SW Legal studies in Business

Phone Company Has No Right to Use Information from Competitors about Customer Loss

Appeals court upheld a Federal Communications Commission ruling that when a phone company learns it is about to lose a customer because the customer has requested a new service provider switch the customer’s phone number to the new carrier, the phone company may not contact the defecting customer in an effort to keep his or her business.


Consumer Protection

Key Words

Telephone Provider; Marketing; Proprietary Information

C A S E   S U M M A R Y

When a telephone company customer decides to change service providers, the customer is entitled to take the existing phone number to the new service provider. The new provider initiates a service request that requires the original provider to take the steps needed to release the phone number to another company on behalf of the customer. The old provider knows at that point that the customer is switching providers. Verizon was in competition with several cable companies in California that were offering phone service. Verizon would call their customers when they received a service request from a cable company and offer the customer a better deal to stay with Verizon. The cable companies complained, and the Federal Communications Commission (FCC) ordered Verizon to stop contacting their customers who were moving service. Verizon petitioned for review of the FCC order.


Petition denied. FCC regulations require the phone companies to use the information from the service request only to comply with the request, not use it as a marketing tool to make an appeal to defecting customers. The information involved is proprietary, as the new provider is the holder of the information about the desire of the customer to begin new phone service. The existing service provider has no right to exploit that information to its benefit. It is not a violation of its free speech right to prohibit the company from using the information.


Verizon California, Inc. v. Federal Communications Comm., 555 F.3d 270 (D.C. Cir., 2009)

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