FCC to uphold cable complaint against Verizon

By Peter Kaplan

WASHINGTON (Reuters) - The Federal Communications Commission is expected to vote Friday to bar Verizon Communications Inc from marketing to customers to talk them out of a decision to switch their phone service to cable, a source at the agency said on Thursday.

The FCC will vote to side with cable operators who filed a complaint accusing Verizon of misusing customer information in their marketing efforts to dissuade customers from switching, the FCC source said.

The expected vote would be over the objections of FCC Chairman Kevin Martin and would uphold a complaint filed in February by Comcast Corp, Time Warner Cable Inc and others.

In May, the FCC's enforcement bureau recommended the agency dismiss the complaint and look further into whether customer retention efforts on all sides are pro- or anti-competitive.

But a majority of the FCC's five commissioners disagree. Voting to support the complaint are the FCC's two Democratic commissioners, as well as Republican commissioner Robert McDowell, the source said.

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

At issue in the complaint are cases where Verizon has been notified that a customer intends to switch service, and whether the company can subsequently undertake marketing efforts to try to keep them as customers.

Earlier this year 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.

Asked about the expected vote, Verizon Executive Vice President Tom Tauke said it is "hard to believe a majority of the FCC believes consumers have real choice if people only get information from the cable company."

"Saying that consumers cannot be provided full information about competing options and prices would harm competition and create an unlevel playing field," Tauke said.

Another source close to the matter said a majority of the commissioners decided to side with the cable operators because they concluded the complaint was supported by U.S. telecommunications law, and was consistent with past FCC decisions on the rules for switching long-distance phone service.

(Editing by Andre Grenon, Richard Chang)