5 August 2004

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NEWS
Federal Communications Commission
445 12 th Street, S. W.
Washington, D. C. 20554

This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D. C. Circ 1974).

News Media Information 202 / 418- 0500
Internet: http://www.fcc.gov
TTY: 1- 888- 835- 5322

FOR IMMEDIATE RELEASE
August 4, 2004
News Media Contact: Julius Knapp
(202) 418- 2468

FCC ADOPTS NOTICE OF PROPOSED RULEMAKING AND DECLARATORY RULING REGARDING COMMUNICATIONS ASSISTANCE FOR LAW ENFORCEMENT ACT

Washington, DC – The Federal Communications Commission today begins a thorough examination of the appropriate legal and policy framework for implementing the Communications Assistance for Law Enforcement Act (“ CALEA”), particularly regarding broadband access and services. It is the Commission’s primary policy goal in this proceeding to ensure that law enforcement agencies (“ LEAs”) have all of the resources that CALEA authorizes to combat crime and support Homeland Security. However, the Commission recognizes that LEAs’ needs must be balanced with the competing policies of not impeding the development of new communications services and technologies and protecting customer privacy.

The Commission initiates this proceeding at the request of, and in response to, a Joint Petition filed by the Department of Justice, Federal Bureau of Investigation, and Drug Enforcement Administration (“ Law Enforcement”) in March 2004. In its Petition, Law Enforcement states that, although the Commission has taken steps to implement CALEA – which was enacted in 1994 – there remain several outstanding issues that require immediate attention and resolution by the Commission, so that industry and LEAs have clear guidance as the CALEA implementation process moves forward.

In the Notice of Proposed Rulemaking (Notice), the Commission tentatively concludes that CALEA applies to facilities-based providers of any type of broadband Internet access service – including wireline, cable modem, satellite, wireless, and powerline – and to managed or mediated Voice over Internet Protocol (“ VoIP”) services. These tentative conclusions are based on a Commission proposal that these services fall under CALEA as “a replacement for a substantial portion of the local telephone exchange service.”

Additionally, the Commission tentatively concludes that it is unnecessary to identify future services and entities subject to CALEA. The Commission recognizes Law Enforcement’s need for certainty regarding the applicability of CALEA to new services and technologies, but anticipates that the Report and Order in this proceeding will provide substantial clarity sufficient to resolve Law Enforcement’s and industry’s uncertainty about future compliance obligations.

The Commission seeks comment on telecommunications carriers’ obligations under section 103 of CALEA and compliance solutions as they relate to broadband Internet access and VoIP. In particular, the Commission seeks comment on the feasibility of carriers relying on a trusted third party to manage their CALEA obligations and whether standards for packet- mode technologies are deficient and thus preclude carriers from relying on them as safe harbors for complying with CALEA.

With regard to compliance, the Commission proposes mechanisms to ensure that telecommunications carriers comply with CALEA. Specifically, the Commission proposes to restrict the availability of compliance extensions under CALEA section 107( c) and clarifies the role and scope of CALEA section 109, under which carriers may be reimbursed for their CALEA compliance costs. The Commission proposes to afford all carriers with pending petitions a reasonable period of time (e. g., 90 days) in which to comply with, or seek relief from, any determinations that it eventually adopts in this proceeding. Additionally, the Commission considers whether, in addition to the enforcement remedies through the courts available to LEAs under CALEA section 108, it may take separate enforcement action against carriers that fail to comply with CALEA and tentatively finds that it has general authority under the Communications Act to promulgate and enforce CALEA rules against carriers and non- common carriers.

With regard to costs, the Commission tentatively concludes that carriers are responsible for CALEA development and implementation costs for post- January 1, 1995 equipment and facilities; seeks comment on cost recovery issues for wireline, wireless and other carriers; and refers to the Federal- State Separations Joint Board cost recovery issues for carriers subject to Title II of the Communications Act.

Finally, the Commission requests comment on what would be a reasonable amount of time for entities that heretofore have not been subject to CALEA to comply with its requirements, if the Commission ultimately decides that those entities are subject to CALEA.

In the companion Declaratory Ruling, the Commission grants in part a Law Enforcement request in the Petition and clarifies that commercial wireless “push-to-talk” services are subject to CALEA, regardless of the technologies that Commercial Mobile Radio Service providers choose to apply in offering them.

Action by the Commission August 4, 2004, by Notice of Proposed Rulemaking and Declaratory Ruling in ET Docket No. 04295 (FCC 04-187). Chairman Powell, Commissioners Abernathy and Martin with Commissioner Copps and Adelstein Concurring. Separate statements issued by Chairman Powell, Commissioners Abernathy, Copps, and Adelstein.

Office of Engineering and Technology contacts: Rodney Small at (202) 418- 2452 and Geraldine Matise at 202- 418- 2322.

ET Docket No. 04-295 -FCC-

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SEPARATE STATEMENT OF CHAIRMAN MICHAEL K. POWELL

Re: In the Matter of Communications Assistance for Law Enforcement Act and Broadband Access and Services, RM-10865, ET Docket No. 04-295, Notice of Proposed Rulemaking and Declaratory Ruling.

We are entering a dynamic space in the evolution of Internet voice services and applications. As technologies re-shape communications, this Commission must continually assess the needs of the law enforcement community under the Communications Assistance for Law Enforcement Act (“ CALEA”). More and more people are taking advantage of these new and exciting competitive voice offerings, and we are starting to see substantial consumer and economic benefits emerge. The development and success of the Internet has been a result, in part, of our desire to maintain its minimally regulated status. Above all, law enforcement access to IP- enabled communications is essential. CALEA requirements can and should apply to VoIP and other IP enabled service providers, even if these services are “information services” for purposes of the Communications Act. The NPRM we issue today demonstrates that the interests of the law enforcement community can be fully addressed for potential information services and these interests need not be an excuse for imposing onerous common carrier regulations on vibrant new services.

Previous Commission action on CALEA has focused primarily on circuit- mode technology. Today’s item takes a major step in implementing CALEA, particularly with respect to new packet- mode technologies, by tentatively concluding that broadband Internet access services and managed voice over Internet protocol (“ VoIP”) services are subject to CALEA.

The item also tentatively concludes that non-managed, or disintermediated, VoIP and Instant Messaging are not subject to CALEA, and that it is unnecessary to identify future services and entities subject to CALEA. Additionally, the item addresses important compliance and cost issues, and requests comment on (1) the feasibility of carriers relying on a trusted third party to manage their CALEA compliance obligations; and (2) whether standards for packet technologies are deficient and preclude carriers relying on them as safe harbors for complying with CALEA’s capability requirements. Finally, in the companion Declaratory Ruling grants in part a Law Enforcement request in the Petition and clarifies that commercial wireless “push- to- talk” services are subject to CALEA, regardless of the technologies that Commercial Mobile Radio Service providers choose to apply in offering them.

I write to make clear that our tentative conclusion is expressly limited to the requirements of the CALEA statute and does not indicate a willingness on my part to regulate VoIP services as telecommunications services. We have before us a pending rulemaking and several petitions for declaratory ruling that address themselves to the classification of VoIP services and nothing in this item prejudices the outcome of those proceedings.

Our support for law enforcement is unwavering; it is our goal in this proceeding to ensure that law enforcement agencies have all of the electronic surveillance capabilities that CALEA authorizes to combat crime and terrorism and support Homeland Security. The Commission will devote the necessary resources to expeditiously and responsibly complete this task. In the interim, carriers, the law enforcement community and the Commission must continue to work in partnership to ensure that law enforcement retains access to the information they have now and to ensure that they have the tools they need in this ever changing environment.

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SEPARATE STATEMENT OF COMMISSIONER KATHLEEN Q. ABERNATHY

Re: Communications Assistance for Law Enforcement Act and Broadband Access and Services, RM- 10865, ET Docket No. 04- 295, Notice of Proposed Rulemaking and Declaratory Ruling

As set forth in the opening provision of the Communications Act, the Commission has no higher priority than promoting public safety and the national defense.

I therefore support initiating this rulemaking regarding the Commission’s implementation of the Communications Assistance for Law Enforcement Act (CALEA). The Department of Justice and other law enforcement agencies have raised a number of significant questions regarding the applicability of CALEA to IP- enabled services, compliance timelines, enforcement, and cost recovery, among other things. The Commission must build a thorough record to ensure that, to the extent permitted by statute, law enforcement agencies have the tools they need to conduct surveillance in a changing technological environment.

While the Commission must do its utmost to enable law enforcement agencies to combat crime and promote homeland security, it would be a mistake to gloss over the possibility that the existing statutory framework does not apply to broadband Internet access services or other IP-enabled services that are classified as information services.

The NPRM we are issuing proposes a plausible interpretation of the “substantial replacement” provision in CALEA that would extend the assistance- capability requirements to broadband access services and IP telephony. But such an extension clearly would be fraught with legal risk. The Commission thus would benefit greatly from further congressional guidance in this area. While the text and legislative history of CALEA make clear that the march of technological progress should not hamper law enforcement’s ability to conduct lawful wiretaps, the statute also explicitly exempts information services from its reach. The Commission has proposed a means of resolving this tension, but it remains to be seen whether our attempts to do so would pass judicial muster.

In addition to the question whether CALEA applies to IP- enabled services, the issues of enforcement and cost recovery also warrant congressional attention. Section 108 of CALEA establishes an enforcement mechanism that requires the Attorney General to bring a civil action in the appropriate federal district court. While law enforcement agencies have noted the shortcomings of this regime, it is unclear whether Congress intended the Commission to assume a central role over enforcement of the statute’s requirements. Moreover, upgrading networks to comply with a new packet- mode standard for surveillance will be a costly endeavor, and there are many unanswered questions about how these costs should be recovered.

In sum, I support the Commission’s initiation of this rulemaking in response to the petition filed by the Department of Justice and other law enforcement agencies. The issues raised are critical, and the Commission must provide clarity and direction to the [text ends]

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SEPARATE STATEMENT OF COMMISSIONER MICHAEL J. COPPS, CONCURRING

Re: Communications Assistance for Law Enforcement Act and Broadband Access Services, RM- 10865, ET Docket No. 04- 295, Notice of Proposed Rulemaking and Declaratory Ruling.

The Commission states that its primary policy goal in this proceeding is to ensure that law enforcement has all of the resources that CALEA authorizes to combat crime and   support homeland security. This is as it should be. But there are less roundabout ways to achieve this result then the collection of tentative conclusions we offer here and there are better ways to build a system that will guarantee judicial approval.

I believe today’s item asks many of the right questions, but I also believe that too often it gets the reasoning wrong. It is flush with tentative conclusions that stretch the statutory fabric to the point of tear. If these proposals become the rules and reasons we have to defend in court, we may find ourselves making a stand on very shaky ground. It would be a shame if our reliance on thin legal arguments results in the CALEA rules being thrown out. Neither law enforcement nor the American people would benefit from that result.

To me, it strains credibility to suggest that Congress intended “a replacement for a substantial portion of the local telephone exchange” to mean the replacement of any portion of any individual subscriber’s functionality. Capturing VoIP under the rubric of substantial replacement, ignoring the Ninth Circuit’s decision in Brand X, and trying to slice and dice managed and non- managed services is not the way to proceed here. Making the statute bear this heavy burden denies carriers, equipment manufacturers and technology entrepreneurs the clarity they need. But more importantly, our law enforcement authorities need that clarity. Those whose job it is to shield us from harm deserve better. So I don’t agree with how we got to this conclusion, but given where we are, we have the responsibility to get a proceeding going. For these reasons, I will concur, but I hope before all is said and done that the record will provide better counsel and our final decisions will put us on a sounder footing.

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SEPARATE STATEMENT OF COMMISSIONER JONATHAN S. ADELSTEIN, CONCURRING

Re: Communications Assistance for Law Enforcement Act and Broadband Access and Services, RM- 10865, ET Docket 04- 295, Notice of Proposed Rulemaking and Declaratory Ruling.

With this Notice of Proposed Rulemaking and Declaratory Ruling, we open a proceeding to examine the application and administration of the Communications Assistance for Law Enforcement Act (CALEA) as the telecommunications industry transitions to so- called packet-mode services, such as broadband Internet access and Voice over Internet Protocol (VoIP). We start this review at the request of the Department of Justice, the Federal Bureau of Investigation, and the Drug Enforcement Administration (“ federal law enforcement”), but the outcome of this proceeding will also affect the ability of state and local law enforcement agencies throughout the nation, which conduct roughly half of all wiretaps, to conduct their operations efficiently and effectively.

This item begins to tackle the increasingly important issue of whether CALEA applies to broadband and VoIP services. Federal law enforcement agencies view this capability as essential to their ability to perform their missions in the digital age. It is imperative that we give law enforcement the tools that CALEA affords them and that they need to safeguard public safety and homeland security. This Notice facially accedes to law enforcement’s request, but stops short of developing fully the most defensible basis for these proposed outcomes, which are at the heart of the federal law enforcement agencies’ petition.

Rather than seeking comment on the most stable footing for law enforcement’s request, the item seizes upon notable but thin distinctions between definitions in CALEA and the Communications Act. Moreover, the item does not acknowledge fully and seek comment on existing precedent that is in tension with the tentative conclusions here. For example, whether or not the Commission ultimately appeals the decision in the Ninth Circuit’s Brand X case, which concluded that broadband access via cable modem includes a “telecommunications service,” this Notice’s failure to seek comment on a legal analysis that would comport with the Circuit’s holding is an unnecessary failing. For these reasons, I concur in the result, if not the full legal analysis behind the Commission’s tentative conclusions.

I am pleased that the Commission is opening this proceeding and that we can move forward with a full vetting of the issues. While we should not jump to conclusions about the many issues raised here, it is critical that we make this proceeding a priority and that we commit to a speedy resolution of the complex, but time sensitive issues raised here.