Fwd: EFF Memo: Digital Telephony, Privacy and Public Accountability

[David J Farber <farber@radiomail.net>]

----- Forwarded Message


Date: Thu, 29 Sep 1994 10:19:15 -0600
From: djw@eff.org (Daniel J. Weitzner)
Subject: EFF Memo: Digital Telephony, Privacy and Public Accountability
To: farber@radiomail.net


Memorandum




To:     Interested Parties
Re:     Privacy and Public Accountability in Digital Telephony Legislation
Date:   September 28, 1994
From:   Jerry Berman & Daniel Weitzner


Digital Telephony legislation (HR 4922/S. 2375) imposes sweeping new
regulatory requirements on telecommunications companies in order to ensure
that law enforcement has easy wiretap access to existing and new
communications networks.  From the outset, EFF and other privacy groups
have pointed out the unfettered government authority to mandate
installation of surveillance technology creates the risk that the growing
Information Superhighway will be turned into vast eavesdropping and
tracking system.  One of the main safeguards against this threat is the
public accountability and reporting requirements currently written into the
proposed legislation.  However, disputes about cost reimbursement
provisions threaten to eviscerate the sunshine provisions that the drafters
wisely wrote into the bill.


EFF believes that the federal government should reimburse
telecommunications carriers for reasonable expenses incurred in complying
with law enforcement requests for surveillance capacity.  Whatever funding
method is adopted, these expenses will be covered either by tax dollars, or
by a hidden tax on telecommunications rate payers.  Public funding will
ensure that money is spent wisely and is subject to oversight by Congress
and concerned citizens.  Forcing these costs to be covered by a hidden tax
on our monthly telephone bills will only increase the risk to privacy and
decrease Congressional oversight powers.


Uncertainty of Current Cost Projections


The Digital Telephony bill has sparked a number of disputes, but all
parties agree that the cost of satisfying the bill's wiretap-ready
requirements will be substantial.  Five hundred million dollars has been
authorized for the first four years, but costs may well go over $1 billion.
 FBI Director Freeh testified that costs could run over $1.5 billion, and
the General Accounting Office told a joint Judiciary Committee hearing that
there is no way to estimate costs for new or existing technologies, but
that the initial FBI analysis significantly underestimated costs.


Cost Accountability Bolsters Privacy Protection


*       Track money spent on surveillance: Federal reimbursement will
create a funding trail that enables Congress to make explicit resource
allocations between surveillance costs and other law enforcement methods. 
Just in the first four years, the bill proposes to spend roughly $125,000
per authorized wiretap.  Congress should have the opportunity to determine,
beyond the next four years, whether or not this is an efficient allocation
of public resources.


*       Track technology choices made to assure adequate privacy
protection: Direct funding of network enhancements required to meet the
bill's requirements will enable privacy advocates to track the types of
surveillance technology used in the future and to ensure that new networks
adequately protect privacy, security and civil liberties.  Without
oversight, network operators may choose the surveillance technology that is
most cost effective.  However, the cost effective solution may not be best
at protecting the privacy and security of users.




Accountability Ensures Wise Allocation of Resources


*       Encourage allocation of resources to areas that require wiretap
capability: The vast majority of wiretaps conducted in the United States
are in New York City, South Florida and Los Angeles.  In fact, over 1000 of
the some 1300 local telephone companies have never been called on the
assist in a wiretap.  A finite upgrade budget will encourage law
enforcement to make prudent choices about which parts of the network
actually require expensive modification.  


*       Protect captive telecommunications rate payers from hidden wiretap
tax:  Refusal to reimburse carriers for costs incurred to meet law
enforcement needs does not make these costs go away, or even necessarily
decrease.  Rather, it only shifts the burden to consumers.  Congress now
faces a choice whether wiretap-related modification costs will be openly
paid for from tax revenues, or be hidden in the bills of telephone rate
payers.


*       Competitive Neutrality: Federal and state policy makers have been
wisely driving the telecommunications market toward a competitive
environment.  Thus, it is critical that this bill not disadvantage new
entrants who seek to compete against incumbent marketshare holders.  As
written, all entities in the market in the next four years are eligible for
sizable reimbursements for network upgrades, but new entrants, who will
likely offer similar services, will have to bear the extra cost of
surveillance equipment on their own.  This is an unwise and unnecessary
barrier to erect in the face of sorely needed new telecommunications
competitors.


Possible criticisms of cost reimbursement


*       Unnecessary, because costs will be de minimis: The FBI has
testified that costs beyond the first four years should be de minimis, so
no "out year" reimbursement is necessary.  Every independent estimate
contradicts this finding, and the FBI Director even notes that it is based
on speculative assumptions.  If costs are actually nominal, then little
or no reimbursement will be required.  However, the Administration should
be willing to bear the risk that it's initial estimates are erroneous and
agree to cover out year costs if they arise. EFF is concerned that if costs
are not covered, carriers will skimp on privacy and security measures in an
effort to find the most cost-effective solutions to law enforcement's
problems.


*       Government may buy too much surveillance capability:  In EFF's
view, privacy is only enhanced by public accountability, but some argue
that a government reimbursement policy would allow law enforcement to buy
"too much" surveillance technology and dictate network design.EFF is
confident that vigorous public oversight, as well as ever-present budget
pressures, will be a reasonable limitation on additional surveillance
features.  The legislation already has reporting requirements and thorough
sunshine provisions which allow Congress together with citizens' groups to
monitor government expenditure.  


*       Disincentive to cost-effective solutions:  Some argue that if
carriers know that they will be reimbursed for all costs, then they will
have no incentive to find cost-effective solutions.  This is the alleged
"gold-plating" problem.Government reimbursement procedures can and should
be designed to deny payment for unreasonable or inefficient solutions. 
First, arbitration provisions already in the bill will provide adequate
scrutiny of cost claims where necessary.  Second, carriers will be more
inclined to find cost-neutral ways to meet requirements than to go through
a lengthy, burdensome, and expensive regulatory process wherein they will
have to justify all of their reimbursement claims. Finally, industry risks
major public embarrassment if it were caught charging law enforcement
agencies inflated costs.


Conclusion


The FBI has requested sweeping new regulatory authority over the nation's
telecommunications networks.  If Congress believes that this authority is
necessary, then it is essential that permanent oversight mechanisms be put
in place which allow monitoring of the uses of this authority.  Tracking
costs, for the first four years, and on into the future, is the only
reliable way to monitor the implementation of this proposed legislation.








For More Information Contact:


Jerry Berman <jberman@eff.org> 
Daniel Weitzner <djw@eff.org>
Electronic Frontier Foundation
202-347-5400


Daniel J. Weitzner, Deputy Policy Director       <djw@eff.org>
Electronic Frontier Foundation                   202-347-5400 (v) 
1001 G St, NW  Suite 950 East                    202-393-5509 (f)
Washington, DC 20001                      [PGP key available via finger]


*** Join EFF!!!  Send mail to membership@eff.org for information ***