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1) When Telecom Australia was a government monopoly, charging for surveil

lance meant the government in effect was charging itself for surveillance

costs. 2) With the introduction of competition, the government considered it unfair to

the shareholders of those companies that they should bear the costs of govern

ment requirements. 3) Because of the size discrepancy between Telecom Australia and the new en

trants, the government also considered it unfair to impose a higher relative

cost on smaller companies. 4) The government determined costs should be visible to the public so that an

assessment can be made about whether the costs of a particular service or

facility are worth the benefit derived from those services or facilities. 5) Police authorities had been accused of having no incentive for efficiency or

cost containment. Accordingly, the federal government determined that the most "economically efficient" and "socially beneficial” means of dealing with police authority requests for intercept facilities was to ensure "full transparency," and the general body of taxpayers carried the costs of those facilities through the budgets of the police authorities.

The government also prohibited the introduction of new technologies which were not capable of interception. This prohibition caused significant negative effects on product development in that nation's telecommunications system. For example, with overloaded analogue mobile telephone capacity, the government was anxious to develop and deploy new GSM-based mobile technology. However, the new technology was untappable.

Consequently, the government authorized the carriers to deploy the new GSM networks, while requiring them to work "double time" to develop an interception capability.

Meanwhile, the Minister of Communications initiated a review to investigate concerns of law enforcement authorities about their obligation to reimburse carriers. The review reaffirmed the basic principles outlined above that the costs of intercept facilities should be borne by the taxpayers. The government also recommended that equipment providers be brought "into the loop” to give realistic and reasonable estimates for needed technology.


The bill should cover all telecommunications services, rather than "carriers." Reference to a functional definition of "local exchange carriers” in House-passed H.R. 3636 is given in the Sectional Summary accompanying the bill. This definition should be made part of the legislative language. Any transmission or switching of electronic communications to unaffiliated parties for hire is a telecommunications service. 2. Reasonableness

Ensure that good faith efforts to comply with the requirements of the Act are sufficient grounds for compliance.

Put into the legislative language the Sectional Summary discussion of economically feasibility as a criterion of compliance.

Delete reference to "timely action that should have been taken. Alternatively, the bill must state that a good faith effort to develop economically and technologically achievable standards that are intended to satisfy law enforcement requirements is sufficient to allow deployment of technologies or services that may not contain surveillance capabilities.

Add a provision which requires reasonable law enforcement demands which may be "achievable” but have little likelihood of being required. 3. Costs

Establish “pay-as-you-goprovision which ensures that the government has only that which is appropriated for purposes of this Act with which to modify existing network facilities. Companies not reimbursed under such appropriated funds shall be found in compliance with the Act.

Expand reimbursement authority after four years to include reimbursement for capabilities as well as capacity requirements. Provide same stipulation that modifications companies not reimbursed shall be in compliance with the Act.

Establish requirement for timely payment and promulgation of reimbursement procedures with industry input.

CONCLUSION Telephone exchange companies will, as they consistently have in the past, endeavor in good faith to meet the requirements of the law enforcement community. In de veloping a bill that will ensure law enforcement's legitimate demands in conducting surveillance activities with future telephony technologies and services, the United States must ensure that a standard of reasonableness guide its actions.

It is important to remember that there are about 1,000 wiretaps performed each year in the United States. The government intends to spend about $125,000 par wiretap per year for the next four years, if it sticks to its budget.

While industry is willing to facilitate the objectives of law enforcement whenever feasible, we cannot afford to raise barriers to investment in and development of new telecommunications technologies and services.

Finally, USTA again acknowledges the efforts of Senator Leahy and Congressman Edwards and their staffs for their willingness to draft legislation that meets the test of time.

I thank the committee for allowing USTA to testify. I look forward to continuing the process of improving this Act to that it can meet the interests of the local exchange industry while satisfying the objectives of our nation's law enforcement


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