On February 10, 2009, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion denying Verizon California, Inc.'s ("Verizon") petition to review the FCC's 2008 order, requiring Verizon to cease and desist from customer retention or "win back" efforts once the technical porting process of a telephone number has begun after a customer's decision to move its voice service to a competitor. The DC Circuit agreed with the FCC's interpretation that "advance notice of a carrier change that one carrier is required to submit to another is carrier 'proprietary information'" that is protected under 47 U.S.C. Section 222(b). The court resolved the principal dispute at issue on appeal by holding that the FCC's interpretation of the statutory language under Section 222(b) "for purposes of providing any telecommunications service," in the context of receiving the proprietary customer information, reasonably refers to the carrier submitting the proprietary information (who has won the customer), not the carrier receiving it (who has lost the customer).
The court further rejected Verizon's argument that the statute only protects customer proprietary information of carriers that purchase wholesale telecommunications services or lease network elements from Verizon, but not carriers that provide voice services exclusively over their own facilities. The FCC argued, and the DC Circuit "readily accepted", that the fundamental policy of The Telecommunications Act of 1996 (the "Act") is to promote facilities-based local competition, thereby protecting carriers affiliated with cable companies offering VoIP services over their own facilities.
The DC Circuit also rejected Verizon's 1st Amendment argument that the FCC's cease and desist order limits commercial speech. It agreed with the FCC's argument that it has a substantial interest in assuring "the losing carrier's neutral role" in the porting execution process, to avoid a "two-masters problem" by ensuring that the losing carrier's "incentive on receiving an LSR [Local Service Request] is unambiguously to complete it promptly and effectively."
Finally, the DC Circuit rejected Verizon's argument that the FCC's order should be vacated with respect to two carriers on the ground that they do not meet the Act's definition of "telecommunications carrier" by holding themselves out as common carriers serving all similarly situated customers equally. The evidence was that the carriers were only serving their cable affiliates. While the court found the issue a "closer" one, it did not find the FCC's classification unlawful. Because the carriers had (1) self-certified that they would act as common carriers; (2) entered into publicly available interconnection agreements with Verizon available only to telecommunications carriers; and (3) obtained a state certificate of public convenience and necessity giving public notice of intent to act as a common carrier; the court held that the Commission's conclusion was reasonable.