Technology companies have been a focus of law enforcement and the intelligence community since 1994, when Congress allotted $US500 million to reimburse phone companies to retrofit their equipment to accommodate wiretaps on the new digital networks.
But as the number of law enforcement requests for data grew and carriers upgraded their technology, the cost of accommodating government surveillance requests increased. AT&T, for example, said it devotes roughly 100 employees to review each request and hand over data. Likewise, Verizon said its team of 70 employees works around the clock, seven days a week to handle the quarter-million requests it gets each year.
To discourage extraneous requests and to prevent losing money, industry turned to a section of federal law that allows companies to be reimbursed for the cost of "searching for, assembling, reproducing and otherwise providing" communications content or records on behalf of the government. The costs must be "reasonably necessary" and "mutually agreed" upon with the government.
From there, phone companies developed detailed fee schedules and began billing law enforcement much as they do customers. In its letter to Markey, AT&T estimated that it collected $US24 million in government reimbursements between 2007 and 2011. Verizon, which had the highest fees but says it doesn't charge in every case, reported a similar amount, collecting between $US3 million and $US5 million a year during the same period.
Companies also began to automate their systems to make it easier. The ACLU's Soghoian found in 2009 that Sprint had created a website allowing law enforcement to track the location data of its wireless customers for only $US30 a month to accommodate the approximately eight million requests it received in one year.
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 $US50,000, a figure that includes reimbursements as well as other operational costs. One narcotics case in New York in 2011 cost the government $US2.9 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.
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