Retention Marketing: Bad Call at the FCC

by on June 22, 2008 · 6 comments

Targeted by Chairman Kevin Martin’s apparent war on cable, the cable industry has had a tough time at the FCC of late. Being a cable lobbyist at the FCC today is like being a Communist in the State Department in the 1950s. One can just imagine the question: “Are you now, or have you ever been, a user of coaxial technology?”

That said, the cable folks don’t always lose. Just this Friday, they won one – handing a defeat to Martin. The problem is that its one they really should have lost.

The question at hand (addressed ably by Berin Szoka on Friday, and by Adam Thierer earlier) is whether telephone companies should be able to contact customers who have requested that their phone numbers be switched over to a competitor, and try to convince them not to switch. Several cable firms filed a complaint against Verizon over the practice early this year. The practice is anti-competitive, they said, pointing out that Verizon was able to ply customers with “price incentives and gift cards” to convince them not to switch.

In April, the FCC staff said it would side with the telcos on this one. But on Friday the commission voted 4-1 – with Chairman Martin the only ‘no’ vote – to ban the practice.

That is unfortunate. Far from being a threat to competition, being able to fight to keep your customers – and even to ply them with a few incentives – is at the heart of it. The practice is common in other highly competitive industries – just try letting a magazine subscription expire. In fact, as Verizon’s Tom Tauke argues, cable firms have long engaged in similar activity to keep customers from moving to telco video service. Why should it now be wrong for telcos to do the same thing for telephone services?

I don’t say this often, but Chairman Martin was right on this one. Not because cable should lose, but because consumers would win.

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