AT&T supervisors ordered operators to aid Nigerian fraudsters making free calls that cost millions in credit card fraud and the life savings of some victims, while AT&T collected more than $16 million in reimbursements paid by telephone ratepayers across the country.

Last week, AT&T admitted no wrongdoing but agreed to pay a $3.5 million settlement to the operator the company fired after complaining about widespread fraudulent use of a service intended to help the hearing and speech impaired.

The story is now the subject of a movie script, reports The New Castle News. It begins in 2003, when AT&T was required by the Americans with Disabilities Act to provide operators willing to relay conversations from hearing or speech impaired individuals typing on a computer or device and the people they called.

AT&T employed at least 150 operators at a western Pennsylvania call center in a former shopping mall just to assist with international relay calls. One of them was Constance Lyttle.

AT&T’s international relay service offered those overseas the opportunity to make a free, untraceable relay phone call to any number in the United States. AT&T billed the FCC-administered fund $1.30 a minute for calls placed through the relay operator.

The service quickly became popular… with Nigerian scammers who used it to make free calls to American businesses. In fact, according to a lawsuit filed in 2010, around 95 percent of all calls placed through AT&T’s international relay service came from con artists peddling various scams and ordering merchandise with stolen credit cards from unsuspecting businesses.

The Nigerians used hard-to-track public Internet terminals to initiate calls through AT&T’s relay center. An AT&T operator would read the words typed by the con artist over the phone to the person called and type back any responses.

Lyttle testified the usual target for the scam was a unknowing small business willing to accept credit card orders from Nigeria or an individual willing to advance their life savings in return for promised larger payout unlocked by their deposit. It was all made possible with the help of AT&T, which earned several dollars for every successfully completed call.

Lyttle said the operators in the call center immediately understood what was going on and complained repeatedly about the abuse of the system. In response, AT&T “made workers sign agreements that they would put through the scam and fraudulent calls, and they actually used those words,” said Lyttle’s attorney, who also happens to be her sister. “The workers at the call center were afraid they would lose their jobs. AT&T paid very well and good-paying jobs are hard to come by in western Pennsylvania.”

Nigerians exploited the AT&T Relay service call center located at this former mall in New Castle, Penn.

The lawsuit against AT&T alleged the phone company had full knowledge of what was going on but didn’t want to lose a lucrative contract that resulted in at least $16 million in reimbursements.

“They were getting $1.30 per minute for these calls,” said Lyttle’s attorney. “Think about the volume of calls that were being made.”

Lyttle’s attorney said Constance would sabotage some calls to stop the fraud, falsely claiming the party at the other end had hung up. Her 2010 lawsuit alleged her effort to protect the public from Nigerian scam artists was the reason she was fired in 2010 after 13 years with AT&T.

Her lawsuit soon attracted the interest of the U.S. Department of Justice. In March 2012, the federal agency joined the case. Lyttle was designated a “whistleblower” and her involvement in the federal lawsuit was initially kept secret. Earlier this year AT&T agreed to reimburse the Federal Communications Commission more than $18 million for abandoning their responsibility to block the overseas scammers not qualified to use the relay service. AT&T also admitted a percentage of callers did use the service for illicit purposes.

Lyttle herself received a settlement proposal of $3.5 million in her whistleblower case. AT&T also offered her old job back but she turned them down, saying she preferred her current part-time job over returning to AT&T.

It’s just as well. The New Castle, Penn. call center at the epicenter of more than $20 million in reimbursements and settlements was ordered closed by an unnamed AT&T executive in November.

“I was told 125 employees would lose their jobs in the next 12 to 15 months,” said New Castle Mayor Anthony Mastrangelo. “I don’t know if the local people will lose their jobs or have the option to be transferred.”

Prominent law enforcement, public safety, and emergency response organizations held a press event outside the Federal Communications Commission (FCC) on Monday, November 18th at the opening of a Commission workshop on e911 location accuracy.

Up to two-thirds of emergency calls made over a cell phone lack critical information about the caller’s location, prompting an advocacy group to call the current situation a crisis.

“If you use a cell phone, you probably think that a 9-1-1 operator can find you if you call in an emergency. Unfortunately, that assumption could be fatally flawed,” said Jamie Barnett, former Chief of the FCC’s Public Safety and Homeland Security Bureau and director of the Find Me 911 Coalition. “For two-thirds of wireless callers in some counties, the emergency call arrived without accurate information on the caller’s location, putting lives at risk when callers don’t know or can’t share their location. The FCC should take immediate action to ensure that all 9-1-1 callers can be immediately located in a crisis, whether indoors or outside, in a rural or urban setting.”

The wireless industry’s lobbying group says the problem is complicated and overblown, and the nation’s biggest cell phone companies are placing the responsibility for the problem on poorly trained 9-1-1 operators. But while the issue is debated, lives are being lost. It’s a growing problem, says the Coalition, because 70 percent of all calls to 9-1-1 now come from cellphones. High-powered smartphones with the latest technology can support thousands of apps, streaming video, help travelers find their way home, and access data at megabit speeds, but when you are in a car or building, your wireless carrier might not be able to pinpoint your exact location and share it with emergency personnel until it is too late.

Deanna Cook of Rylie, Tex is just one victim who might still be alive today if 9-1-1 operators could have tracked her precise location. Last August, Cook called 9-1-1 from her home but was too badly injured in a domestic violence incident to provide her address. Operators relied on the current system to access her location. It took just a few seconds to find the cell tower Cook was accessing to place the call. Shortly after that, Cook’s street and general location became available in about a block-wide circumference, part of what the industry calls “Phase One” data. But the operator had to wait nine minutes for Cook’s wireless provider to finally pinpoint what they believed to be her exact address, the critical “Phase Two” data that can bring help to the right door.

The call location problem is growing worse in this Pennsylvania county.

The Dallas Morning News discovered while Cook was pleading for her life on 9-1-1 tapes, responding officers didn’t arrive until 50 minutes after the call was placed and then left when no one answered the door, perhaps uncertain about the veracity of the address given to them. Cook’s body was found two days later by relatives. Her ex-husband was eventually arrested and faces murder charges.

It isn’t an isolated incident, Lt. Midge Boyle of the Dallas police told the newspaper.

Dallas’ emergency call center, like many around the country, has seen an increase in the number of calls in which 911 call takers have to spend precious time trying to get the caller’s location, and what operators do receive from cell phone providers isn’t always correct.

“It’s time-consuming,” Boyle said. “In an emergency when minutes count, it’s a challenge.”

In Delaware County, Penn., new data from the Federal Communications Commission shows despite all the wireless network improvements taking place, problems locating callers are actually getting worse.

The Coalition notes the FCC’s data shows an alarming drop in more accurate “Phase Two” data from 75 percent of all wireless calls placed during March 2011 to just 35% in September of this year.

Countywide data released by the FCC found that 489,726 of the wireless calls received since April 2011 lacked accurate “Phase Two” location information, despite FCC regulations requiring accurate location data be provided with all calls.  In most cases, the 9-1-1 call center only received basic “Phase One” data showing the location of the cell tower from which the call originated, information of little use to emergency responders given the large area covered by each tower.

California regulators named names of providers deficient in providing reliable location data in that state:

• AT&T provided Phase Two location data 20 percent of the time;
• Sprint managed to deliver accurate data 21 percent of the time;
• T-Mobile USA only managed to offer correct information 10 percent of the time;
• and Verizon Wireless scored the highest, but only to the extent it delivered Phase Two location data 37 percent of the time in California.

The Coalition wants the FCC to require more advanced and accurate location technology. A whole range of solutions exist that could pinpoint a 9-1-1 caller even within a downtown office building 70 floors high. Among them:

• Advanced Forward Link Trilateration (AFLT);
• Observed Time Difference of Arrival (O-TDOA);
• RF Pattern Matching;
• Terrestrial Beacon Transmitters;
• and Uplink Time Difference of Arrival (U-TDOA)

The CTIA – The Wireless Association said it was willing to sit down with public safety organizations to discuss the problem, but little more. Barnett hopes the FCC will act more quickly. The Coalition is hoping public support will help nudge the FCC to give the issue priority attention. The group has set up a webpage to help the public draft letters to members of Congress.

[flv]http://www.phillipdampier.com/video/ABC GMA Murder Victims Husband Fights to Improve 911 System 11-13.flv[/flv]

ABC’s “Good Morning America” talked with Nathan Lee, husband of Denise Amber, who was kidnapped and murdered in 2008. Lee advocates an overhaul of the cell phone network after law enforcement failed to find Denise even after she covertly used her attacker’s cell phone to call 9-1-1 for help. “Denise should be alive today had the Local 9-1-1 system performed to every citizen’s expectation.” (1:59)

“Use it or lose it” is the policy under which the Federal Communications Commission licenses scarce, publicly owned airwaves, but in practice companies warehousing unused spectrum can sell it off and make a handsome profit.

Reuters today reports T-Mobile USA is exploring a spectrum buy from its rival Verizon Wireless to bolster wireless data services to effectively compete against Verizon, AT&T and Sprint.

A source told Reuters the deal is in the early stages and could involve the purchase of Verizon’s unused “A” Block 700MHz spectrum, ideal for long distance and indoor reception. Verizon chief financial officer Fran Shammo earlier said the company was not going to sell its unused spectrum at “fire sale” prices and recently rejected an offer deemed to be too low. One analyst estimated the value of Verizon’s excess “A” spectrum to be as high as $3 billion.

T-Mobile, owned by Deutsche Telekom, told investors on Nov. 12 it was launching an equity offering to raise money for spectrum deals with a private, unnamed party. T-Mobile raised $1.8 billion through a sale of its common stock last week and offered $2 billion in bonds on Nov. 18 with the expected aim of funding future spectrum purchases.

Verizon acquired the spectrum in 2008, part of a broader auction that sold off frequencies formerly used by UHF TV channels 52-69. The “A” block is considered less desirable because of adjacent interference concerns in areas where a television station operates on Ch. 51. Those stations may not be there for long. The FCC is proposing to auction off UHF channels 31-51 to wireless companies in the future, reducing UHF TV to channels 14-30. Verizon’s “A” block licenses do not blanket the entire country, but can cover a number of major cities. Verizon Wireless deployed its LTE 4G network on its “C” block.

Tom Wheeler circa 1983, when he represented the cable industry. (Image: The Cable Center)

Skepticism persists over whether new FCC chairman Tom Wheeler, a former cable and telco lobbyist and venture capitalist, will have the interests of an industry he was a part of for decades ahead of the people he is supposed to represent.

The doubts are so significant, The Wall Street Journal’s ‘All Things D’ devoted an entire piece on the subject, interviewing Wheeler about his plans for the federal agency.

“My client today is the American people, and I am going to be the most effective advocate they could hope for,” Wheeler told AllThingsD in a phone interview on Wednesday. “I was (involved in) the early days of cable television when everybody was trying to squash it; I was a was champion for a diversity of voices and the competition that represented. I’m very proud of that period, but it was 30 years ago that I was in in cable, and 10 years ago that I was in wireless.”

Both periods were extremely important for both industries. When Wheeler was president of the National Cable TV Association (now the NCTA), his leadership helped enact the 1984 nationwide deregulation of the cable television industry. Wheeler promised the single national “hands-off” policy for cable television would put control “back in the hands of customers” instead of the local, state, and federal government. The cable lobby pushed hard for extra provisions in the law that would prohibit local or state governments or franchising authorities from reimposing controls the federal government eliminated.

The 1984 Cable Act contained three major provisions to strip away regulatory/rate oversight:

1. “Basic Cable” rate regulation was removed in any community where a cable company faced “effective competition” from at least three unduplicated over the air television stations. If your community received two fuzzy network affiliates and one local religious station, that was considered effective competition.
2. Local franchise authorities and cable TV commissions, often citizen-run, had most of their oversight and enforcement powers stripped away, including the most important power to deny a franchise renewal to a bad-acting local cable company, except in the most extreme cases. Cable operators effectively used this provision to launch costly lawsuits burying local communities in litigation expenses when they tried to find a different provider.
3. Granted local franchise authorities to right to demand cable systems set aside a few channels for Public, Educational, and Government (PEG) use.

The cable industry carefully lobbied for an effective definition of “competition” that made it into the final version of the bill. Estimates from congressional researchers predicted that 97 percent of the country’s cable systems would be deregulated when the law took effect Dec. 29, 1986.

In a 1984 C-SPAN call-in program, Wheeler noted that before deregulation, “the cities were in the driver’s seat” controlling the franchising process. Wheeler claimed cable operators competing for franchise agreements were forced to promise services and technology that ultimately proved too burdensome or expensive to actually deliver. Deregulation, Wheeler promised, would “keep cable rates low because you are not going to be paying for services that [the government says] have to be provided that nobody watches.”

In reality, after the passage of the 1984 Cable Act, cable systems were bought and sold in a frenzy that left control ultimately in the hands of a handful of operators. Soon after, cable rates skyrocketed and cable-industry-owned networks and channels were shoveled on to cable lineups. With every sale and every new channel addition, rates were raised even higher, whether customers wanted the extra programming or not.

Without oversight, cable service itself deteriorated in quality. In some cities, cable operators ignored rights-of-way and often refused to hang or bury cable lines left scattered on lawns. Customer complaints often went unresolved for days or weeks. Cable operators also rolled out new charges for monthly programming magazines and equipment, even as they continued to boost rates for basic cable itself. Prior to deregulation, customers usually paid less than $10 a month for basic cable. After, rates rapidly pushed towards the $20 a month mark. Today’s cable TV prices are much higher.

In the summer of 1984, Wheeler left the NCTA to pursue a new business – The NABU Network, a precursor to cable broadband that turned out to be a commercial failure. The NABU Network coupled a home computer system with a cable-based data service. The only significant North American trial of NABU was in Ottawa, Canada and required significant subsidies from the Canadian government. Wheeler said the NABU system would offer subscribers a mountain of software at a monthly subscription price. Canadians had to buy the NABU PC for around $950 and pay around $10 a month for software access.

The venture fell apart because cable systems in that era lacked two-way capability, making it cumbersome for users to interact with the NABU platform or manage applications. Ottawa Cablevision and Skyline Cablevision introduced NABU in 1983 and discontinued it in 1985.

In 1992, Wheeler went on to become president of CTIA – The Wireless Association, the nation’s biggest cell phone industry trade group. Wheeler beefed up the association’s lobbying forces after joining, turning CTIA into “one of the most influential lobbying forces on Capitol Hill,” according to Connected Planet.

Once there, Wheeler presided over efforts to get government spectrum policies relaxed and keep cancer questions about RF energy leaking from cellphones under wraps:

In a 1994 memo, Wheeler raised objections to a draft of a mobile-phone manual that, among other things, advised consumers how to limit radio-frequency radiation from mobile phones. The book says Wheeler succeeded in getting the industry consumer safety document watered down.

In a September 1994 memo, Wheeler mapped out “a pre-emptive strike” on Rep. Edward Markey (D-Mass.) by highlighting to Markey the involvement of Harvard University. Wheeler, according to the book, even had a backup plan to curry favor with Markey that, if necessary, would “send all cash through Harvard.”

By 2000, Wheeler was being questioned about conflict of interest charges about his lucrative investments in businesses represented under the CTIA’s public policy umbrella, according to RTR Wireless:

But conflict-of-interest issues-real, perceived and otherwise-that flow from Wheeler’s lucrative ties to Aether, OmniSky and now, Metrocall, could have long-term consequences that CTIA and the wireless industry would rather not consider in these halcyon days of soaring stocks, consolidation and deregulation.

The unorthodox arrangement Wheeler has with outside wireless firms begs closer scrutiny by CTIA’s board. Do Wheeler’s money and management ties to firms he advocates set a bad precedent? Could it diminish CTIA’s credibility as an organization?

Wheeler claims to be committed to three principles that will govern how he looks at issues before the FCC:

1. Is it good for competition? “You can’t have economic growth if you don’t have competition. You can put me down as rabidly pro-competition,” Wheeler said.
2. Trust between those who run networks and those who use them must be maintained.
3. Opening up high-speed networks must include guarantees that content will be open and accessible to all. “I am pro-the ability of individuals to access an open network,” he said.

Wheeler asked for a review of all proposals before the FCC and expects that in two months.

Tom Wheeler, then retiring president of the National Cable TV Association (NCTA), appeared on this fascinating 1984 C-SPAN call-in program at the NCTA Convention with future president Tom Mooney. The NCTA promised deregulation would deliver many benefits to cable subscribers. They got higher bills and declining service instead. (June 5, 1984 – 39:00)