Wiretaps may mute Nextel rivals

At stake are walkie-talkie-like services from Verizon Wireless, Sprint and AT&T Wireless. These networks currently can't be bugged, making them a target for law enforcement agencies that portray them as havens for criminals and terrorists.

"Those that would do our nation harm will migrate to the new technology, if they have any idea or any regard that it cannot be surveilled," New York Attorney General Eliot Spitzer told federal utility regulators earlier this year. "Yet firms continue to roll out untappable functions. Anyone today can easily obtain wireproof phones and thereby exploit the gaps in law enforcement's ability to effect intercept with impunity."

Ongoing push-to-talk wiretap problems could dampen industry projections. A quarter of all cell phone subscribers are expected to use such services by 2008, generating up to $30 billion in revenue per year worldwide.

To see just how successful these services can be, look no further than Nextel. Three-fourths of the company's 13.5 million subscribers use push-to-talk, generating the highest average revenue per user in the cell phone industry.

Those numbers have drawn the envy of competitors, which are racing to create their own national push-to-talk networks. Verizon and Sprint rolled out push-to-talk services last year, and AT&T Wireless began building its network in the middle of 2004.

Unlike Nextel, however, all these carriers rely heavily on third-party equipment suppliers, giving them less control over details such as wiretap compliance. As a result, push-to-talk surveillance requirements could prove to be a more significant problem for the industry than has been widely recognized up until now.

Earlier this month, the Federal Communications Commission issued findings that made it clear that the agency believes the 1994 Communications Assistance for Law Enforcement Act, or CALEA, covers new technologies such as voice over Internet Protocol (VoIP) and push-to-talk.

Meanwhile, Sprint and AT&T Wireless have asked the FCC to extend compliance deadlines, most recently seeking a waiver that would give them up to 10 months to meet CALEA requirements.

"Sprint is working with law enforcement and carriers to develop standards for PTT (push-to-talk) services...Once this is in place, we believe that the CALEA solution will address law enforcement concerns," a Sprint representative said.

Added AT&T Wireless: "We have asked for an extension while our vendor develops a technology solution."

Despite such assurances, law enforcement agencies have grown tired of delays and now oppose granting carriers more time to comply. In the latest sign of impatience over the issue, the FBI pulled its support for extending waivers to push-to-talk providers.

"For once I agree with the businesses: Get these nosey SOBs off my back." --Jo Makee

If the FCC fails to grant the most recent waiver requests, providers of up-and-running services such as Verizon and Sprint could find themselves subject to millions of dollars in fines. It could also delay plans from companies such as AT&T Wireless, which is in the midst of building out its own push-to-talk network.

Although the FCC has yet to rule on the requests, it may have tipped its hand earlier this month, when reaffirming that push-to-talk services are indeed subject to federal wiretapping statutes.

"The FCC is being very careful to avoid any impact on the rollout of new technology," said Julius Knapp, deputy chief of the FCC's Office of Engineering and Technology. "But we have to balance the needs of law enforcement, which have shown they've been patient so far."

Mike Altschul, general counsel of the CTIA wireless association, said the industry as a whole is scrambling to comply. But he's also working to win FCC approval for the cellular carriers' waivers.

"The commission should take into account the current lack of commercially available intercept capabilities for most such services," he said.

Showdown at PTT corral
For their part, the carriers say they are at the mercy of their push-to-talk network equipment providers, which are being asked to quickly come up with a fix for the problem.

Push-to-talk is based on the technology behind VoIP telephone services. Just like this cheaper version of traditional home phone calls, voices are broken up into bits of data and sent on any number of paths over the Internet.

To capture the conversations, carriers have to corral all those bits, which is no easy feat. Wiretapping these calls is more difficult than a traditional phone network, because equipment makers haven't standardized their surveillance gear, creating problems for carriers that aren't as experienced with the equipment, said Kari Kurronen, Nokia senior marketing manager.

"Typically, when new services are introduced, legal interception is not the first thing to be standardized," he said.

Carriers are capable of documenting a push-to-talk cell phone's location, the telephone numbers involved with the conversation and other information. But they can't deliver the actual conversations--the most valuable part, from an investigative standpoint.

Togabi Technologies, which produces push-to-talk gear, said it has a solution "on the road map" but declined to say when it would be ready.

Nextel licks its chops
Meanwhile, Nextel is sitting on the sidelines, watching its competitors sweat it out. The company, along with Motorola, introduced push-to-talk technology in the early 1990s and has been able to capture the conversations for at least two years.

With competitors' development efforts now possibly sidelined, the Reston, Va.-based carrier can continue perfecting its first consumer-oriented phones after a decade of selling them predominantly to mobile business professionals.

Nextel's engineers, which worked alongside Motorola's for two years on its tapping solution, uses an older generation of push-to-talk technology, in which everything, from the silences to the giggles, passes through the same bit of bandwidth.

"I can't stress this enough: It took a lot of work for us to tap these phone calls," Nextel spokeswoman Audrey Schaeffer said. "We had to invent an entirely new technology. It wasn't easy, and we worked long and hard at it."