The U.S. Court of Appeals for the District of Columbia has upheld (pdf) a FCC decision finding that Verizon’s use of proprietary information of rival companies for marketing purposes violates federal law.

To make more sense out of this holding, we’ve gotta back up a few steps. When a customer informs her carrier that she plans to switch operators, the consumer’s current company puts out a notification to assist in transferring (aka porting) her existing number over to a new service. Apparently, Verizon had been offering customers sweetened deals to stay with the Nation’s #2 telecommunications company once it learned that the particular customer was planning to defect.

After learning about these shady dealings last year, Comcast, Time Warner, and Bright House Networks called upon the FCC to investigate Verizon’s actions, arguing that they violated the U.S. Telecommunications Act’s restrictions on the use of rivals’ proprietary information for marketing purposes. The FCC agreed, issuing a decision stating that the intention of the federal law was to ensure the losing carrier played a neutral role in transferring a customer’s phone number. Verizon then moved to challenge the FCC decision, arguing that it put Verizon at an unfair disadvantage.

Then, two days ago, the Court of Appeals sided with the FCC, holding that the regulatory body’s interpretation of the particular section (222(b) to be exact) of the Telecommunications Act was reasonable and rejected Verizon’s challenge. This ruling will effectively prevent all communications companies from actively trying to persuade customers to reconsider their pending move to a new service. Too bad it won’t stop these same companies from providing spotty coverage and terrible customer support…

[via Reuters]