Dept. of Homeland Security granted right to snoop on T-Mobile users

In order to gain the approval of the United States government to merge SunCom Wireless into T-Mobile USA, parent company Deutsche Telekom had to extend its electronic surveillance agreement to include the Department of Homeland Security.

The Federal Communications Commission late Friday gave the green light to Deutsche Telekom to acquire regional cellular carrier SunCom for $2.4 billion in cash. SunCom is based in Pennsylvania and serves 1.1 million customers in North Carolina, South Carolina, Tennessee, Georgia, Virginia, Puerto Rico and the U.S. Virgin Islands.

Because T-Mobile is the smallest nationwide mobile operator in the United States, it pays the most roaming fees. In turn, adding SunCom's footprint should reduce those expenses, along with bulking up T-Mobile's customer base.

The deal, which was announced in September and was already guaranteed approval by the two companies' boards, ran into delays at the end of the year. Although T-Mobile and SunCom don't overlap and the FCC was not concerned about reduced competition, the acquisition brought about additional scrutiny by federal regulators because of the foreign ownership element.

For a little background: FCC license deals frequently involve the FBI, Department of Justice and more recently, the Department of Homeland Security, because they directly affect communications that these agencies may need to monitor. The agencies typically require the FCC to defer its ruling until they obtain concessions from the companies involved, that they otherwise may not have been able to receive.

Former FCC commissioner Harold Furchtgott-Roth was an outspoken critic of such concessions, because he felt the FBI and DOJ were getting in the way of the Commission's duties and made these agreements behind closed doors.

"I am also concerned about one other aspect of today's decision: the hijacking of our license transfer authority by other government agencies," he wrote in February 2000 regarding VoiceStream's acquisition of Omnipoint. "More specifically, the FBI and Justice Department continue to use our licensing process to extract concessions from licensees in exchange for this agency's approval of the transfer."

Not long after VoiceStream bought Omnipoint, it was acquired in early 2001 alongside Powertel by Deutsche Telekom, which then formed T-Mobile USA. At the time, the German government controlled 60 percent of DT, a number which has since dropped to around 32 percent.

Before the FCC could give the go-ahead for DT to acquire VoiceStream, the deal needed the approval of the FBI and the DOJ. Since a foreign entity would have control over electronic communications occurring within the United States, the agencies wanted to make sure national security was not impacted and their ability to record conversations was not restricted.

An agreement was signed on January 12, 2001 between DT, the FBI and the DOJ, which prompted the agencies to give the FCC their nod of approval. Specifically, the agreement required all VoiceStream infrastructure to reside in the United States, and stated that it must be accessible to process lawful electronic surveillance of domestic communications 24 hours a day. It also was designed to limit the influence a foreign government could have over U.S. communications.

Because the agreement was signed in early 2001, before the September 11 terrorist attacks and before the formation of the Department of Homeland Security, T-Mobile was ostensibly not bound to turn over customer data to that agency.

Although it's been rumored that T-Mobile has been hesitant to comply with DHS demands, which has hindered its ability to roll out 3G services, no specific instances have been publicized. Recently, T-Mobile was forced by court order to turn over a customer's location data to DHS.

With DT now acquiring SunCom, the U.S. government was able to wrap up the loose end by requiring an amendment to the 2001 agreement that adds the Department of Homeland Security to the list of government parties. DHS now has the same privileges as granted to the FBI and the DOJ in 2001.

"After discussions with representatives of DT, T-Mobile, and SunCom, the Executive Branch Agencies have concluded that the commitments set forth in the 2001 Agreement and 2008 Amendment will help ensure that the Executive Branch Agencies and other entities with responsibility for enforcing the law, protecting the national security, and preserving public safety can proceed in a legal, secure, and confidential manner to satisfy these responsibilities," the FCC concluded in its approval of the SunCom purchase.