Intellectual Property Law

Lobbyists Battle on Blogs Over Impending FCC Ruling

By Cynthia Brumfield

A fun uber-lobbyist blog fight has broken out today regarding a rumored FCC ruling that would smack down Verizon over its practice of pitching special deals to landline customers slated to switch voice service to cable companies. Back story: Last February, Comcast, Time Warner and Brighthouse Networks filed a complaint at the FCC claiming that Verizon is violating the FCC rules by offering retention incentives to landline customers that have already decided to switch to cable digital voice services.

FCC rules bar incumbent telcos from dangling special deals mid-switch. Although FCC Chairman Kevin Martin (not a friend to the cable industry) and FCC Enforcement Bureau staff had purportedly recommended that cable's complaint be dismissed, an apparent majority of FCC Commissioners, including Martin's usual two Republican allies, are seemingly siding with cable on this one.

Top Verizon lobbyist Tom Tauke cried foul today on Verizon's Poliblog, saying that if the reports are true, then the FCC is "about to decide against transparency and in favor of denying consumers the information they deserve before making a buying decision."

Cable's top lobbyist, NCTA CEO Kyle McSlarrow, answered this contention in comments on both Verizon's blog as well as the association's own blog, accusing Verizon of trying to thwart competition.

McSlarrow said that the law is very clear. "When customers make a decision to leave you, you are obligated to honor their decision," he wrote.

Tauke then responded to McSlarrow (on cable's blog) saying that cable is trying to game an outdated regulatory edge originally intended to apply to wholesale business and not residential customers in order "to deny customers the information they need to make an informed choice."

More interesting than the fun back-and-forth blogfight between the highly paid lobbyists is the fact that they're arguing over an FCC decision that hasn't been publicly announced yet and is part of a rare "restricted" proceeding, meaning that no one is supposed to be blabbing about it unless everyone who is a party to the proceeding is present.

Yet, as McSlarrow notes, "someone in the FCC apparently leaked a decision that apparently goes against Verizon and...the leak was apparently choreographed in a way that gives Verizon a shot at debating this in the press and the blogs." It's obvious that McSlarrow thinks that Chairman Kevin Martin himself is the leaker given his long-term enmity towards cable, his friendliness toward telcos and his apparent loss on this particular vote.

Investment banking firm Stifel Nicolaus offered details on the last-minute lobbying on this matter in a client newsletter this morning, saying that cable representative held various meetings with the FCC on the ruling over the past week and that Verizon filed a June 18 letter rebutting cable's arguments raised during these meetings. Stifel analysts think the FCC will issue a ruling on Monday and that if Verizon loses, its landline losses will accelerate unless it gets a court to overturn the rumored FCC decision, an unlikely outcome given the deference the courts show to the expert agency.

Full post as published by IP Democracy on June 20, 2008 (boomark / email).