July 11, 2006

AT&T Inc. settled two Federal Communications Commission enforcement actions by paying $550,000 and agreeing to strengthen customer privacy practices.

The nation's largest phone company didn't admit to violating any law and the payment doesn't constitute a fine or penalty, according to a consent decree announced Monday by the FCC.

The settlement ends actions against the former AT&T Corp. and SBC Communications Inc. The FCC claimed AT&T Corp. failed to certify it complied with privacy rules. San Antonio-based SBC bought AT&T Corp. last November and then renamed itself AT&T Inc.

The agency cited increasing concern over the security of customers' personal data and evidence that records can be obtained easily by unauthorized users.

The two largest U.S. mobile-phone companies, No. 1 Cingular Wireless and No. 2 Verizon Wireless, have obtained court orders to prevent data brokers from fraudulently acquiring and selling customer calling records.

The FCC Enforcement Bureau began an investigation in July 2005 after SBC reported failures in its procedures for notifying customers of their privacy rights.

"AT&T has commendably self-reported some of its failures in its compliance mechanisms and has agreed to adopt a compliance plan so that consumers are appropriately notified" about FCC privacy rules, Commissioner Jonathan Adelstein, one of two Democrats on the five-member FCC, said in a statement.

SBC discovered last year that it had failed to notify some new customers of their right to prevent the company from using their records for certain internal marketing purposes, said AT&T spokesman Michael Balmoris.