FCC approves Net-wiretapping taxes

update WASHINGTON--Broadband providers and Internet phone companies will have to pick up the tab for the cost of building in mandatory wiretap access for police surveillance, federal regulators ruled Wednesday.

The Federal Communications Commission voted unanimously to levy what likely will amount to wiretapping taxes on companies, municipalities and universities, saying it would create an incentive for them to keep costs down and that it was necessary to fight the war on terror. Universities have estimated their cost to be about $7 billion.

"The first obligation is...the safety of the people," said FCC Commissioner Michael Copps, a Democrat. "This commission supports efforts to protect the public safety and homeland security of the United States and its people."

Federal police agencies have spent years lobbying for mandatory backdoors for easy surveillance, saying "criminals, terrorists and spies" could cloak their Internet communications with impunity unless centralized wiretapping hubs become mandatory. Last year, the FCC set a deadline of May 14, 2007, for compliance. But universities, libraries and some technology companies have filed suit against the agency, and arguments before a federal court are scheduled for Friday.

"We're going to have a lot of fights over cost reimbursement," Al Gidari, a partner at the law firm of Perkins Coie, who is co-counsel in the lawsuit, said in an interview after the vote. "It continues the lunacy of their prior order and confirms they've learned nothing from what's been filed" in the lawsuit, he said.

The original 1994 law, called the Communications Assistance for Law Enforcement Act, or CALEA, authorized $500 million to pay telecommunications carriers for the cost of upgrading their networks to facilitate wiretapping. Some broadband and voice over Internet Protocol (VoIP) providers had hoped that they'd be reimbursed as well.

Jonathan Askin, general counsel of Pulver.com, likened Wednesday's vote to earlier FCC rules extending 911 regulations to VoIP. "It essentially imposed a mandate on the industry without giving the industry the necessary support to abide by the rules--and the same thing seems to be happening here," Askin said.

Even without the CALEA regulations, police have the legal authority to conduct Internet wiretaps--that's precisely what the FBI's Carnivore system was designed to do. Still, the FBI has argued, the need for "standardized broadband intercept capabilities is especially urgent in light of today's heightened threats to homeland security and the ongoing tendency of criminals to use the most clandestine modes of communication."

The American Council on Education, which represents 1,800 colleges and universities, estimates that the costs of CALEA compliance could total roughly $7 billion for the entire higher-education community, or a tuition hike of $450 for every student in the nation. Documents filed in the lawsuit challenging the FCC's rules put the cost at hundreds of dollars per student.

But during Wednesday's vote, commissioners dismissed those concerns as unfounded. "I am not persuaded merely by largely speculative allegations that the financial burden on the higher-education community could total billions of dollars," said FCC Commissioner Deborah Taylor Tate, a Republican.

The FCC's initial ruling last fall had left open the question of whether broadband and VoIP providers would be reimbursed for rewiring their networks and upgrading equipment to comply with CALEA.

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