There You Go Again. . .

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Kyle McSlarrow

[Ed. Note: This is in response to a post on Verizon’s Policy Blog, by Tom Tauke.]

Tom, I have great respect for you but your blog this morning was a little over the top.

“Thwart consumer choice?” C’mon, Tom. This is really about Verizon trying to thwart competition . . . again.

Here is what is really going on. For the first time in history, Verizon’s entrenched incumbent position in the phone marketplace is being challenged successfully by cable competitors providing digital phone service, a relatively new marketplace development that gives consumers more choice, better value, and — according to J.D. Power and Associates — provides consumers greater satisfaction in every region of the United States. Not to put too fine a point on it: Verizon is losing customers.

Naturally, you’ll do everything you can to retain them. I get that. But, the law is very clear: Verizon can market to its heart’s content 362 days of the year to its customers. However, when customers make a decision to leave you, you are obligated to honor their decision to request that their phone number be transferred to their new provider, and respect their privacy by porting their current number within 4 days without harassing them with marketing retention calls. Congress, on a bipartisan basis, and the FCC have previously recognized that integrity in the number porting process is essential for true competition to flourish.

You are right that this is about consumer choice . . . but when consumers have made a choice, they deserve to have their choice implemented. That’s why there are rules preventing you from undermining that choice by invading their privacy.

You also call this an “intriguing” development. You refer of course to a decision that has not yet been announced (although there have been press reports). I agree that it is “intriguing.” First, this is a rare “restricted” proceeding. That means no one is supposed to speak to anyone at the FCC about this proceeding unless all parties to the complaint are present. It’s “intriguing” that someone in the FCC apparently leaked a decision that apparently goes against Verizon. And it is “intriguing” that the leak was apparently choreographed in a way that gives Verizon a shot at debating this in the press and the blogs.

One solution we should all agree on is to reduce the “porting interval” – the period of time it takes to shift a phone number from the losing provider to the winning provider, regardless of whether it is a shift from a phone provider to a cable provider or the other way around. That’s what consumers really want and deserve. And, the temptation for mischief is reduced. I invite you to work with us to ensure the FCC actually makes a decision soon to shorten the ridiculously long 4 days that consumers are forced to tolerate for simply making a choice in favor of the competition.

One other thing: you make the usual “apples to oranges” argument that because cable is engaged in win-back marketing when a cable video customer decides to switch to FIOS service, Verizon should be able to market during the porting interval for phone service. Oh, and you also throw in the same old tired refrain of “rising cable prices.” Are you really unaware that Verizon’s video service is priced about the same as cable providers? Did you miss the press release where Verizon announced perhaps the greatest video price hikes in the country last year? And, of course, what you also leave out is that a FIOS customer won’t cancel service until Verizon has already wired up the house and is ready to turn on (or has turned on) the service. So, it’s a done deal at that point. Of course the cable company may try to win back the customer. But it’s not doing it with inside information.

Intriguing? You bet.

  • DB

    It seems to me that you are both playing games with the regulatory process to maximize your advantage in the marketplace. Correct me if I’m wrong here:

    If we take a snapshot of the market, most people currently get their phone service from the telcos, and their video service from the cable providers.

    Therefore, to change their service, most voice customers will be switching from telco to cable, and most video customers from cable to telco.

    If I want to change my voice service, the FCC says I can call the cable provider, and the cable provider acts as my agent in contacting the telco and executing the switch. Obviously, this is great for the cable industry because it limits the ability of the telco to try and win me back.

    If I want to change my video service, no FCC rules allows me to contact the telco and have them act as my agent. Therefore, I must contact the cable provider directly and ask them to cancel my service, giving them an opportunity to try and change my mind (a perfectly rational thing for them to do).

    How am I doing so far?

    If this is correct, we can agree that the current regulatory framework benefits the cable industry, and disadvantages the telcos.

    Therefore, the cable industry prefers the status quo, and Verizon wants more regulation to allow them to act as my agent if I choose to leave my cable provider.

    In my opinion, you are both wrong here. Why should the FCC have rules in place that unfairly give one industry an advantage over another? Similarly, why should the answer to bad regulation be more regulation?

    Why don’t we just repeal the original rules? This would mean that if I want to switch to cable’s voice service, I would contact my telco and tell them to cancel my service and port the number. I would then call the cable provider and tell them to sign me up.

    You will probably argue that it is an enormous inconvenience for the customer to make 2 calls instead of one, but consider how the market will likely respond.

    Suddenly, nobody has an unfair advantage from the government. The cable industry has an incentive to make voice switches hassle-free. The telcos have an incentive to make video switches hassle-free. How long do you think it would take for both industries to come together and work out voluntary agreements for customer switches?

    Wouldn’t this create an incentive for you to work together to benefit consumers instead of lobbying the FCC to protect regulatory advantages?

  • http://policyblog.verizon.com Tom Tauke

    Kyle, I respect you, too; you are one of the “good guys” in the policy arena. I won’t suggest your comments are “a little over the top,” but I will assert that they do not reflect the real world of voice and video competition.

    The companies you represent and Verizon are battling to be the communications provider for a household. In most cases, your companies are trying to sign up video customers for voice service before Verizon can sign up our voice customers for video service. This is real competition. It’s good for consumers.

    Of course, it’s easier to convert cable networks into facilities that can provide voice services than it is to take a voice network and equip it for video. And, in Verizon’s case, we’re replacing our network with fiber to the home. As a result, our cable competitors have had a head start in being the “full service” provider to a customer. That’s all part of the development of competitive markets. Again, it’s good for consumers.

    What isn’t fair or right or good for consumers is to apply rules designed a decade ago for Verizon’s wholesale customers – companies who were providing retail voice service using our network – to cable companies who use their own networks to serve customers. What’s not fair or right is for the FCC to:
    1) tell Verizon that if we win a customer from cable that we must tell that customer we cannot notify the cable company on their behalf, they must do so; and then allow the cable companies to do retention marketing to those customers when they call to disconnect their service, and at the same time
    2) permit cable companies to have the right to notify Verizon that a customer is terminating service and then prohibit Verizon from contacting its own customer to make a competing offer.

    Bottom line: cable is happy forcing customers to call to disconnect their cable service and taking advantage of that opportunity to market. Meanwhile, you are trying to get the FCC to prohibit Verizon from reaching out to its customers with overnight mailings after your companies notify us that our customer wishes to change service.

    I understand why your companies want to preserve the advantage they have. I suppose most industries would just keep quiet and enjoy the regulatory edge. So I do have a certain admiration for the chutzpah demonstrated by cable’s effort to expand this advantage through the closed complaint process at the FCC.

    But when the process is going to deny customers the information they need to make an informed choice and it’s going to further tilt the playing field in favor of incumbent cable providers, it’s not fair or right.

    BTW: Kyle – The assertion about number porting is a dog that won’t hunt. The cable companies have stipulated in the proceeding that “Verizon does not have a practice of delaying the porting of numbers in order to engage in” retention marketing. But we’re always happy to work with you to improve the process.

  • Ken

    You guys don’t get it, do you? The only reason there’s this privacy requirement is for number portability, which requires active cooperation between the old and new phone provider.

    There is nothing comparable in other services like video or internet. And why in the world would you call to cancel your old TV or internet service until you were sure your new service was up and running? At which point you should be immune to last-ditch retention marketing.

    The only reason I can think of why you would call your current provider before your new provider’s service was installed, would be to coax a counter offer out of your current provider.

    It’s apples and oranges. Get over it.

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  • Ken

    . . . and further, I’m so sick of Verizon guys whining about how tough they have it. You have market cap and revenues that dwarf every single cable operator, including Comcast, and will no doubt dwarf the entire cable industry after you gobble up Alltel and probably Qwest. And the FCC rewards you for totally disregarding the 7/07 separable security deadline . . . by giving you a year’s extension with no penalties. And you’re whining because cable points out that you’re misusing customer information that was intended for a narrow technical purpose? Cry me a river . . .

  • http://www.cabletechtalk.com Kyle McSlarrow

    Tom, I hear you. We both agree that the competition that is occurring in the marketplace today is bringing real innovation and value to consumers. But we all need to play by the same rules, and Verizon’s decision to resort to self-help in ignoring long-settled laws that exist to protect consumer privacy and ensure fair competition is simply the wrong approach, and ultimately, chooses to ignore important differences between voice and video services.

    It’s hard to deny the fact that consumers generally want to keep their phone number when they change their wireline voice service, so as a competitor, until I get that number ported, consumers aren’t able to try the competitive voice service. As for dogs that will hunt, it seems to me that you’re continuing to bark up the wrong tree. We have no problem with companies marketing to win customers back after the porting process is complete. That’s why a shorter porting interval is not only in the best interest of consumers, but will also help is get us at least a good bit closer to the “parity” that you and I both seek.

    Parity doesn’t (or, shouldn’t) work the other way, and it is easy to explain why with a little thought experiment: imagine my suggesting that we achieve parity by insisting that when a customer wants to change video providers, that they have to wait 4 days while we engaged in “marketing retention.” I suspect you would object because you prefer the current regime, where Verizon can install a customer’s video service immediately after they order it. Not so for phone. Customers need that phone number from their current provider. And, absent a rule, phone companies would not port that number. So, I’m all for moving in a direction where different services have less regulation across the board. But we can’t ignore the obvious, and limited unique difference when it comes to allowing a customer to keep their phone numbers.

    Have a great weekend. Kyle

  • http://policyblog.verizon.com Tom Tauke

    Kyle –

    I’m impressed that you’re on the job late on Friday afternoon in the summer. Perhaps we should get away from the computers and find an appropriate establishment where we could share our views in person.

    First, cable’s assertion in this complaint is not based on long-standing rules. Your companies want to change the long-standing rules and be treated like telecommunications carriers in this specific instance, but they don’t want to be telecommunications carriers when it comes to all the other obligations and rules imposed on telecom carriers. That really gets to the heart of the issue. Under the statute, you can’t get the benefits without the obligations. That seems fair to me.

    Second, I concur that there are differences between voice and video. That doesn’t mean that customers should be denied the opportunity to make an informed choice.
    Cable is trying to change current practice. Our current practice — and that of other telecom carriers — of communicating with our customers when we receive notice that they are terminating voice services allows customers to get information from both us and the cable company before making a final decision to switch carriers. Your companies’ current practice of requiring consumers to call their cable company in order to terminate service (rather than permitting their newly chosen carrier to do it, as occurs when a cable company wins a voice customer) gives your companies the opportunity to market to that customer and ensure that the customer has information from both carriers before making a final decision to switch. If the cable companies win this complaint, this balance that gives both cable and telcos the chance to provide information to customers will change. Consumers will be the losers.

    The FCC already has extensive rules relating to number porting. And your own companies indicate that we are playing by the rules and are not using the porting process to do retention marketing. As noted before, we’ll work with you on improving the process if you see that as a problem.

    The question policymakers and consumers should be asking you is: Are you willing to give consumers the opportunity to weigh the best offers from both sides before they switch carriers? This complaint says you’re not.

  • http://www.cabletechtalk.com Kyle McSlarrow

    Tom, I just put the kids down after reading them a fairy tale. I should have waited. Could have read them your last post.

    Last time I checked, the phone number is pretty essential to phone service. And for reasons that I’ve stated before, any competitor can’t start providing voice service until that number is ported. If you want to talk about other regs (and benefits) that apply to your service, we can start another post, but the issue here is that there is no way of providing real competition unless a competitor can get access to the phone number. Period.

    As for consumer choice, I’m all for it. But doesn’t informed choice mean that the customer at least gets the chance to try the competing service he or she asked for? Have at ’em the first day after the port is completed, but how does the “Verizon rule” allow the customer to experience a competitive service that J.D. Power and Associates says provides greater consumer satisfaction nationwide?.

    Your last question is puzzling and worth quoting in full. You say: “The question policymakers and consumers should be asking you is: Are you willing to give consumers the opportunity to weigh the best offers from both sides before they switch carriers? This complaint says you’re not.”

    They haven’t weighed best offers? In the real world, a typical Verizon customer has often had Verizon (and predecessor) service up to decades and had no choice about the matter. And now they at long last have a chance to switch to a competitive provider. They know full well what they get from your service . . . and now that they have already made the decision to switch, at a time when all they need is for Verizon to perform the simple task of allowing them the courtesy of taking their phone number with them, that’s the big moment when they have to weigh best offers? How about all the days and years before that? Or, all the days and years after? I’m fine with all of that.

    As to your offer to get away from the computers and continue this discussion, I’m all in favor of it. At this point, I think you and I are simply amusing the folks who work with us while they watch the two old guys argue in the blogosphere.

  • http://www.MichaelsInsight.com Michael Willner

    NO! Resist going back to the old Washington ways!! Don’t settle this in a beltway gin mill. This is the 21st Century and we all want a front row seat!!

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  • Wayne

    Two large businesses each with great ambition attempting to get the government to change the rules to their favor. Not a gin mill but it is business as usual. And both with great spin as appropriate in this political season.

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