Court protects the right to bluff

In a rare move, the DC Circuit has upheld an FCC decision

The cable industry has won a big legal victory in the fiercely competitive phone services market. An appeals court has supported the Federal Communications Commission in its ruling that phone carriers—in this case Verizon—can’t try to lure back customers after they’ve initiated a service switch but before their number has been transferred.

The FCC rarely prevails in court, of course, so this may be a sign that we’re living in the End Times. But we can take some comfort from the fact that it wasn’t totally unpredictable, given that Kevin Martin was on the losing side.

The case involved Verizon’s efforts to win back customers when notified by the new carrier that they had to release the phone number. Verizon took this as an occasion to offer sweeter deals, which the court ruled an unlawful violation of the customer’s privacy, despite the fact that Google’s entire business is based on this kind of snooping.

It’s a win for consumers because it preserves the right to bluff. In today’s economy, consumers can frequently get better deals on subscription services merely by threatening to cancel, whether we’re serious or not. As it happens, I got lower prices from Sports Illustrated and Illy Coffee by calling up to cancel my subscriptions, and in both cases they were substantial. DirecTV refused to offer me a sweetner last year when I was tired of their crappy DVR, so they lost my TV business to Comcast. It’s not entirely clear to the business whether any of these threats are serious, of course, so it’s in their interest to err on the side of caution and offer the customer a better deal when they have the chance. Efforts to win back a customer who’s already made a switch have to be harder to pull off.

But the Verizon deal stacked the cards a little too far in the company’s favor, because it allowed them to play hardball until it was absolutely clear that the customer wasn’t bluffing. They only get a switchover for phone service when you’ve made a deal and scheduled a hookup date.

No deal, we all have the right to bluff and the company is going to have to guess just like any other poker player. That’s a good deal for the consumer.

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