Verizon is no longer allowed to use proprietary information from its rivals to persuade phone owners to switch from Verizon's competitors, a U.S. appeals court ruled.

Verizon tried to defend itself by saying it should be allowed to undercut competition by offering better deals to customers who were thinking about switching phone carriers.  Comcast, Time Warner, and Bright House Networks all complained to the Federal Communications Commission (FCC) about Verizon's activities, saying they violate federal law.

In essence, Verizon was caught sending letters to customers who canceled their service trying to persuade them to go back to Verizon rather than let them sign up with a competitor.  Rather than simply port the number after a customer requests it be transferred to a new service, Verizon allegedly delayed the process in an effort to persuade customers to rejoin.

This activity is banned under federal rules, which caused a government investigation into Verizon's activities.

Specifically, when a company contacts another rival company, it's known as a "port," which means the companies transfer the same phone number to the new carrier.

Last year, the FCC agreed with the cable companies and told Verizon it must stop its illegal activity.  The federal appeals court upheld the FCC's ruling, agreeing the law Verizon violated was designed so a carrier losing a subscriber could have a neutral role in the process of transferring a former subscriber's phone number.  

Verizon and AT&T currently offer internet and TV services, with cable competitors such as Comcast offering phone and Internet services.

"If Verizon is allowed to do this kind of retention marketing, consumers in general get less competitive deals on phone services," said Consumers Union attorney Chris Murray.

Verizon fired back, with company spokespeople saying it "looks like a loss for consumers, who now will have less information available when choosing between different competitors."

This court victory against Verizon could open up the door to similar lawsuits in the future, with companies actively looking to point fingers at one another after customers begin switching services.  Unconfirmed reports indicate other companies do the same thing, but Verizon was the first company to be officially accused of the practice.