AT&T’s latest effort to rid itself of universal service obligations and a commitment to offer discounted phone service to more than one million low-income Californians has been temporarily stopped in the state legislature after advocates for the poor objected to the bill.

AB 1407 would have made major changes to the state’s regulations governing LifeLine, the low-cost phone service for the poor. In its place, both AT&T and Verizon advocated a voucher program that would effectively raise rates for everyone, gut regulatory authority to limit future rate hikes, and open a loophole that could allow phone companies to unilaterally abandon landline service in favor of wireless.

The bill, introduced by Assemblyman Steven Bradford (D-Gardena), would drop the current LifeLine program offering landline service at rates not to exceed $6.84 a month and replace it with a fixed amount voucher worth $11.85 a month that could be applied to reduce a wireless or landline provider bill. AT&T says the proposal will make it easier for consumers to adopt wireless LifeLine phone service and cut burdensome oversight and rate regulations.

Consumer groups argue the legislation delivers all of its benefits to phone companies like AT&T while eliminating consumer protection regulations. The California Public Utilities Commission (CPUC) also complained the bill could end guaranteed quality landline service, potentially permitting AT&T and other companies to stop providing wired phone service and force customers to wireless services instead.

The little-known and less understood bill moved quickly through the Democratic-controlled legislature over the summer and on July 9, AB 1407 passed a key Senate committee in a 6-1 vote, well on the way to passage in the state Senate. Consumer groups and low-income advocates learned of the bill and launched a broad-based opposition campaign including the Coalition for Economic Survival, AARP, the California Labor Federation and The Utility Reform Network. The Howard Jarvis Taxpayers Association, a tea party group that vigilantly monitors the state legislature for attempts to circumvent Proposition 13 limits on tax hikes, also opposed the measure because it adds a 3.3% state-mandated surcharge on all intrastate telephone services, also applicable to Voice over IP providers.

AT&T found a good friend in Bradford, who has advocated for the company’s interests since AT&T became his biggest campaign contributor by far, donating more than $40,000 to his re-election coffers.

Bradford

Larry Gross of the Los Angeles-based Coalition for Economic Survival described Bradford as a “front person for AT&T.”

Bradford and AT&T’s lobbyists, dominating earlier discussions on AB 1407, were overrun at an Aug. 19 hearing when a group of tenants from San Francisco’s Central City SRO Collaborative (CCSRO) appeared and opposed the bill and its impact on the poor.

BeyondChron noted Bradford was so confident about the momentum his AT&T-ghost-written bill had received, he waived his testimony. Minutes later, he discovered the growing number of speakers lined up to oppose the bill. Bradford then attempted to rebut the surprising opposition, but it was too late. The tenants persuaded the majority on the Senate Appropriations Committee to suspend further consideration of the bill for now.

The proposed legislation had support from a number of elected officials, almost all recipients of AT&T campaign contributions.

Nearly all the non-profit groups supporting AB 1407 also received direct financial support from AT&T and/or Verizon. Among the first 20 supporters investigated by Stop the Cap!, all but a few turned out to have direct financial ties to either AT&T, Verizon, or both:

Verizon is linked from COFEM’s home page.

• Asian Pacific Islander American Public Affairs Association: AT&T is a “major sponsor.”
• Bakersfield Homeless Center: AT&T is a funding partner.
• Brotherhood Crusade: AT&T is a “silver partner.” Verizon, which also supports the measure, is a “platinum” donor.
• California Black Chamber of Commerce: Verizon is a “corporate member.”
• California Hispanic Chamber of Commerce: AT&T is a corporate member.
• California Partnership to End Domestic Violence: Verizon cut them a check for $130,000 to become a partner.
• Center for Fathers and Families: AT&T is a sponsor.
• COFEM: Verizon is so important to their mission, the company’s logo is on the group’s home page.
• Community Youth Center of San Francisco: AT&T is a “diamond sponsor.”
• Congress of California Seniors: Verizon is one of their “key sponsors.”
• Eskaton Foundation: AT&T is a “level 3” donor.
• Florence Douglas Senior Center: AT&T is a “primary sponsor.”

We stopped looking after researching the first 20 groups, but it is highly likely the others will also have similar ties.

Although Assemblyman Bradford repeatedly has claimed there is no intent to eliminate or diminish universal service “Carrier of Last Resort (COLR)” obligations that require basic phone service be provided to any California resident requesting it, the CPUC found ambiguous language in the bill that muddies the author’s intent. One section of AB 1407 states that “any lifeline provider, including a local exchange carrier, may use any technology, or multiple technologies, within the provider’s service territory.” This could be interpreted to allow a provider to meet its basic service obligation with wireless technology that may not meet the CPUC’s definition of basic landline service.

The legislation repeatedly states LifeLine providers should only be obligated to offer the minimum service elements as required by the FCC. Those provisions ignore the CPUC’s own rules and AT&T could theoretically prevent a wireless LifeLine customer from switching back to landline service because the wireless alternative is considered good enough.

Other provisions in the bill are tailored primarily for the benefit of wireless providers, including AT&T, and introduce new fees and charges for services that many customers would assume are included in the price of basic service:

• Flat rate local calling is eliminated;
• Providers can charge customers extra or deduct wireless minutes for 911 calls, calls to toll-free 800-type numbers, and incoming calls of all kinds;
• Providers can require a deposit for LifeLine customers and all former exemptions from taxes, surcharges and fees are canceled;
• The requirement to provide a toll-free method to reach customer service is eliminated;
• Providers can charge extra or deduct minutes for use of the California 711 Relay Service;
• Provisions requiring providers to offer surcharge-free outgoing calling service, touch-tone dialing, directory assistance (for LifeLine customers), access to an operator, a listing in the telephone directory, and a copy of the White Pages are eliminated.

The bill is probably shelved for the rest of this year but will likely return for consideration in 2014.

The Berlin Wall was still there in 1987, but thanks to AT&T and the Drug Enforcement Administration, your privacy was gone.

The New York Times has revealed the U.S. government, in close cooperation with AT&T, has been accessing an enormous AT&T database containing decades of data about nearly every phone call placed in the United States, including calling locations, numbers called, and the length of each call.

The Hemisphere Project, a partnership between federal and local drug officials and AT&T, has been up and running for at least six years. AT&T’s secret database of telephone calling records can be accessed upon receipt of an administrative subpoena. The arrangement has proved lucrative for AT&T, paid for its participation. AT&T employees also enjoy real world experience in law enforcement, often placed in law enforcement drug-fighting units nationwide and paid by the U.S. government.

U.S. taxpayers ultimately pick up all the expenses.

Each day, some four billion call records are swept into the database, which is stored by AT&T. The U.S. government then pays for AT&T employees to station themselves inside DEA units, where they can quickly hand over records.

The scope of the program goes beyond the data collected by the National Security Agency, according to the Times. AT&T’s data is more comprehensive than that collected by the NSA, and involves any telephone call that passes through an AT&T switch, not just those made by AT&T customers.

Justice Department spokesman Brian Fallon said in a statement that “subpoenaing drug dealers’ phone records is a bread-and-butter tactic in the course of criminal investigations.”

Fallon said Americans concerned about privacy can rest easy because the calling records are kept by AT&T, not the government.

[flv width=”640″ height=”370″]http://www.phillipdampier.com/video/Democracy Now ATT DEA Data Mine 9-3-13.flv[/flv]

Democracy Now talks with the New York Times reporter who broke the story that AT&T and the Drug Enforcement Administration have access to your phone records dating back to 1987.  (8 minutes)

Buying shares in a public company used to be straightforward and simple. Buyers instructed their broker to trade shares with the simple maxim: “buy low, sell high.”

These days, things are more complicated thanks to wealthy investment banks that have created Wall Street’s version of a Las Vegas casino. Today, buyers don’t even need to purchase shares in a company — they can make a killing just by betting whether they believe a share price will increase or decrease.

The Options Regulatory Surveillance Authority is now investigating a sudden surge in such option trading just before AT&T launched its $1.19 billion cash bid for Leap Wireless, owner of the Cricket-branded prepaid cell service.

The unnamed buyers included investment bank Goldman Sachs, that either traded options for themselves, on behalf of well-heeled clients, or simply processed the trades as part of doing business.

Those who purchased the call options were either clairvoyant, extremely lucky, or had inside knowledge of the yet-to-be-announced deal and were able to buy thousands of lucrative contracts that bet Leap stock would make a sudden recovery and increase in price. Nanex reports an explosive increase of 15,749 Leap “call contracts” trading hands that week, according to a report in USA Today. That well-surpassed that same week’s 1,384 Leap “put contracts” — investors making the safer bet that the always-anemic Leap stock would fall in price even further. That particular week, they were very wrong.

During the last 15 minutes of trading on July 12, 2,536 Leap contracts were executed, and nearly 80 percent of them gave buyers the right to purchase Leap shares for $9 each through Aug. 16, an amazing display of confidence in a stock that traded as low as $6.58 per share a few weeks earlier.

Leap into the big money pool.

Other investors were left scratching their heads over the wisdom of that kind of trading until just after the market closed that day, when AT&T announced its intention to buy the prepaid carrier, boosting Leap’s stock price from $7.98 on July 12 to $17.23 on Monday, July 15.

“Did someone know something early in Leap Wireless?” asked Jon Najarian, co-founder of Option Monster, a provider of options-trading ideas, in a written commentary for TheStreet.com. “The question now is whether someone will end up in prison for insider trading.”

While the unnamed parties likely made a handsome and quick profit, the brokerages that sold the options took a beating.

“We, as market makers … sold these calls,” said Thomas Peterffy, head of Timber Hill and an affiliated group of brokerages. “When the news came out, we had an immediate loss of $1.5 million.”

Goldman $achs

Timber Hill promptly filed a request for an investigation into potential illegal insider trading with the Options Regulatory Surveillance Authority that has since responded it was reviewing the issue “to determine if any exchange or Securities and Exchange Commission rules may have been violated.”

A Nasdaq spokesperson did not respond to messages seeking comment. Goldman Sachs also declined to comment.

Peterffy told the newspaper securities regulators should pursue examples such as the Leap Wireless options trading, “where it’s very clear what happens.”

“This has been going on for 20 years. It happens all the time, happens about 20-30 times a year. And we’ve never seen a penny from this stuff,” said Peterffy.

MYOB

Asking about the cost of DirecTV could turn out more expensive than you think.

The Los Angeles Times found DirecTV a little more nosy than it should be, opening the door to identity theft and some minor credit damage from unwanted credit inquiries from the satellite provider.

As customers in southern California grow weary over Time Warner Cable’s dispute with CBS, some are shopping around for a better deal with another provider.

57-year old Los Angeles resident Michael Bell got more than he bargained for when he called DirecTV looking for some price quotes. Before the representative would answer, Bell found himself grilled for a lot of personal details that seemed irrelevant in response to a question about the price of HBO.

In addition to name, address, and type of residence, DirecTV wanted to know if Bell owned or rented his home.

“That stopped me,” Bell told the LA Times. “Why should he care? I told him I just wanted a price quote. He said we’d get to that. And then he asked for my Social Security number.”

That was T.M.I. for Bell’s tastes and he quickly hung up.

Requesting a Social Security number these days is a red flag, often giving warning the person asking is about to run a credit check on you.

Sure enough, Robert Mercer, a DirecTV spokesman, explained the satellite provider pulls a credit report on every potential customer to determine their financial viability. DirecTV doesn’t want deadbeat customers, not after spending close to $900 to install satellite television in the average home.

If you don’t like it, you can pay DirecTV a $300 deposit and keep the number to yourself. The money is gradually refunded in the form of $5 monthly service credits each month you maintain service.

Cable companies are also notorious for running credit checks on customers, which can appear to other creditors as a request to extend credit. Too many credit inquiries can temporarily cut your credit score or worse, deny you credit.

AT&T and Verizon are also sticklers for good credit so expect them to run credit checks as well.

Time Warner Cable stands out among others for at least taking an interest in protecting customer privacy and preventing possible identity theft.

Dennis Johnson, a company spokesman, told the newspaper it can run a preliminary credit check with only the last four digits of a Social Security number and your date of birth.

Consumer privacy advocates argue that in the age of identity theft, nobody should be providing a Social Security number to anyone without a clear understanding it is being used to establish credit, open an account, or get earned retirement benefits. Consumers asked for a Social Security number for any other purpose should ask if they can avoid providing it or at least carefully scrutinize the request. If uncomfortable, simply end the conversation.