Project X

After a Southwestern Bell manager saved a woman's life, the phone company celebrated him as a hero. After he complained about what he alleges were racist billing practices, it fired him.

Hamilton alleges that Southwestern Bell had another, more insidious reason for wanting to get rid of him. Hamilton became a marked man, according to his suit, because he had been complaining to his supervisor about the possible illegality of company policies known internally as "Project X."

According to Hamilton's complaint, Project X was the name for a set of procedures in the company's Dallas revenue-management office that discriminate against minority customers. Hamilton--and others who worked in the department with him--say the term and policies came from their boss, Dennis Dorsey, area manager for the revenue-management center. Project X, says the lawsuit, involves rules "concerning the establishment and termination of telephone service to minority subscribers" that are "radically different" from those applied to nonminority customers.

Southwestern Bell spokesman Chino Chapa declined to comment on the existence of Project X, but said the company denies "any and all allegations of discrimination" and has "a commitment to equal opportunities for all citizens." Asked about Project X, Dorsey replied, "I'm not even sure what we're talking about there." Dorsey's boss, Thomas Rasberry, just laughed when asked about Project X.

But five other Southwestern Bell revenue-management office employees--three still there and two who have left--confirmed details of the Project X policies in interviews with the Observer.

Responding to a description of Project X practices at Southwestern Bell, Rick Guzman, an assistant public counsel in the Office of the Public Utility Counsel, an Austin state agency established to serve as a watchdog for telephone consumers, said: "Sounds like high-tech redlining to me."

"It's difficult when people come and tell me I am a hero," says Doug Hamilton as he finishes a lunch of fried chicken, potatoes, and corn in a Rockwall restaurant. "I don't think a hero would act like this. In the movies, the hero lives happily ever after. They don't have flashbacks and nightmares."

The son of an auto mechanic, Hamilton describes himself as a born-again Christian. The first in his family to graduate from college, he started at Southwestern Bell immediately after earning his degree in 1975. His first job was in an Oak Cliff business office, where he began as a customer-service representative, an assignment that meant handling all kinds of telephone customers' requests, including those for repairs and starting up service. Fond of his job and the company, Hamilton planned to be a lifer with Southwestern Bell. Hamilton became even more intent on that plan in the spring of 1986, when he discovered that his wife, Janet, a part-time dental hygienist, suffered from multiple sclerosis, an incurable disease of the brain and spinal cord. He knew that it would be difficult to obtain health insurance if he switched jobs, given his wife's pre-existing condition.

That same spring, Hamilton completed his master's degree in business administration and moved into management. In January 1992, a corporate restructuring landed him a supervisor position in the newly created revenue-management office. His boss was Dennis Dorsey.

Employees in the revenue-management office focused their energies entirely on maximizing Southwestern Bell's collection of cash: screening potential customers' billing and credit information (such as addresses, employers, and social-security numbers) to avoid starting service for those at high risk of failing to pay; and deciding when to pull the plug on those who had fallen behind on their bills. The revenue-management workers also call customers to demand prepayments or deposits on accounts with high long-distance charges.

It is in the course of this everyday business that Dorsey reportedly began instituting the policies known within the revenue-management office as Project X. Hamilton and four others familiar with the policies there say they first heard the term from Dorsey.

The Southwestern Bell employees say Dorsey instructed his subordinates to scrutinize customers in lower-income, high-minority-population areas more closely than those in neighborhoods that were more affluent and heavily Anglo. Even the Southwestern Bell computer-billing software is programmed, Hamilton and the others say, to focus bill-collection activities on areas such as Oak Cliff rather than Addison, Northside Fort Worth rather than North Richland Hills.

Careful scrutiny of prospective customers is a legal and prudent business practice--as long as it is applied equally. Public Utility Commission of Texas rules state: "No utility shall discriminate on the basis of race, nationality, color, religion, sex, or marital status." But at Dorsey's direction, Hamilton says, Project X implemented specific approaches that treated customers in low-income areas more harshly.

On busy days, for example, revenue-management supervisors would tell their staffs to investigate and validate 100 percent of the social-security numbers and previous addresses on service applications from prospective customers in Oak Cliff--while not checking a single one from Richardson.

At other times, they would be told to start service-termination procedures for any Oak Cliff resident who was late on a bill of more than $50. Workers were told not to bother contacting North Dallas customers even if they were delinquent on a $200 bill.

If a relatively new customer in West Dallas began making more than $100 in long-distance calls a month, supervisors told revenue-management workers to call and ask for a deposit--as much as $1,500. Southwestern Bell typically required no such deposit from a Richardson or Addison resident with comparable long-distance charges.

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