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What The Gov’t Pays Industry To Snoop

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Most companies agree not to charge in emergency cases like tracking an abducted child. They also aren’t allowed to charge for phone logs that reveal who called a line and how long they talked – such as the documents the Justice Department obtained about phones at The Associated Press during a leaks investigation – because that information is easily generated from automated billing systems.

Still, the fees can add up quickly. The average wiretap is estimated to cost $50,000, a figure that includes reimbursements as well as other operational costs. One narcotics case in New York in 2011 cost the government $2.9 million alone.

The system isn’t a true market-based solution, said Al Gidari, a partner at the law firm Perkins Coie who represents technology and telecommunications companies on privacy and security issues. If the FBI or NSA needs data, those agencies would pay whatever it takes. But Gidari said it’s likely that phone and technology companies undercharge because they don’t want to risk being accused of making a false claim against the government, which carries stiff penalties.

Online companies in particular tend to undercharge because they don’t have established accounting systems, and hiring staff to track costs is more expensive than not charging the government at all, he said.

“Government doesn’t have the manpower to wade through irrelevant material any more than providers have the bandwidth to bury them in records,” Gidari said. “In reality, there is a pretty good equilibrium and balance, with the exception of phone records,” which are free.

Not everyone agrees.

In 2009, then-New York criminal prosecutor John Prather sued several major telecommunications carriers in federal court in Northern California in 2009, including AT&T, Verizon and Sprint, for overcharging federal and state police agencies. In his complaint, Prather said phone companies have the technical ability to turn on a switch, duplicate call information and pass it along to law enforcement with little effort. Instead, Prather says his staff, while he was working as a city prosecutor, would receive convoluted bills with extraneous fees. That case is pending.

“They were monstrously more than what the telecoms could ever hope to charge for similar services in an open, competitive market, and the costs charged to the governments by telecoms did not represent reasonable prices as defined in the code of federal regulations,” the lawsuit said.

The phone companies have asked the judge to dismiss the case. Prather’s lawsuit claims whistle-blower status.

If he wins, he stands to collect a percentage – estimated anywhere from 12 percent to 25 percent – of the money recovered from the companies.

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Posted by FanningCommunications on Aug 1st, 2013 and filed under American Street Guide. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site

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