FCC Puts U.S. Cell Phone Routing System in Hands of European Firm despite Security Warnings

Tuesday, July 26, 2016
(photo: John Lamb, Getty)

 

By Eric Lichtblau, New York Times

 

WASHINGTON — The Federal Communications Commission has decided to make a European-owned company the clearinghouse for routing billions of cellphone calls and text messages across the United States, despite claims by critics that the plan poses national security risks, officials said Thursday.

 

The FCC’s approval, which has not been publicly announced, will give a New Jersey subsidiary of Ericsson, the Swedish technology giant, the obscure but critical job of operating a sprawling national system to track and route wireless calls and texts among hundreds of service providers.

 

The routing system began in the 1990s as a way for people to keep their cellphone numbers when they switched carriers, but intelligence and law enforcement agencies have come to rely on it to track and trace phone numbers in investigations.

 

The contract, worth as much as $1 billion over seven years, has been held since 1997 by a small Virginia company, Neustar. As part of an intense bidding process, the Ericsson subsidiary, Telcordia, told the FCC it could do the work much more cheaply than Neustar, and it earned the backing of many large carriers.

 

Some current and former intelligence officials have expressed concern that handing the contract to a foreign-owned company could leave the system more vulnerable to an attack.

 

Illustrating that point, evidence emerged several months ago that Telcordia had improperly used a small number of foreign nationals, including one Chinese citizen, to do computer coding for early work on the system after Telcordia was given preliminary approval for the job. Only “vetted U.S. citizens” were supposed to work on the project, and as a result, the FCC forced the firm to scrap the extensive computer work it had done and start over.

 

The FCC’s three Democratic-appointed commissioners, led by Tom Wheeler, the chairman, voted this month in a closed setting to give the final go-ahead to Telcordia, people with knowledge of the deliberations said. The two remaining commissioners, both Republicans, voted to concur with that approval in part, differing with the Democrats on the reasoning behind the move, these people said.

 

The FCC has not made the results of the vote public, but a spokesman, Mark Wigfield, said Thursday that, “I can confirm that the plan was voted on and approved.”

 

He declined to discuss the details of the final order but said in a statement that FCC staff members were working to release the order as soon as possible. The FCC oversees the work and has authority for picking the contractor, which runs what is known as the Local Number Portability Administration, but there is no direct federal funding.

 

Neustar waged a furious effort to hold on to the job, and it criticized the FCC over a bidding process that it said was deeply flawed, suing last year in federal court.

 

The firm hired Michael Chertoff, the former Homeland Security secretary, in 2014 as a private consultant to assess the possible risks posed by the plan to change administrators. He concluded in a 45-page report that the FCC had given short shrift to security concerns and that turning the job over to a European-owned company could make security “obsolete in the face of constantly morphing threats.”

 

The controversy echoes earlier disputes over the role foreign companies should play in U.S. infrastructure systems. In 2006, for instance, a $6.8 billion deal that would have allowed a company in the United Arab Emirates to manage six U.S. port terminals set off outrage in Congress and was eventually killed.

 

Neustar charged that Telcordia should be disqualified from the job for violating its promise to employ only U.S. citizens in the preliminary work. It also charged in a letter to the FCC two weeks ago that what it called the commission’s arbitrary decisions had “tipped the scales in favor of” its Swedish-owned competitor and had risked compromising service for cellphone users nationwide.

 

Through a trade consortium, many major wireless carriers pushed for Telcordia’s selection because of the cost savings they said it had offered. But a number of smaller rural carriers backed Neustar and said their interests had been ignored.

 

The bidding process “has been marked by limited transparency and little opportunity for meaningful input from small and rural carriers,” executives for a trade group called NTCA-The Rural Broadband Association said in a letter in May to the FCC

 

A spokesman for Telcordia could not be reached for comment Thursday.

 

FCC officials said they had worked to address the national security concerns raised in the bidding process.

 

In a letter filed with the FCC this week, David G. Simpson, a retired rear admiral who leads the commission’s public safety bureau, said he and other officials from the FCC and the FBI had received a “detailed walk-through” in April of several of the sites that Telcordia plans to use for the phone database.

 

Simpson said his team had examined a range of security steps planned by Telcordia, including digital security defenses, computer coding practices, whistle-blower programs, guards and visitor screenings.

 

In a separate letter to the FCC last month, the FBI said it was important for law enforcement and national security agencies to get accurate, confidential and secure phone-routing information under the contract. It said that it had no indication that Telcordia was unable “to meet those needs.”

 

To Learn More:

Phone Routing Firm Recruits Ex-Homeland Chief to Sound Alarm on U.S. Security in Bid to Hold Onto Federal Contract (by Noel Brinkerhoff, AllGov)

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