AT&T's Spying Activities Risk Backlash

AT&T has joined a growing list of technology companies that have been implicated in spying activities carried out by the US National Security Agency (NSA). The question is: How damaging could the latest revelations be to the operator's business?

Following much earlier reports that high-profile players such as Google (Nasdaq: GOOG) and Apple Inc. (Nasdaq: AAPL) had colluded with the NSA, the New York Times last weekend disclosed further information obtained from whistleblower Edward Snowden -- a former NSA contractor -- pointing to a "decades-long" relationship between AT&T Inc. (NYSE: T) and the NSA. According to the Times report, AT&T has been giving the NSA access to billions of emails travelling across its domestic networks. In what the newspaper describes as a "unique and especially productive" partnership, AT&T also appears to have helped the NSA to eavesdrop on Internet communications at the headquarters of the United Nations (UN), one of the operator's customers.

Earlier this week, the UN was reported by Reuters to have indicated it was considering its response to the disclosure, claiming to have previously received assurances from US authorities that its communications were not being monitored. A spokesperson even suggested that it would consider any snooping by the NSA to be a violation of international law.

That a number of telecom and technology players have provided information about their customers to the NSA and other US government agencies will perhaps shock only the most naďve of privacy-conscious individuals. But the perception that some players have been only too willing to assist the NSA, while others have been more respectful of privacy rights, could be harmful.

Outside the US, service providers including Deutsche Telekom AG (NYSE: DT) and Vodafone Group plc (NYSE: VOD) have been doing their utmost to demonstrate that any involvement with government surveillance programs has been a legal obligation and something they have tried to resist. Both companies have recently published transparency reports detailing the extent of their collaboration with domestic and foreign intelligence agencies. Deutsche Telekom has even insisted that it "does not respond to inquiries from authorities outside of Germany." (See Eurobites: DT Details Surveillance Requests, Eurobites: Vodafone Opens Window on Wire-tapping and Vodafone Law Enforcement Disclosure Report 2015.)

By distancing itself from state-sponsored snooping, and expressing outrage at earlier revelations the NSA has spied on the Internet communications of German citizens and politicians, the German incumbent has been trying to promote itself as a much safer bet -- in the world of cloud computing -- than some of its US technology rivals. As the operator regularly points out when touting its cloud wares, data centers maintained by Deutsche Telekom in Germany are subject to some of the most stringent data protection laws in the world. With its troubled history under the Nazis and the Stasi, Germany has endeavored to uphold a right to privacy and various other civil liberties that seems to be a lesser concern in democracies whose recent past has been less turbulent.

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Indeed, in June last year, Germany's government was said to have torn up a contract with AT&T rival Verizon Communications Inc. (NYSE: VZ) following Snowden's revelations. Verizon had been providing network services for government facilities in Berlin and Bonn, but it was apparently dropped in favor of Deutsche Telekom amid concern it was feeding information about German government communications back to Washington.

AT&T now risks being similarly turfed out of the UN's headquarters, although the UN's ire appears to have been directed solely at US authorities and the organization has not explicitly indicated it is considering a different communications provider. In any case, the loss of one customer -- no matter how big -- is unlikely to hurt the operator financially, even if it does tarnish its reputation.

That said, AT&T will be keen to avoid being seen as an NSA stooge while complaints about government spying grow louder. If customers believe other service providers maintain a more arm's-length relationship with intelligence agencies than AT&T does, they may be drawn to its rivals. For the time being, AT&T can probably be thankful that most US consumers have a more easygoing attitude than their German counterparts.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

Mitch Wagner 8/18/2015 | 7:27:01 PM
Re: Rock and a hard place It remains to be seen how much US consumers and enterprise customers will care about this. International customers definitely do. US government surveillance is hurting American service providers. 
cnwedit 8/18/2015 | 3:02:49 PM
Rock and a hard place US telecom giants are certainly caught in the middle on this stuff. It's easy to understand how anyone would object to the spying reports, but wouldn't the fur fly if they took a hard line with the NSA as well?
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