(CN) - Verizon violates federal law by using competitors' proprietary information to make a last plea to keep customers from switching service providers, the D.C. Circuit ruled on Tuesday.
When Verizon California was about to lose a customer, the new service provider often initiates a "local service request" (LSR), which signals that the customer wants to "port" his or her old number to the new carrier.
House Networks, Comcast and Time Warner Cable challenged Verizon California's practice of using the LSR information to contact defecting customers and offer them incentives to stay with Verizon.
The Federal Communications Commission agreed that the marketing tactic violates the Telecommunications Act, which bars carriers from using other carriers' proprietary information for marketing purposes.
The FCC ordered Verizon to stop using this strategy.
Verizon objected, claiming the agency misinterpreted the law.
The FCC and Verizon disputed the interpretation of the phrase "for purposes of providing any telecommunications service." The FCC took a broad view, claiming the law applies to both Verizon and competitors who submit LSRs. Verizon said the law is restricted to situations where the receiving carrier - in this case, Verizon - is the one providing the service.
The D.C. Circuit noted that context is crucial, and the FCC's concern "is really to assure the losing carrier's neutral role in the execution process (here, execution of porting)."
The law ensures that "Verizon's incentive on receiving an LSR is unambiguously to complete it promptly and effectively," Judge Williams wrote.
The court rejected Verizon's First Amendment claim and denied its petition for review.
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