The FBI and other U.S. law enforcement agencies are worried that new space-based telephone systems, which theoretically allow a person to use a wireless phone from virtually anywhere on earth, will undermine their ability to wiretap telephone calls and trace criminals through cellphones.
Federal communications officials are holding up critical operating licenses for Globalstar and a handful of smaller satellite phone services while they negotiate with the FBI over wiretapping issues.
"These are borderless systems," said Mac Jeffery, a spokesman for Globalstar, a satellite phone provider scheduled to launch service in North America by the end of this year. "But it's not really a borderless world from the legal perspective yet."
Globalstar, Iridium, and a handful of other companies are leading an ambitious push to create a network of satellites that compete with traditional cellular phone service. The industry has already run into growing pains--Iridium, the first and largest system to launch, has run into severe financial difficulties after falling short of subscriber goals.
The wiretapping issue affects these companies and a handful of other non U.S.-based smaller satellite phone providers which are seeking licenses to operate in the United States, but have land-based equipment located in Canada.
A 1994 U.S. law, dubbed the Communications Assistance for Law Enforcement Act (CALEA), requires telephone companies to provide law enforcement with access to digital call information, including the ability to tap calls and determine the location of users.
That law has proven controversial. Privacy rights groups have protested that the FBI is encroaching on citizens' rights in their push to tap phone calls. Meanwhile, the FBI has said that industry proposals for following the law don't go far enough. The Federal Communications Commission has yet to make a final ruling on the laws.
The FBI's concerns with satellite phone providers do include figuring out how they fit into this law's framework, said one department official. But the Bureau's concerns are larger and more immediate, which has led to the current delay in licensing the services.
Some of these satellite systems are unable to provide information on a caller's location. This information is critical for law enforcement, the FBI says, so it can know whether or not it can legally seek a U.S. court order to tap the phone calls.
Canada's TMI Communications, which has seen its U.S. license application languish in the FCC for close to 16 months, faces this objection. Department of Justice officials are reportedly asking the company to include some kind of global positioning system in TMI phones that would at least determine which country a caller was in.
TMI executives confirmed that they are discussing possible ways to solve the dilemma with U.S. law enforcement officials, but would not comment further.
Because its system is configured differently, Globalstar doesn't face this issue. But because it wants to set up two of its four land-based receiving stations in Canada, it is in a different--and perhaps more technically challenging--situation.
The FBI is concerned that it would have to go through Canadian government officials to win a wiretap on any calls going through these stations--an idea it strongly opposes. Allowing information about surveillance operations to go through foreign government channels would be a serious violation of national security, one FBI official said.
All the companies involved are negotiating these issues with the FBI, and have each proposed a series of technical and policy solutions to the problem unique to their own networks. But according to Washington sources, senior trade and law enforcement officials from Canada and the United States have also discussed the problem, with an eye to settling national security concerns on a policy level with a minimum impact on industry development.
Meanwhile, the FCC is waiting and watching. The FBI and the Department of Justice have no official power to hold up the companies' operating licenses, but regulators are waiting for a resolution to the talks anyway.
"The parties are discussing this," said one FCC official, who asked to remain anonymous. "In the absence of indications that this is not moving forward, we would like to give that process a chance to work."
The dispute is similar to the fight being waged by U.S. software companies, who are barred from exporting strong encryption programs overseas. The FBI has lobbied to bar these exports--and has advocated for stricter rules governing use of encryption inside the United States--arguing that law enforcement needs to be able to crack encryption on encoded email messages of criminals and terrorists.
As with the software companies, the satellite firms are taking a conciliatory stance, hoping to get federal approval before the issue begins cutting into their official launch date. Globalstar, which is slated to go live in North America by the end of this year, says it doesn't expect the issue to push that date back.
"Obviously some modifications are going to be made in order to make sure that national security is intact," said Andy Radlow, a spokesman for Vodafone AirTouch, the company handling Globalstar's North American business. "But we don't foresee launch delays."