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Qwest defies NSA

Company's refusal to hand over phone records draws praise

Friday, May 12, 2006

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Qwest Communications' lone refusal to cooperate with the federal government's spy agency in secretly collecting customer telephone records drew praise from lawmakers and many others Thursday.

A source familiar with the situation confirmed a report that the Denver telco was the only major phone carrier to balk in helping the National Security Agency track and keep a database of domestic calls.

USA Today reported that the country's three largest carriers - AT&T, Verizon and BellSouth - have helped the NSA since shortly after the Sept. 11, 2001, terrorist attacks to collect the phone call records of tens of millions of Americans. The NSA reportedly analyzes the data to determine calling patterns that might reveal terrorist activities.

Qwest Chief Executive Dick Notebaert declined to comment when reached by e-mail.

Said company spokesman Bob Toevs: "Qwest doesn't comment on matters related to national security."

Qwest initially balked at participating in the NSA program when former CEO Joe Nacchio headed the telco and continued the position under Notebaert, USA Today reported.

Qwest's top executives and lawyers were concerned about the legal issues, consumer privacy issues and possible fines that might be assessed if customer information was inappropriately turned over.

News of the alleged domestic eavesdropping sparked a fresh outcry from lawmakers and constitutional rights activists.

U.S. Sen. Ken Salazar, D-Colo., was one of many who praised Qwest's position and called for Senate hearings on the issue.

"I have long been concerned about the NSA's domestic spying program, and today's media reports only reinforce that concern," Salazar said in a statement. "I also laud Denver-based Qwest Communications for its decision not to share private information with the NSA."

Qwest also was concerned about the "expansiveness" of NSA's request to include the possibility of the information being shared with other government agencies, including the FBI, CIA and Drug Enforcement Agency, according to USA Today.

Rob Douglas, a security consultant in Colorado who has testified before Congress numerous times about privacy issues, said it was the possible record-sharing among agencies that struck him the most.

"It demonstrates the slippery slope," Douglas said. "What relevance would a DEA operation be to thwarting a catastrophic terrorist event? I don't see the connect. This is always the concern with data mining, that the government will broaden its authority . . . the Big Brother argument."

Douglas said the NSA program might represent the largest database ever collected about Americans and poses "huge constitutional issues."

Through the cooperation by the other three carriers, the NSA had the country covered except for parts of Qwest's 14-state local phone region.

The NSA reportedly put pressure on Qwest by suggesting its lack of cooperation not only could harm national security but possibly affect the company's ability to get classified work with the government.

USA Today reported that Nacchio was "deeply troubled" by the NSA's argument that Qwest didn't need court orders to turn over the phone records.

Some found Nacchio's reported resistance to the NSA program curious.

Nacchio, who faces 42 charges of insider trading, has indicated that one of the defenses in his criminal case may be that he possessed confidential information that made him optimistic about the telco's prospects to land federal contracts.

That optimism would seem to be contradicted by Qwest's refusal to participate in the NSA program.

But the timing may be key: Nacchio was indicted in connection with selling stock in the first five months of 2001. Nacchio's attorneys may argue that Qwest indeed unexpectedly lost federal business after Sept. 11 because of Nacchio's refusal to cooperate with the NSA.

John Richilano, Nacchio's local attorney, declined to comment Thursday, as did Jeff Dorschner, spokesman for the U.S. attorney's office in Colorado.

It's unclear whether Qwest's federal business actually suffered because of its refusal to participate in the NSA program.

Qwest has announced at least a dozen major government contracts since the fall of 2001, with the Department of Defense, the Army, the Air Force, NASA, the Department of Energy, the Department of Treasury and others.

Many of those contracts, in fact, were won while the General Services Administration was considering suspending or barring Qwest from receiving federal business because of allegations that it had inflated its revenue during the Nacchio era.

While lawmakers praised Qwest for refusing to help the NSA, investors were tepid, with Qwest stock declining by 9 cents to $6.51 a share on Thursday.

"I don't think it's a big deal," said Donna Jaegers, a telecommunications analyst with Janco Partners of Greenwood Village. "Maybe it creates some near-term goodwill. But in Colorado, Qwest has about an 82 percent market share, so I don't know if it's going to make all that much difference. Service counts a lot more."

The effect on Qwest

Qwest has done its share to reinvent the company in recent years, but it may have generated an unexpected windfall by rebuffing the National Security Agency.

• Will the news reflect positively on Qwest? That depends on the "political orientation of the individual consumer," said Bryan Thomas, chief executive officer of the Denver marketing firm Thomas, Taber & Drazen.

"For those of a more conservative nature who have supported this kind of (national security) approach, this doesn't put Qwest in a good light. For those who are more liberal, they'll probably say, 'Hurrah for them for sticking to their guns and not bowing to the pressures of D.C.' "

• Will the company need to address the issue with customers? That will depend on how big an issue it becomes in the coming days, Thomas said.

"This has just come out, and you don't want to overreact to it. Let's see where it goes, and if it becomes a bigger issue, then from a P.R. standpoint they'll need to come out and state why they're taking the position they are. If it's well-thought out, I think most consumers who are fair-minded will say, 'I respect that.' Certainly there will always be others who will say, 'I'm canceling my service.' "

• Can Qwest use this news in marketing? Both Thomas and Leanna Clark, a principal at Schenkein Public Relations in Denver, say the issue is much too sensitive to become part of a media or marketing campaign in the future.

"I would take the more subtle approach and let it speak for itself, though there might be opportunities to leverage it down the road," Clark said. "But it's not an issue you want to come out and beat your chest about."

Janet Forgrieve

Congressional reaction

Colorado's congressional delegation weighs in on allegations that the National Security Agency collected Americans' phone records.

• Sen. Ken Salazar, D-Denver: "I think that there should be a great alarm to the people of America that potentially tens of millions of phone call records have been turned over by these companies to the federal government. If in fact this is what has been going on through the NSA in conjunction with telephone companies, I think it's wrong and it's something that needs to be taken very seriously."

• Sen. Wayne Allard, R-Loveland: "I do not support domestic eavesdropping on the American people's private telephone conversations. According to information provided to me by the White House, telephone customers' names, addresses and other personal information have not been handed over to NSA as part of this program. The White House and the chairman of the Senate Intelligence Committee have clearly and repeatedly stated to me that there is no domestic surveillance without court approval. NSA's terrorist surveillance program intercepts calls made by terrorists in other countries to suspected terrorists in the United States. It is not designed to nor intended to eavesdrop on domestic-to-domestic phone calls. I strongly support the NSA terrorist surveillance program and believe it is a key tool in the global war on terror."

• Rep. Diana DeGette, D-Denver: "I'm appalled by the concept that phone companies and the NSA should be colluding to have the records of domestic phone calls just given over to our premier spying agency. It's not about al-Qaida. It's not about terrorist interception. It's about records that would show regular phone calls between regular Americans."

• Rep. Joel Hefley, R-Colorado Springs: "What I understand is this is not a matter of listening in on anybody's calls, but having the information about the routing of calls so they can help determine the techniques used by terrorist groups to communicate in the United States. There will be a misconception out there that every phone call you make will be listened-in by somebody. I don't think that's the case at all. If they need to do this to protect the country, they need to do it."

• Rep. Mark Udall, D-Eldorado Springs: "It confirms what a lot of us thought, that there was more to this story. It once again raises the responsibility Congress has to hold this administration accountable. I have no question in my mind that we ought to be surveilling those who would do us harm, but the president, like everyone else in our system of government, ought to procure warrants to do so."

• Rep. Bob Beauprez, R-Arvada: "The government must do everything in its power to legitimately and effectively support the war on terrorism. However, we must be aware that in this effort, we do not overstep the boundaries of law-abiding citizens. There may be cause for a congressional investigation, but at this time we do not have all of the facts."

• Rep. Marilyn Musgrave, R-Fort Morgan: "The news of this concerns me greatly. I will be contacting the president and the head of the NSA, demanding all relevant information regarding this program and specifically asking about probable cause. In my opinion, if there wasn't a serious terrorism or national security threat, we have a big problem on our hands."

• Rep. John Salazar, D-Manassa: "I'm still concerned that the president or executive branch has that kind of power to acquire phone records from a phone company. I believe in due process and Congress' oversight as well."

• Rep. Tom Tancredo, R-Littleton, did not respond to requests for comment.

M.E. Sprengelmeyer

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