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October 10, 2006

Readers Say AT&T Still Ripping Off US Soldiers

Back in March I blogged that AT&T was ripping off American soldiers in Iraq and abusing its payphone monopoly in that country.  I hoped that the new at&t would correct the policy of profiteering it inherited from its predecessor, especially since it is seeking permission to extend its monopoly here at home with the pending purchase of BellSouth.  No such luck.  The quote below is from a comment by reader KE:

“My husband just arrived in Iraq this past Monday (October 2nd) for an 8 month tour with the USMC (his first tour in Iraq). In this very short window, we've learned that AT&T has a monopoly on the pay phone service; they've set up their phones to only accept AT&T cards. Phone cards that offer cheaper rates (from other companies) cannot be used. To top it all off, to recharge these cards ($42 buys you approx 165 minutes of talk time; to compare, when he was stationed in Japan, $30 bought us 375 minutes of talk time), there is a 10% "recharge fee." Though this can be avoided by just buying a new card from Iraq, my husband does not always want to be carrying cash on him. Further, we thought it would be easier for family members to just recharge this card than to send him new ones. Well, I was charged almost $7 in "taxes & fees" to recharge this card yesterday. Calls to AT&T revealed that they are no longer charging the surcharge fee as of Oct. 31, but that does me no good now. I'm just outraged that AT&T and the government have essentially created a monopoly systems with the pay phone service. Even though cheaper options do exist, the general public has been given the impression that to "support the troops," you should buy these AT&T cards that have these outrageous rates and hidden fees.

“The information on these VIOP (sic) phones is very helpful, and I intend to pass this information along to him when he calls next. However, the other postings have indicated that they have problems, too, so I'm not sure which is worse. My husband has indicated that at his location, internet service is unreliable and when it does work, incredibly slow (7-10 minutes to load a page in its entirety), so I don't think that VIOP would really work well for him. We'd be happy with consistent email as a way to communicate, but that can't happen with his options right now, and we're stuck with these pay phones.

“To top it off, when I called AT&T this morning to express my outrage at this issue, I asked how they could justify these charges for the phone cards. Well, the "friendly" customer service agent indicated that because of the cost of operating phones in Iraq (which I do not dispute) is higher than it is in other countries because of the instability, they need to recoup their costs somehow. And instead of AT&T just sucking up the difference to save these troops some money, they've elected to pass along those charges to the troops and their families. Outrageous. I hate the fact that we're being nickeled and dimed by the government and AT&T. I have enough to worry about without figuring out how to fund calls home.”

Because I don’t know KE and was reluctant to ask for ID info for a soldier in a combat zone, I checked with a friend whose husband is on his second tour of duty there.  She confirmed that AT&T IS still charging these exorbitant rates AND is still blocking calls using other calling cards, a practice which is illegal in the US.  She also added that some bases (but certainly not all) have VoIP phones at which the soldiers are charged $.04/min (as opposed to over $.20/min by AT&T).

From my experience running a wholesale phone company, I know that the cost to complete a phone call in the US is less than $.01/minute.  That is why companies like Vonage can offer unlimited US calling for a low price and why Skype can offer unlimited free calling in the US and Canada until the end of the year. When the call is placed from a company phone (as are the both the AT&T and VoIP calls), there is no incremental cost to the company which owns the phone although there is, of course, a cost associated with providing and maintaining the phones.

Transport of a phone call from Iraq to the US whether on the obsolete phone system or via VoIP is less than a penny/minute.  Don’t let yourself be confused by the fact that some companies choose to charge much more for calls to the US.  These are what the costs are.

at&t is claiming that it must recoup its costs.  If that is all they are doing, my quarrel is with the government for selecting them as an expensive vendor and essentially charging the soldiers to have the phones installed.  But I don’t know enough to know whether the government or at&t or both (my suspicion) are at fault.

Here are some questions. Hope someone with the kind of press credentials to get at&t to respond will ask them:

  1. Did at&t actually install the phones or did the government pay someone else to do that?
  2. Did at&t get reimbursed by the government for installing the phones if they actually did install them?
  3. If at&t wasn’t reimbursed, how much unreimbursed cost are they trying to recover?  Since the war has, to say the least, lasted longer than expected, how come they haven’t recovered their costs by now?
  4. Why does the VoIP provider (also a private company) only need to charge $.04/minute to recover its costs and presumably make a profit?
  5. Did the government know when it granted at&t this monopoly on pay phones at PXes that at&t would use this monopoly to block calls through other carriers?

Making a profit, even from war is OK.  Profiteering is despicable.

Question for all of us:  do we want at&t to be able to reconstitute it’s old monopoly back in the States?

BTW, I did check on soldiers making their own VoIP calls from computers.  Answer is that some (very few) can if they have a good IP connection which is rare.  Moreover, they can’t use Skype on the secure military network.  As much as I am an advocate of an open Internet, I’m afraid that blocking Skype in this case is justified.

My suggestions for those buying calling cards for soldiers abroad:

  1. You are nice people but you are being taken advantage of.
  2. Ask the soldier you are buying the card for whether, he or she has access to VoIP phones where he or she is stationed. You can buy many more minutes for the same dollar on these phones.
  3. If, like reader KE, the only way you can hear from your soldier is by buying an at&t ripoff card, make sure your congresspeople know the facts and what questions to ask (see above).
  4. Always feel free to post your experience as a comment on this blog. It comes up when people Google “pay phones in Iraq” so your experience may be helpful to others.

Friend Gene Retske (whose son has spent time in Iraq) originally broke this story in The Prepaid Press.

I posted previously here, here, and here

A post about a judge who is looking into the previous antitrust clearances given to the former SBC (now at&t) is here.

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