Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
The Federal Communications Commission this week was very busy doing what it’s very good at doing: generating money.
Unlike previous weeks when the government agency was generating billions of dollars for the U.S. Treasury by running auctions for air, this week the FCC was generating tens of millions of dollars by slapping companies on the wrist. In a move to make this slapping seem on the up-and-up, the FCC termed the “slaps” as “fines,” but considering the amount of those fines, I will generously term them as slaps.
That slapping included a $17.4 million slap (fine) levied against telecom operator CenturyLink and 911 technology provider Intrado Communications, followed by a $25 million slap against some telecom firm with the odd name of AT&T. (Isn’t that a “Star Wars” machine?)
(Yes it is!)
The CenturyLink/Intrado fine was heavily weighted toward the former, which is being forced to cough up $16 million for the failure of 911 services across portions of six states impacting 11 million people over a six-hour period. The FCC Enforcement Bureau (awesome name!) estimated that the outage resulted in 6,600 missed 911 calls, including reports of “domestic violence, assault, motor vehicle accidents, a heart attack, an overdose, and an intruder breaking into a residence,” according to federal documents.
Wow! The numbers are one thing, but to then lay out what sort of emergencies were missed due to the outage, I think the underwhelming amount of the fines is obvious. I know there are a number of 911 calls of the “I have lost my keys” variety, but this list is significant. And thus the questioning of fines totaling just $17.4 million, or 1.2% of CenturyLink’s total 2014 net income. Sure, some investors may be unhappy in having to forgo 1.2% of their return on investment, but I am guessing those investors aren’t any of the people who had their 911 call mishandled.
As for AT&T, it was dinged for $25 million as a result of employees at three of its international call centers accessing private customer data, including Social Security numbers, and then selling that information to third parties. That information was said to have then been used to facilitate unlocking of mobile devices that were part of a trafficking ring targeting stolen mobile phones and secondary-market phones.
However, what else that information was used for is anyone’s guess. Maybe we can hope that these criminals properly disposed of that information in an ecologically appropriate manner that somewhat offset the severity of the initial crime. Maybe.
This security breach stretched over a 168-day period, which is a bit longer than the six hours in which CenturyLink didn’t connect 911 calls. As part of the settlement, AT&T will also have to call impacted customers – although a real punishment would be to make AT&T CEO Randall Stephenson do the calling – and explain the issue.
I am guessing that whoever is tasked with that job will likely hear all of these seven words in various orders.
(Warning: NSFW, unless you work in a really cool office.)
For those interested in numbers greater than seven, that $25 million fine was about .2% of AT&T’s total net income in 2014 – removing the $10 billion the company tagged to a one-time charge for abandoning some landline equipment – or .1% of what AT&T forked over to the FCC connected to the recent AWS-3 spectrum auction.
I guess some sort of comfort can be taken in the fact that the fine total was just slightly more than what Stephenson made in compensation last year, so there’s that.
(Also, I wonder if the folks at America’s Promise were hip to this AT&T issue before bestowing the “Promise of America” award on Stephenson? Or maybe he let those folks know that he never promised to keep AT&T’s customer information safe.)
Look, I know there are limitations on the amount of money the FCC can fine companies for these issues, and to some folks these sums of money are indeed significant. And, I know that mistakes happen, which are probably what led to the events that these firms were fined for.
But when a company is fined such a relatively infinitesimal amount for errors makes me wonder if it’s even worth the fine. Sure, these fines allow the FCC to tout it’s being tough on the companies it has been granted the power to regulate, but is it really?
It would seem to me that some form of public shaming would be a better way to punish companies in these instances. Letting them throw money at a problem is too easy. But, besmirching their good name? Now that is something that stings.
Instead of allowing these companies to pay a fine that is touted on the FCC website, which nearly no one in the general public will read, or relying on news organizations to get the word out does not provide a broad enough scale or deterrent to this sort of behavior. The FCC should force these companies to use the money from the fines to purchase television commercials in primetime, advertisements across social media websites, billboards and skywriters to announce the mistakes they made.
Can you imagine the impact on a company’s internal privacy policy should it be forced to run a commercial during the Super Bowl admitting that in its attempt to trim some costs it also let slip Social Security numbers of a quarter-million people? That would surely take some of the luster off of an LTE coverage map.
I know this shaming angle will never fly, but if the FCC really cares about ensuring that the companies it has authority over “safeguard the personal information of their customers,” or if a company drops the ball on supporting 911 services and “will be held accountable,” as FCC Chairman Tom Wheeler said in both instances, then let’s put some real weight behind those words.
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