The U.S. telecom regulator Federal Communications Commission (FCC) recently slapped a $25 million fine on telecom behemoth A&T Inc. T for the carrier’s negligence in maintaining data security at its call centers in Mexico, Colombia and the Philippines. The leaking of customers' personal data occurred between Nov 2013 and Apr 2014.
This is by far the largest privacy and data security enforcement action taken by the FCC. In Oct 2014, the FCC had imposed a $10 million fine on telecom operators TerraCom and YourTel for the same reason.
The FCC’s investigation confirmed that call-center employees of AT&T in the above mentioned three countries illegally disclosed almost 280,000 U.S. customer names and their full or partial Social Security numbers and other protected account-related data called customer proprietary network information (CPNI) to third parties.
All these vital personal information are then used by mobile phone thieves and cell phone traffickers who send request to U.S. customers to unlock their mobile phone numbers so that the device can be used from any network other than AT&T. All these may lead to severe financial frauds.
AT&T is facing several challenges like aggressive pricing plans from its direct competitors such as Verizon Communications Inc. VZ, Sprint Corp. S and T-Mobile US Inc. TMUS. Further, discounts on the company’s pricing plans may hurt its near-term earnings. Smaller wireless carriers also offer cost effective voice and data plans. This may impact AT&T’s high-end handset sales and challenge subscriber retention.
Meanwhile, AT&T’s wireline division is facing persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data and video) offerings by cable companies. These are weighing on the company’s revenues and margins.
At this juncture, a record fine for customers' privacy violation will certainly dent AT&T’s reputation and make matters worse for the company.
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