Verizon and phone industry leader AT&T (NYSE: T) offer high-speed Internet and video services that compete with cable, while cable providers sell phone services.

Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWX), among others, had complained to the FCC in February that Verizon was improperly using its customers' information to stop them from switching their phone service.

In a recommendation expected on Friday, the enforcement bureau will say the FCC should turn down that complaint and look further into whether customer retention efforts on all sides are pro- or anticompetitive.

Comcast responded in a statement by saying, "We are evaluating our legal options at the federal level and will continue to pursue our complaints with state public utility commissions."

Last month, Verizon countered the cable industry complaint by asking the FCC to make it easier for people to switch from cable television to video services offered by phone companies.

Verizon said consumers should be able to switch from cable as easily as they can change phone companies. Phone companies accept cancellations from rival providers, but many cable companies require consumers to submit disconnection orders themselves.

Verizon issued a statement on Friday saying that cable operators' efforts "to suppress communications would reduce consumer choice, and the bureau's recommendation to reject it is legally correct and good policy."

"As the FCC looks at the rules, it should note that consumers cannot enjoy the full benefits of competition if companies are blocked from providing information on new choices," Verizon said.