Intellectual Property Law

Verizon's War with Cable over VoIP Customers

By Cynthia Brumfield

Top telco Verizon has seemingly had enough with cable operators stealing away its local voice customers. Fresh from its VoIP patent lawsuit victory over independent VoIP provider Vonage, Verizon is now flexing its legal muscles to take on the even more threatening cable industry.

Last week the telco filed its second infringement suit against a cable operator, Charter Communications, accusing Charter of violating its VoIP patents. Verizon seeks an injunction plus monetary damages. The Charter suit follows a similar lawsuit Verizon filed against cable operator Cox Communications last month.

Charter and Cox are not, apparently, alone in feeling Verizon's jab at their VoIP businesses. Three other cable companies, Comcast, Time Warner and Brighthouse Networks, filed a complaint with the FCC yesterday claiming that Verizon is violating the Commission's rules by dangling retention incentives to landline customers that have already decided to switch to cable digital voice services.

FCC rules bar incumbent telcos from trying to win back customers while they are in the process of switching away from the phone companies. The three cable companies contend that Verizon begins to woo its almost-lost customers once it receives number portability requests from the operators themselves.

Verizon offers these customers discounts and even gift cards when they receive notice that a phone number will move to a cable rival, and thousands of potential cable voice customers are lost in the process, the companies claim.

These latest skirmishes underscore just how surprisingly high the competitive stakes have gotten in what many people consider to be a cozy duopoly marketplace. Although Verizon is clearly making headway against cable on both the video and high-speed data fronts -- the telco added nearly 250,000 FiOS TV customers during Q4 07 -- cable operators are far more successful in stealing voice customers away from Verizon.

For years now, Verizon has lost around one million access lines per quarter, due in part to mobile phone substitution and competition in the enterprise market. But cable accounts for at least a third to one half of these lost access lines, with Verizon losing around 400,000 to 500,000 residential lines each quarter.

So, it's easy to see why Verizon is suing Charter and Cox and it's not hard to believe that the telco is fighting tooth and nail to keep customers on the network. Verizon is waging war with cable over VoIP customers.

Full post as published by IP Democracy on February 12, 2008 (boomark / email).