Bloomberg News

NSA Spy Data Seen Costing Phone Carriers $60 Million a Year (1)

January 09, 2014

Verizon Communications Inc. (VZ:US) and other U.S. carriers might have to spend as much as $60 million a year if they’re required to keep bulk phone records for the National Security Agency, a top Democratic Senator said.

Senator Dianne Feinstein, chairman of the Senate intelligence committee, said after a meeting today with President Barack Obama about limiting NSA surveillance programs that it would be too costly for phone companies to retain the metadata and might expose them to lawsuits.

Requiring the phone companies keep the records “presents a huge civil situation,” she said in an interview. “Would every detective or every attorney want to get the records?”

The California Senator was one of several lawmakers who were in the White House meeting to discuss the future of NSA surveillance and records retention. The review was sparked by backlash over NSA spying exposed last year in documents leaked by former contractor Edward Snowden, who has been charged with espionage and has temporary asylum in Russia.

The Defense Department told lawmakers that Snowden downloaded about 1.7 million intelligence files, the biggest single theft of government secrets in U.S. history, Republican Representative Mike Rogers, chairman of the House intelligence committee, said in a statement today. The Defense Department concluded that the case could “gravely impact” U.S. national security, he said.

Company Involvement

The disclosures have ensnared technology and telecommunications companies in a debate over information security, privacy and how to defend against the threat of terrorism.

A panel appointed by Obama, the independent Review Group on Intelligence and Communications Technology, recommended in its report to Obama last month putting limits on the NSA, including prohibiting the agency from collecting and storing billions of phone records. Instead, the data should be held by Verizon, AT&T and other U.S. carriers or another third party and only accessed by the NSA with a court warrant, the panel said.

The potential liability is probably more of an issue than storage costs for the three largest U.S. phone carriers -- Verizon, AT&T Inc. (T:US) and Sprint Corp. -- which reported a combined $164.1 billion in operating revenue in 2013, according to data compiled by Bloomberg.

Phone Records

During today’s meeting, Obama discussed options for handling bulk phone records without indicating what he supports, said Senator Chuck Grassley of Iowa, the top Republican on the Senate Judiciary Committee.

Obama told lawmakers he plans to announce his decisions at the end of next week, Grassley said in an interview after the meeting.

“We would oppose any sort of data retention mandate,” Jot Carpenter, vice president for government affairs for CTIA-The Wireless Association, said in an e-mailed statement today.

Obama is “fairly far along” with his own review “but he’s no yet finished with that,” White House press secretary Jay Carney said today.

Foreign Leaders

The administration is seeking to rein in U.S. surveillance without sacrificing its ability to use electronic intelligence gathering to fight terrorism.

Obama will call for tighter limits on U.S. spying on foreign leaders in response to a global uproar over U.S. surveillance, according to an administration official familiar with the proposal.

It’s unclear how far Obama will go to limit spying on foreign leaders, and the official who confirmed the restrictions on condition of anonymity declined to provide further details. White House officials have suggested that Obama may be willing to curtail snooping on allies while preserving the ability to monitor leaders from hostile nations.

Obama is also expected to call for putting a privacy advocate on the secret court that oversees the NSA programs, and is considering limits on the government’s ability to collect and store phone records.

The president has been holding a series of meetings this week with various stakeholders -- privacy advocates, lawmakers, and members of various review panels.

Tomorrow, White House staff members will meet with executives from technology companies to discuss U.S. surveillance programs, according to an administration official who asked not to be identified discussing the meeting.

The intelligence review panel’s five members are scheduled to testify about their recommendations before the Senate Judiciary Committee on Jan. 14.

Feinstein said lawmakers are waiting to see what Obama decides before they will know if legislation is needed. “It all depends upon what he does,” she said.

To contact the reporters on this story: Chris Strohm in Washington at cstrohm1@bloomberg.net; Margaret Talev in Washington at mtalev@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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  • T
    (AT&T Inc)
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