Sprint Fined $15.5 Million After Charging Feds for Government-Mandated Wiretapping Upgrades

Insult, meet injury. You'll be paying the feds' bills.


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Sprint Communications just got whacked with a $15.5 million fine for charging the feds the cost of government-mandated wiretapping technology upgrades. The Communications Assistance for Law Enforcement Act (CALEA), passed in 1994, puts telecoms under the gun for making communications through their systems tappable by government snoops, and also for shouldering the costs of upgrades necessary to keep the system compliant, except for case-by-case circumstances approved by federal officials. If the feds don't agree to accept the bill, the telecom is on the hook—and subject to hefty fines if it tries to pass costs along.

CALEA, which has been expanded by reinterpretions several times since passage, "forced telephone companies to redesign their network architectures to make it easier for law enforcement to wiretap digital telephone calls," according to the Electronic Frontier Foundation. Compliance with the law sounds like a bitch, if you try to dig through the Federal Communications Commission's guidance. But the victory-dance press release from United States Attorney Melinda Haag is sufficiently plain English and eye-opening to make matters clear:

In 2006, the Federal Communications Commission ruled that carriers were prohibited from passing on the costs of their CALEA upgrades to law enforcement agencies in their intercept bills.  The investigation by OIG and the U.S. Attorney's Office revealed that from 2007 to 2010, in violation of the FCC's ruling, Sprint nevertheless included in its intercept charges the hidden costs of financing its CALEA upgrades.  In the settlement agreement, Sprint agreed to pay $15.5 million to resolve the allegations in the complaint but did not admit to any wrongdoing or liability.

That's pretty straightforward. Telecoms have to dig into their own wallets to keep the feds's toys up-to-date. The FCC allows for "petitions for cost-shifting relief," but who ultimately pays is entirely up to the feds.

In response to my questions about the case, a Sprint representative responded, "Sprint provides these services to the government at below cost and respectfully disagrees with the government's claim that it was entitled to even greater discounts. Sprint agreed to settle this matter to avoid the expense and distraction of this litigation."

Through reinterpretive sleight of hand, the FCC unilaterally expanded CALEA to apply to VoIP communications and instant messaging a decade ago. In this age of apps produced and made available by small players across jurisdictional boundaries, that doesn't necessarily mean there's a backdoor into your communications software, though there might be. If there's not, it's not for lack of intent to snoop, or to pass the buck for keeping communications snoopable along to anybody and everybody but the feds themselves.

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  1. So, basically the Feds didn’t like the bill Sprint sent them, and decided to extort money to make up for it by arguing that there were ‘hidden fees’ in it for things they can’t charge for.

    I wonder what would really happen if Sprint told the Feds to fuck off. Seriously, how much would they be willing to fuck with Sprint? I’m sure there’s various ways they could get their money, but the corporations bow and take it without a whimper most of the time.

    1. Well, the problem is the feds won’t go after *Sprint*. They’ll go after *specific people in Sprint* and threaten them with personal fines and jail time through criminal liability.

      1. Hump or death. You have ten seconds to decide. hump-death, hump-death, hump-death, your time is running out!!!

        1. Very well, then. Cake.

        2. You killed my father,prepare to die!

    2. Ask Joseph Nacchio what happens to telecom CEOs that tell the feds to screw off.

      1. Touche.

      2. BS. Nacchio’s prosecution has little to do with that and everything to do with his own illegal actions. He encouraged accounting fraud and traded on inside information. Fuck him with a rusty stake.

  2. So no one in government understands economics?

    1. Pssht. They understand force. And fraud. What do they need to understand economics for?

  3. couldnt have happened to a nicer company

  4. And we just gave these people latitude to treat ISPs like telecom companies.

    Is there any group of concern-trolling special interest panderers dumber than the NN folks?

    1. No

    2. But, but, but COMCAST!!!!!!!!!


    3. alternative energy?

  5. Unilaterally. Time for the FCC to go, I think.

  6. doesn’t necessarily mean there’s a backdoor into your communications software

    Something, least untruthful, something.

  7. Up next,a law making all businesses give the feds a key to their buildings ,because,911!

    1. Dammit, stop giving them ideas!

      1. We don’t need no stinking keys. Or warrants.

    2. Having a key means they have less justification to dress up like soldiers and bash the door down. The don’t want that.

  8. this sounds a lot like gila medical center charging “patients” for the forced enemas and colonoscopies the police inflicted upon them.

  9. What legitimate purpose (beyond FYTW) does the FCC serve again???

    1. It is the official administrator of an essential government choke point (electronic communications, mass and individual).

  10. How is that not an unconstitutional taking?

    I know. I know. FYTW.

  11. And, of course, we know where Spring gets *its* money, so can we cut the crap and simply call this a new tax?

  12. Sprint agreed to settle this matter to avoid the expense and distraction of this litigation.

    So, they chose a fingering over a fisting. Sounds like at least one person at Sprint understands risk-reward analysis.

  13. Here’s what I don’t get: The Constitution exists at all, in part, because of a once well-understood and strongly held belief that it is important NOT to make things easier for the government in its dealings with the people — that checks and balances, including due process, are necessary OBSTACLES to put in government’s path, if we want it to remain the people’s servant, instead of becoming their master. One of those obstacles is the Fifth Amendment, which guarantees that no “private property be taken for public use without just compensation.” Has CALEA not been challenged on Fifth Amendment grounds? If it has, how could anyone rule for the government? Clearly, private resources are being put to “public use” — the resources necessary to install and maintain the government’s means of access — and clearly the law FORBIDS any compensation, much less “just compensation.” If my City forced every property owner to set-back their back yards to provide for alleyways that would accommodate garbage, police, and fire vehicles, I think the property owners would have a good case to get that declared as a “taking” under the Fifth Amendment, especially if the City required the alleys to be established at the property owners’ expense. Why isn’t the equivalent situation in telecom readily seen and acknowledged as a Fifth Amendment taking?

    1. I looked into this a little bit. Apparently, CALEA was challenged on Fourth Amendment grounds, back in the early 2000s, but not Fifth, and no case was ever decided in the Supreme Court. I think the lack of Fifth Amendment challenge was because, originally, Congress provided funding to help implement CALEA. That ran out long ago, however. Today, the idea that the Feds can force private entities to purchase, install, and maintain/upgrade facilities intended for government use only, and then prohibit the entities from getting proper compensation for this compliance, mocks the Fifth Amendment, imho. Since Sprint settled the case, do they no longer have standing to sue about either the specific fine or CALEA itself? The subheading for this article says, “You’ll be paying the Fed’s bills.” But that would have happened, one way or another, anyway. If Uncle Sam paid Sprint, taxpayers would be on the hook. If Sprint pays Uncle Sam’s bills, then the tens (hundreds?) of thousands of Sprint customers will pay those bills. Maybe Sprint customers or shareholders should sue the government, since money from their pockets will ultimately be used to satisfy the government’s demand. I use Sprint. Would I have standing to sue?

      1. I’m betting that if it got anywhere beyond the circuit court, the government would invoke “National Security”, the judges would genuflect, and telco customers will continue to pay the tax.

  14. Reminds me of the Soviet practice of sending the bill for bullets to the family of those that they executed.

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