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ties.

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 authori

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 esti. mates for needed technology.

USTA RECOMMENDS THE FOLLOWING CHANGES TO THIS LEGISLATION 1. Scope

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 economi. cally 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-go” provision 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 modi. fications 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 community.

New York City Buildings Connected to Competitive

Telecommunications Service Providers

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4 Albany Street 1 Bankers Trust Plaza 101 Barclay St ... 1 Battery Park Plaza 17 Battery Place 15 Broad St 20 Broad St 30 Broad St 40 Broad St 50 Broad St 60 Broad St 61 Broad SI 67 Broad St 80 Broad St 85 Broad St 90 Broad St 104 Broad St 125 Broad St 116th & Broadway 2 Broadway 25 Broadway 26 Broadway 45 Broadway 55 Broadway 61 Broadway 120 Broadway

1345 Ave of the Americas

1370 Ave of the Americas

New York City Buildings Connected to Competitive

Telecommunications Service Providers

140 Broadway

195 Broadway 222 Broadway 233 Broadway 250 Broadway 270 Broadway 305 Broadway 770 Broadway 825 Broadway 1633 Broadway 1675 Broadway 1700 Broadway 1775 Broadway 45 Broadway Atrium 1 Centre St 100 Centre St 1 Chase Plaza 100 Church St 250 Church St 22 Cortlandt St 227 E 19th St 120 E 23rd St 150 E 42nd St 250 E 42nd St 345 E 46th St 12 E 49th St

10 E 50th St 55 E 52nd St 153 E 53rd St 525 E 68th St 1 Exchange Place 20 Exchange Place 26 Federal Plaza 1 Financial Square 866 First Ave 111 Fulton St 100 Gold St 390 Greenwich St 7 Hanover Sa 10 Hanover Sa 60 Hudson St 325 Hudson St 375 Hudson St 90 John St 116 John St 127 John St 130 John St 405 Lexington Ave 420 Lexington Ave 425 Lexington Ave 466 Lexington Ave 33 Liberty St

New York City Buildings Connected to Competitive

Telecommunications Service Providers

1 Libery Plaza Merrill Lynch

1 Park Ave Plaza ,75 Park Place 180 Park Place 399 Park Place 375 Pearl

2 Penn

4 Penn

11 Penn

130 Liberty Plaza 33 Liberty St 200 Liberty St 1 Madison Ave 51 Madison Ave 535 Madison Ave 590 Madison Ave 625 Madison Ave 33 Maiden Lane 59 Maiden Lane 100 Maiden Lane 180 Maiden Lane 1 New York Plaza 2 New York Plaza 4 New York Plaza 32 Old Slip 1 Park Ave 200 Park Ave 237 Park Ave 245 Park Ave 277 Park Ave 299 Park Ave 320 Park Ave 399 Park Ave

4 Pennsylvania Plaza 5 Pennsylvania Plaza 20 Pine St 70 Pine St 80 Pine St 88 Pine St 40 Rector St 1 Rockefeller Plaza 30 Rockefeller Plaza 50 Rockefeller Plaza 75 Rockefeller Plaza 1 State St Plaza 33 Thomas St 85 Trinity PI 86 Trinity PI 1 United Nations Plaza 200 Vesey

250 Vesey

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