Don't Ignore AT&T's Latest Business Service Guide Update!

I'm a telecom and technology attorney who keeps up with changes to online terms the big guys -- AT&T, Verizon, and CenturyLink -- make. Why? They form part of the contract under which LB3 clients purchase services. I'm often bored by what's inside the change notifications -- a typo fix, shuffling of material, or statement that numerous (typically customer unfriendly) terms do not apply to a fabulous new service. That was not the case last week, however, when I reviewed changes to AT&T's General Provisions.

Those changes I found intriguing, with AT&T taking on limited responsibility for network and data security.

Good News

If you are an AT&T customer that recently sought network and data security protections, the new online terms are likely familiar -- the first AT&T response to your request. If you either accepted those terms in the contract or negotiated better ones, no need to read more.

If instead you are a longtime enterprise AT&T customer that signed your deal before data security became a concern and hesitated to open a smoking master service agreement to add network and data security protections, AT&T's changes may be good news.

AT&T must have a "comprehensive security program" to secure its networks and computing, and the program must "draw upon" security industry standards like ISO/IEC 27001:2013 and "appropriate" controls referencing familiar phrases (e.g., access screening, PINs, tokens). AT&T will conduct "regular tests" to see if the controls are being maintained, and take action within "defined time intervals" if not. AT&T will notify you should it determine your non-public data in its network or data storage has been compromised. AT&T will also provide you with "certain prepared materials and external audits" about its security program.

Not So Good News

AT&T does not, however, provide specifics about its actual security program, a schedule of how often it tests its compliance with and maintenance of that program, or copies of its external audits. That may not be enough. For example, LB3 financial institution clients typically require third parties to audit performance of a security program at least once a year. AT&T does so "regularly," but regularly could mean once a decade.

And, although AT&T removes access to your information by individuals who no longer need it, it commits to doing so only "within a defined time interval" -- and the intervening time can be risky, particularly if access is no longer needed because an employee has been dismissed. Many financial institutions require compliance with ISO/IEC and SSAE standards, not simply "drawing upon" those standards, and they often need more than answers to "basic questions" and generally available "prepared materials." AT&T may or may not provide more support, but if it does, it will cost you.

AT&T also imposes new obligations on you. You must establish and implement security policies and procedures to protect your data and sensitive information against unauthorized access and use. You should have these in place, but if data or sensitive information is accessed and used without authorization, AT&T may be relieved of responsibility.

Still Better Than Verizon's Online Terms

While AT&T's offer has some flaws, it's better than Verizon's online terms related to network and data security.

First, AT&T consolidates all provisions related to network and data security in a single clause allowing you to get a full picture of the pros and cons. Verizon, by contrast, spreads the provisions throughout the terms. Second, Verizon makes you feel comfortable because it is required to put "appropriate technical and organizational measures" in place to protect "Regulated Customer Data" against unauthorized disclosure or access. You may not then see the clause that makes you solely responsible for any content transmitted, as well as access to that content. Putting the clauses together should eviscerate your comfort. Verizon may not be responsible for disclosure of "Regulated Customer Data" even if it arises from its failure to take appropriate technical and organizational measures. AT&T by contrast does not place sole responsibility for your data on you.

Remember Online Terms Aren't Everything

Vendors' online terms are only one piece of the contract related to network and data security concerns. You also have a written contract (master terms and service-specific documents) to sign. In a properly structured contract, online terms do not apply when the written contract includes a provision covering the same issue. They just fill gaps not covered by the written contract. (This is the "order of precedence"/"order of priority.")

Network and data security contract terms -- whether in the online terms or the written contract (as CenturyLink's tend to be) or both (as AT&T's and Verizon's are) -- include limitations of liability, disclaimers of damages, sole remedies, and security obligations for which you are "solely responsible." If your written contract includes a disclaimer of damages for access to or loss of your data, the online terms may make little difference, as you will receive no money if the vendor breaches any network and data security obligations it may have. If, however, your written contract includes appropriate data and network security requirements, allocation of responsibility for meeting those requirements, and limitations of liability for confidentiality and data breaches, you can generally ignore the online terms as there are no gaps to fill. If your written contract includes only part of the preceding, take a closer look to see how the pieces fit together and keep an eye on changes to the online terms.

Bottom Line

At an average total organizational cost of a data breach in the U.S. of $7.35 million, data security poses large risks to you and your vendor. Silence in the written contract is no longer an option. You must be certain network and data security are addressed directly in all relevant parts of the contract.