CyberWire Dispatch // Copyright (c) 1994

Jacking in from the "Riding A Straw Horse" Port:

Washington, DC -- If the government can't guarantee it will pay your telephone company for the full cost of making it easier to wiretap your conversations, you could end up paying for it on your phone bill.

Unlike the bogus "modem tax" of urban legend fame, the costs of paying to implement the Digital Telephony bill could eventually lead to a kind of "digital wiretap tax." No, this is no joke. And it's closer than you think.

The idea of a kind of wiretap surcharge tax, which would be imposed on all phones, was a scene in the sub-text of an often edgy Congressional hearing Tuesday held to flesh out the problem areas of the FBI's bastard child: The Digital Wiretap Bill.

The House Telecommunications & Finance Subcommittee rounded up the usual suspects and generally grilled them on two specific issues: What will this cost? How the hell are we going to pay for it?

Rep. Alex McMillan (R-N.C.) went so far as to suggest that a special "Anti-Crime Surcharge" tax be levied on every single phone in the U.S. to help pay the cost of installing wiretap software throughout the U.S. "I think that the American public would be willing to pay this," he said with a straight face.

The crux of the problem is that the FBI insists that the $500 million currently authorized to pay for all these wiretap software modifications is enough. When that pot of money runs out, "it's not really a concern of mine" who ends up paying, said FBI Director Louis Freeh, the corners of mouth curled ever so slightly in an almost Bruce Willis trademark smirk.

But from industry's standpoint, the $500 million is "chump change" as one telephone executive whispered into the ear of his blonde companion during the hearing.

Although $500 million "is hardly chump change," as Freeh later said, the economics here suck, no matter whose calculator you use.

There are less than 1,000 wiretaps done each year, according to official Justice Dept. statistics. The government is giving the telephone companies $500 million and 4 years to complete the entire rewiring of America.

You do the math. You're going to pay $125,000 *per* wiretap per year for the next four years. That's a lot of coin to pony up in light of the fact that last year state prosecutors "determined that only 20 percent of all [wiretapped] conversations were relevant" to on-going investigations, according to the Electronic Privacy Information Center (EPIC). At the Federal level, EPIC says, "only 17 percent were relevant."

As the bill stands now, your $500 million will have to cover all the software and hardware modifications necessary to make your local telephone line "wiretap ready." It doesn't matter if you live in New York City, where the majority of wiretaps are issued to eavesdrop on guys with names like "Big Tony" or "Nick the Weasel" or in Blue Balls, PA, where there probably hasn't been a legal wiretap officially issued in decades -- the FBI wants its wiretap access to be universal and complete within 4 years, 6 at the outside.

The actual cost to implement this bill is more along the lines of "billions" according to Roy Neel, president of the United States Telephone Association (USTA) and who, in another life was on the staff of Vice President Gore and served at the Cabinet level in the early months of the Clinton White House.

Neel gave the example of the giant phone company BellSouth, which hasn't been cooling its jets waiting for this bill to pass. These guys have already been out getting estimates on how big a financial hit they'll take if the bill passes, Neel said. Answer: $138-$247 million for its wireline business only.

And that's only one of the Seven Sisters of Our Lady of the Dial Tone. Don't forget the country's biggest local phone company, GTE, which also happens to still have a large installed base of outdated and in some cases, antique telephone switches. Then there are the 1,100 or so "mom and pop" telephone exchanges in rural areas. These smaller exchanges also will have to upgrade their systems. No one escapes.

Why? Well, hell, if you're the FBI you just never know when you'll have to, say, oh... go to all the trouble of flying into some small Texas town and roll out the armored personnel carriers and firebomb the plywood compound of a religious wacko.

So, just in case that shit happens again, the FBI wants to be able to listen in when the Religious Head Wacko growls on his cellular phone: "Jimmy, bust out the scatter-guns. God and an informant just told me the Feds are coming to reap their heavenly rewards."

Trust Us. We'll Pay. No, Really.

FBI Director Freeh admits there's no way to nail down the actual cost. "But it may turn out that it's significantly less than $500 million." That's what he desperately wants you to believe.

It's a fantasy.

The National Association of Regulatory and Utility Commissioners estimates that telephone companies spent $1 billion per year on software modifications alone.

USTA's Neel testified that one of his association's member company's "with only moderate law enforcement obligations" ends up spending some $3.7 million yearly to handle more than 100,000 subpoenas. "These expenditures of time and personnel are borne by the companies alone, without government reimbursement, even though the companies frequently request compensation," Neel said.

When it comes to paying up, the government has a poor repayment record, Neel implies. There's no reason to believe the government will actually repay the telephone companies for all their costs, even though required to, Neel said. This is because the language of the bill is too ambiguous, he said.

Such ambiguity led Thomas Wheeler, president of the Cellular Telecommunications Industry Association (CTIA) to call the bill "substantively sound but fiscally flawed." He called the bill an "unfunded mandate" in which the government demands require cellular telephone companies to "obey and spend" the money to install the wiretap software,"then we'll see if we can reimburse you."

When the Well Runs Dry

If the money runs out, who pays? That's what Rep. Rick Boucher (D- VA) wanted to know. "I'm persuaded that these costs should be borne by the government," he said. Otherwise, it's the ratepayers that get stuck with the bill or it's industry themselves, which will only drain money from implementing emerging technologies which would slow down deployment of the information superhighway, which would leave it up to cable companies to develop and then... god help us...

Boucher asked FBI's Freeh what happens if Congress fails to even give him the original $500 million. "I doubt that Congress would pass on the opportunity to make sure that our children were safe from terrorists," Freeh said.

But Boucher came right back: "I wouldn't be surprised if appropriated funds don't make it... we have enough problems here coming up with money for discretionary programs."

Rep. Ron Wyden (D-Ore.) said the bill should be amended to assure that if the money runs out there's no "hidden wiretap tax" imposed on the American public. He said the issue is one of "accountability." By making sure government pays, it means that someone has to track the spending, "making sure that we don't legislate a blank check." He said if the cost after 4 years is passed on to the telephone companies, state regulators would probably allow the costs to be passed on to the customers as "a legitimate business expense."

And Still No Pressing Need

Freeh calls the passage of the wiretap bill a "drop dead issue" for law enforcement. In Tuesday's testimony he continued to ride the straw horse of probable cause. Freeh, again, trotted out an "informal" FBI study that had identified 183 instances where FBI wiretaps have been "frustrated" by digital technologies.

But when Dispatch pressed Freeh for details on these 183 instances of "wiretap frustration" (covertus interruptus), he admitted that "most" of those instances weren't officially wiretaps at all. Of those 183 instances, 30% were caused by the cellular company not having enough physical connections to allow the Bureau to borrow into the cellular switch. Easy -- but expensive -- fix: Buy more ports for the cellular switch.

The next level of "problems" came from "the inability to capture dialed digits," Freeh said. "Do you mean pen registers, as in, the things that don't need a court order to get?" Yes, Freeh said. Of the 183 "wiretap" problems caused by digital technology, about 19% were pegged to pen register problems. The "other" category took home the rest of honors and included other non-wiretap technologies used by the FBI, such as "trap and trace."

USTA's Neel said, for what must be the 1000th time now: "We know of no instance where a court authorized wiretap has been thwarted by digital technologies."

Hey, Boss? The Mafia Wants To Rent Office Space

Another area of contention is that this bill doesn't cover every single telecommunications company. USTA wants it to cover everyone from the makers of answering machines to your local Internet provider.

The FBI would like this too, however, they realized this was politically more capital than they had to spend during this congress. Even so, the FBI found an unlikely ally in the process: The Electronic Frontier Foundation (EFF).

At the end of the previous hearing on this bill, FBI Director Freeh patted EFF Policy Director Jerry Berman on the shoulder and said: "Who would have thought, two years ago, that we'd be collaborating like this." And Tuesday, the subcommittee Chairman Markey (D- Mass.) thanked EFF for "brokering" a tough compromise among all interested parties.

In all fairness, the EFF was able to broker stronger privacy protection for electronic communications and kept -- for now -- all online services out of the grasp of this bill.

But the bill still treats some networks differently. Mainly, these are "shared tenet" networks, which are phone systems such as those strung together between buildings. These private networks handle all their own calls, billing, etc. Sometimes they can be huge, dwarfing the majority of rural telephone companies in both scope and technology.

The World Trade Center is an excellent example. The WTC's network is exempt under this rule. The FBI can't wiretap it, or so it would appear. Why? Because it's digital and private and oh shit...

"This creates a safe haven for criminals," says USTA's Neel. Indeed, even the FBI's Freeh admits that some criminals will be able to go "off network," allowing "a part of the sophisticated criminal world" to not be covered under this bill. Are you getting this?

All a criminal has to do then, is, say, set up offices in the WTC and chatter away all they want because the FBI can't wiretap their phones because these networks won't be required to install the software! But Freeh was quick to point out that "we feel that the majority of our dangerous criminals fall under the universe of this bill's coverage."

So, What the Hell Does the Public Want?

Freeh is convinced that you will support this bill. It's all a matter of perspective, he said, a kind of syntactical slight of hand: "Ask the American public if they want an FBI Wiretax and they'll say 'no.' If you ask them do they want a feature on their phone that helps the FBI find their missing child they'll say, 'Yes.'"

But in fact, statistics complied by the Justice Department seems to indicate otherwise. In 1991, the latest year figures are available, most Americans, across all age groups, disapproved when asked the question: "Everything considered, would you say that you approve or disapprove of wiretapping?" Some 67% of all 18-20 year olds gave the thumbs down, as did 68% of the Gen-X crowd (and Newsweek said these kids were confused...). Boomers disapproved of wiretapping almost 3-to-1 while 67% of those 50 and over disapproved.

Yep, it's a "drop dead issue" alright.

Meeks out...