Pai

Like President Donald Trump, Ajit Pai is a busy man. He’s spent his first month as FCC chairman gutting his predecessor’s legacy, reversing pro-consumer policies, ending forays into set-top box competition, fair pricing for inmate phone calls, cheap internet access for the poor, ending reviews of data caps and zero rating practices, and threatening to terminate Net Neutrality with extreme prejudice.

No wonder Bob Quinn, AT&T senior executive vice president of external & legislative affairs applauded President Trump’s appointment of Pai, proclaiming he will “quickly and decisively put back in place the commonsense regulatory framework necessary to support the President’s agenda for job creation, innovation and investment. We look forward to working with him and his team and the FCC to support President Trump’s growth agenda.”

AT&T’s only growth agenda is sending customers ever-increasing bills, and with Mr. Pai at the helm of the FCC, they are sure to get their wish.

Over their terms at the FCC under the Obama Administration, Republican Commissioners Ajit Pai and Michael O’Rielly frequently complained their minority voices on the Commission were ignored and newly proposed regulations or policies would come before the FCC so quickly, there was inadequate time for public review. But since Pai teamed up with O’Rielly to abolish many of the most important achievements of his predecessor, Chairman Thomas Wheeler, they have reportedly all but ignored the sole remaining Democrat currently serving on the Commission — Mignon Clyburn.

Last Friday, Clyburn accused Pai of hypocrisy for complaining about policies being rushed for a vote without explanation before doing the same thing himself late last week.

Clyburn

“Today is apparently ‘take out the trash day.’ In an eponymous episode of the West Wing, White House Chief of Staff Josh Lyman stated: ‘Any stories we have to give the press that we’re not wild about, we give all in a lump on Friday . . . Because no one reads the paper on Saturday,'” Clyburn said in a statement. “Today multiple Bureaus retract—without a shred of explanation—several items released under the previous administration that focus on competition, consumer protection, cybersecurity and other issues core to the FCC’s mission. In the past, then-Commissioner Pai was critical of the agency majority for not providing sufficient reasoning behind its decisions.”

Clyburn’s office asked for more than the allotted two days to review a dozen items that suddenly appeared on the FCC’s agenda.

“We were rebuffed,” Clyburn wrote.

Clyburn then accused Pai of violating the Administrative Procedure Act, which requires adequate public notice and a comment period for public input. When she asked the chairman to comply with the “reasoned decision-making requirements of the APA,” she was told ‘No deal.’

Mr. Pai’s regulatory rollback agenda has moved with breathtaking speed, according to some FCC observers. Consumer group Free Press today called Pai’s progress “Orwellian.” Over less than a month, Pai — with the help of Commissioner O’Rielly — has:

• Announced the formation of a Broadband Deployment Advisory Committee that is expected to be stacked with industry stakeholders that will recommend reform the FCC’s pole attachment rules, identify “unreasonable” regulatory barriers to broadband deployment, encourage local governments to adopt “deployment-friendly” policies, and develop a “model code” for local franchising, zoning, permitting, and rights-of-way regulations for telecom infrastructure like cell towers. Few expect the eventual “model code” to stray far from Big Telecom companies’ wish lists;
• Near-unilaterally loosened rules allowing AM radio stations to continue making their presence felt on the overcrowded FM band through the use of low-power FM “translator” stations that rebroadcast the AM station’s programming;
• Changed FCC policies to give broader notice of upcoming agenda items and policy proposals, ostensibly to improve public access to FCC rulemaking procedures. But observers suggest the change will primarily benefit industry lobbyists who will have advance detailed notice about the FCC’s upcoming agenda items, allowing them time to lobby for or against the proposals, or suggest changes;
• Rescinded “Improving the Nation’s Digital Infrastructure,” a policy paper promoting rural broadband deployment and other broadband improvements released just prior to the inauguration of President Trump. On Feb. 3, the FCC set “aside and rescinds the Digital Infrastructure Paper, and any and all guidance, determinations, recommendations, and conclusions contained therein. The Digital Infrastructure Paper will have no legal or other effect or meaning going forward.”
• Rescinded “in its entirety and effective immediately, earlier guidance provided in a March 12, 2014, public notice, DA 14-330, “Processing of Broadcast Television Applications Proposing Sharing Arrangements and Contingent Interests,” which attempted to limit ongoing media consolidation controversies including allowing one TV station to effectively operate and provide content for so-called ‘competing’ stations in a local area.
• Closed the FCC’s investigation into wireless carriers’ zero-rating policies, which allow subscribers free access to “preferred provider content” without it counting against their data plan. Critics call zero rating an end run around Net Neutrality, because providers treat their own content as “preferred.” AT&T charges other content providers to participate in its zero rating program.
• Instructed the FCC’s legal team to stop defending court challenges to its authority to ensure fair and reasonable telephone rates for incarcerated prisoners held captive to using a single carrier to make phone calls at prices much higher than what the public pays. Those rates were as high as $5.70 for a 15-minute in-state collect call placed from an incarceration facility in Kentucky. In that state alone, consumers effectively paid $2.79 million in kickbacks to state prison systems or a county jail. In contrast, a similar 15-minute call placed from a West Virginia jail or prison would cost $0.48. As a result of Pai’s actions, companies like Global Tel*Link, Securus, and Telmate “can continue the practice of price gouging prisoners and their families,” according to Prison Phone Justice;
• Ended former FCC Chairman Wheeler’s attempt to force competition in the cable set-top box marketplace, allowing consumers to take a bite out of the $20 billion cable companies make in rental fees annually. At least 99% of subscribers now pay an average of $231 a year to lease the boxes, even after the company has fully recouped their original cost. Customers in Canada can buy their own set-top boxes and DVRs.
• Killed an expansion of the FCC’s Lifeline program to offer discounted internet access to the poor. Pai reversed approvals made to nine providers — none accused of waste, fraud, or abuse — including Kajeet, Spot On, Boomerang Wireless, KonaTel, FreedomPop, Applied Research Designs, Liberty Cablevision of Puerto Rico, Northland Cable Television and Wabash Independent Networks. Pai later defended the move claiming his predecessor rushed through approval of the providers and he was rescinding those “midnight rules” as current chairman. Many Republicans are seeking a complete elimination of the Lifeline program.
• Rescinded the latest progress report on modernizing the Universal Service Fund’s E-Rate program, which is designed to subsidize telecom services for schools and libraries. It could be the first step in eliminating or dramatically reforming the Fund;
• Gave two violators of the FCC’s rules on properly collecting and reporting information about the source of political advertising aired on stations air a free pass.
• Threw out a white paper from the FCC’s own Homeland Security Bureau advising the agency on cybersecurity issues. Pai doesn’t think the FCC should be involved in cybersecurity, so anything contrary to his agenda of reducing the role of the FCC is likely destined for the nearest wastepaper basket.

FCC letter to AT&T’s Bob Quinn letting him know the company is off the hook with the FCC on zero rating.

“Ajit Pai has been on the wrong side of just about every major issue that has come before the FCC during his tenure,” said Craig Aaron, president of Free Press. “He’s never met a mega-merger he didn’t like or a public safeguard he didn’t try to undermine. He’s been an inveterate opponent of Net Neutrality, expanded broadband access for low-income families, broadband privacy, prison-phone justice, media diversity and more. If Trump really wanted an FCC chairman who’d stand up against the runaway media consolidation that he himself decried in the AT&T/Time Warner deal, Pai would have been his last choice — though corporate lobbyists across the capital are probably thrilled.”

Ajit Pai

Meet America’s next chairman of the Federal Communications Commission Ajit Varadaraj Pai (born January 10, 1973): a lawyer formerly representing Verizon who wants to take a “weed-wacker” to Net Neutrality, thinks data caps represent innovation, opposes almost every consumer protection measure introduced by his predecessor Thomas Wheeler, and believes the best solution to improving broadband is to take pressure off companies like Comcast, AT&T, Charter, and Verizon.

Pai has been a commissioner at the FCC since 2012 where he and his fellow Republican Michael O’Rielly have strongly opposed most of Chairman Wheeler’s pro-competition agenda and broadband reforms:

• Pai and his chief of staff Matthew Berry vocally opposed efforts by Wheeler to monitor and manage providers’ implementation of data caps and zero rating schemes that exempt provider-preferred content from usage allowances or speed throttles. Pai said Wheeler’s inquiries to carriers regarding zero rating practices showed “the era of permissonless innovation is over,” followed by a Tweet from Mr. Berry complaining that, “If you come up with an innovative service, you will be hauled into FCC to explain yourself.” In 2012, Pai decried allowing Net Neutrality to take hold because it could lead to eventual regulation of usage-based pricing policies.
• Pai fiercely opposes Net Neutrality and told an audience at the conservative Free State Foundation in December he will remove “outdated and unnecessary regulations” and “fire up the weed-wacker and remove those rules that are holding back investment, innovation, and job creation.”
• In 2015, Pai cut and pasted large sections of AT&T’s website into a dissent over the FCC’s plan to fine the phone giant $100 million for deceiving customers about its “unlimited data” plan. Pai’s statement defended AT&T’s business practices and blamed consumers for not understanding AT&T’s definition of “unlimited.”
• Pai voted against the Charter – Time Warner Cable/Bright House Networks merger not because he opposed it. He was upset that Chairman Wheeler insisted on a seven-year ban on Charter implementing data caps. “Chairman Wheeler’s order isn’t about competition, competition, competition; it’s about regulation, regulation, regulation. It’s about imposing conditions that have nothing to do with the merits of this transaction. It’s about the government micromanaging the Internet economy,” said his spokesperson.
• Pai partly dissented from the AT&T buyout of DirecTV because he didn’t like the deal’s conditions mandating affordable internet access for consumers, marketplace protections for competing online video services, and a strongly empowered compliance officer assigned to make certain AT&T met its obligations — a lesson the FCC learned after Comcast was accused of skirting its obligations in its acquisition of NBCUniversal.
• Complained Comcast’s efforts to buy Time Warner Cable would be dead on arrival ‘because the Obama administration has shown itself much less likely to approve major telecom mergers — such as the blocked AT&T-T-Mobile merger — than a Republican administration might be.’
• Opposed Wheeler’s effort to force open the set-top box marketplace to competition so consumers can buy their own cable boxes at a lower cost.
• Called Wheeler’s push to have the minimum broadband speed standard reset to 25Mbps “incoherent,” claiming that 71 percent of consumers who can already buy access at those speeds don’t want or need it and that there was no need to push wired providers to deliver faster access because Verizon and AT&T already offer 4G LTE service to 98.5% of America.

Where your next FCC complaint will likely end up.

“Ajit Pai has been on the wrong side of just about every major issue that has come before the FCC during his tenure,” noted Craig Aaron, president of Free Press. “He’s never met a mega-merger he didn’t like or a public safeguard he didn’t try to undermine. He’s been an inveterate opponent of Net Neutrality, expanded broadband access for low-income families, broadband privacy, prison-phone justice, media diversity and more.”

In contrast, Comcast was thrilled with President Trump’s appointment.

“We commend [Pai’s] tireless efforts to develop and support policies that benefit American consumers and spur greater investment and innovation in broadband technologies to connect all Americans and drive job creation,” said David Cohen, senior executive vice president and chief diversity officer at Comcast. “This is a terrific appointment for the American consumer and the companies the FCC regulates and we look forward to continuing to work with Chairman Pai in his new role.”

That may not be too surprising, considering he spent his formative years in Washington as an associate general counsel at Verizon, where he helped the company deal with pesky regulatory matters. Pai has already given the public clues about how he is likely to respond to consumer complaints about the state of American broadband.

In January 2016, Pai complained the FCC should not be responding to the whims of public interest and consumer groups that “protest a particular [provider] offering,” referring to T-Mobile’s zero rating plan, claiming the “agency is going to jump to the tune” as a result. When the FCC starts scrutinizing providers over their “highly competitive and innovate service[s],” that represents the “very definition” of regulatory uncertainty.

For Pai, the ultimate sin seems to be bothering the incumbent telecom giants, who in his view seem to know what is best for America. So he is very likely to stay out of their way.

The stunning victory by Donald Trump in Tuesday’s election ended two years of campaigning, negativity, and divisiveness.

Wednesday probably marked the beginning of Election 2020, which will involve four years of campaigning, negativity, and divisiveness.

Before looking at the implications of the forthcoming Trump Administration, some personal words about the results from the perspective of a lifelong resident of western New York, on the periphery of the Rust Belt region that evidently made all the difference for Mr. Trump on Tuesday night.

Casting my vote here in western New York while suffering a severe cold that has now evolved into walking pneumonia, I reflected on the fact this nasty election probably gave it to me. Despite that, I have the good fortune of living in a diverse community. Our next door neighbor, and by far the closest to us personally, is an ardent Republican who supported Sen. McCain, Gov. Romney, and Mr. Trump. Across the street, a reliable panoply of Democratic candidate lawn signs sprout every other fall. I spend my Friday afternoons in a community south of Rochester where Hillary Clinton has been largely reviled since she was a senator of New York. She didn’t win in Ontario County this year either. But Sen. Chuck Schumer routinely wins his elections with little effort or opposition.

Politics in the western half of New York State (known as “somewhere around Canada” to those in New York City and Long Island) is far more comparable to the battleground state of Ohio than reliably Democratic Manhattan. Our urban centers in Buffalo, Rochester, and Syracuse are solidly Democratic, while the suburbs and rural areas are just as likely to elect Republicans to office. Among those disappointed Democrats pondering a surprising election of Donald Trump, many cannot understand how such a result is possible. But having been a lifelong resident in a region that has seen profound changes from the decimation of blue-collar, high-paying manufacturing jobs in states that still cling to tax rates that assume everyone still has one, the Trump rebellion predicted by Michael Moore was hardly outlandish. Across the Rust Belt, more than a few voters have given up believing politicians, and are still waiting for relief from the relentless pressure on the declining middle class. Some of the worst job declines came in this region during the first Bush Administration and then again under President Bill Clinton. Memories are still fresh.

The changes to local economies in this region are profound and extremely difficult to navigate for those who lack advanced degrees or special technical skills. A state like North Carolina understands these changes well. An economy quickly transformed away from tobacco and textiles towards high technology created enormous challenges for many families. Those problems still exist in many parts of the state where infrastructure and good jobs are still lacking more than two decades later.

In Rochester, the formerly solid and reliable employers like Eastman Kodak and Xerox are a fraction of the size they were in the 1980s. My father met my mother at Eastman Kodak, a company that also employed more than half my extended family. But not for long. I vividly recall watching the inauguration parade of President Bill Clinton on television in 1993 on a day that Eastman Kodak carried out another wave of draconian job cuts. My father’s job survived, but my uncle’s did not. My grandfather had retired by then.

Michael Moore correctly predicted the reality of a Trump victory with the support of a disaffected middle class in economically distressed states.

Twenty-three years later, the largest employer by far in this area is the University of Rochester/UR Medicine, which includes the university and an enormous medical treatment infrastructure. Together, this accounts for 22,500 workers. The second largest employer in Rochester is a grocery store. A great grocery store — Wegmans, founded and based here, but a grocery store nonetheless. It accounts for 13,500 jobs. Another 13,000+ workers are employed in medical treatment and hospital services that compete with the U of R. Rounding out top employers are the Rochester City School District with 5,500 teachers, administrators and staff, which is almost as big as Monroe County’s government, which accounts for 4,500 employees. The biggest remaining manufacturer is Xerox, which employs 6,300 workers. But consider this contrast: in 1982 Kodak employed 60,400 in the Rochester area. Today, that number is just 2,300.

Rochester had it easy compared to heavy manufacturing cities to our west. Buffalo, western Pennsylvania, Ohio, and Michigan have been walloped twice — first by the offshoring of heavy industry and then a second round of manufacturing job losses many voters blame on various free trade agreements. Many tens of thousands of these displaced workers have relocated to other states. Exiting residents of Rochester overwhelmingly prefer North Carolina and Arizona for various reasons, while blue-collar workers further west often end up in Kentucky, Tennessee, Alabama, and other southern states. Many of those that remained behind and remember their old jobs are angry, very angry. Some of them supported Bernie Sanders, especially in Michigan. But once the choice came down to Hillary Clinton or Donald Trump, more than a few voted for Mr. Trump, not out of a great allegiance to the Republican party, but because Trump vilified free trade and business as usual in D.C. To these voters, fair or not, Hillary seemed to embody the establishment that has done little or nothing except make speeches.

The election is now over and we have the results. My candidate did not win because she did not run. (Elizabeth Warren in 2020!) On the broadband issues Stop the Cap! is concerned with, a Trump Administration is likely to be bad news for consumer protection, fair pricing, and community broadband, primarily because the people Mr. Trump has chosen thus far to advise him on tech issues are the usual sort with close ties to the largest telecommunications companies in the country, and many have penned papers that have closely aligned with those companies’ public policy positions.

Phillip Dampier: This election gave me walking pneumonia.

Trump transition team adviser Jeffrey Eisenach, for example — who we wrote about back in August, could hold considerable power over the direction President-elect Trump will take tech policy in this country. Eisenach has written papers opposing Net Neutrality, is unconcerned about data caps and zero rating policies, and called fears about consolidation blowouts like the now-dead Comcast-Time Warner Cable mega-merger overblown.

Trump did state opposition to the recent merger announcement from AT&T and Time Warner, Inc., which has Wall Street concerned the deal will be DOA by the time the merger papers are filed sometime early next year in Washington. If President Trump keeps his word on that, there are many more mergers and acquisition deals that will emerge in 2017 that will likely never be on his radar, but will be reviewed by a Federal Communications Commission stacked with commissioners closer in ideology to Ajit Pai and Michael O’Rielly than Thomas Wheeler. In our view, Commissioners Pai and O’Rielly have yet to support any significant pro-consumer policy change on broadband before the FCC. Instead, they have largely parroted Big Telecom’s talking points.

It is our suspicion that most of the merger and acquisition deals dreamed about on Wall Street that would never have gotten through the Obama Administration’s Justice Department and FCC will receive quick approval under a Trump Administration.

While Mr. Trump alludes he will prove to be a complete game-changer to business as usual in Washington, his transition team is being swarmed by the usual faces — corporate lobbyists, big donors, and political hacks angling for cabinet or agency positions. Most of them are Beltway insiders, and many have been through D.C.’s revolving door before — lobbyist -> public servant -> lobbyist.

So while Mr. Trump tells America AT&T and Time Warner is “too much concentration of power in the hands of too few,” we remain uncertain he will speak as loudly about other likely deals, particularly involving Altice, Cox, Mediacom, CenturyLink, Windstream, Frontier, Sprint, and T-Mobile — just some of the hunters and the hunted that may get consolidated in 2017.

On other issues:

• Net Neutrality: Republicans vilified Net Neutrality and a Republican-dominated FCC will likely kill or dramatically downplay any efforts to enforce it. Trump himself has never been a fan. Any new powers won by Chairman Wheeler to regulate internet providers under Title II will also likely be jettisoned by a Chairman Pai or O’Rielly;
• Data Caps/Zero Rating: This issue is important to us, but isn’t likely to see any regulatory action under a GOP-dominated FCC. Internet providers are likely to see a Trump Administration as a green light for data caps and consumption billing;
• Internet Privacy: Efforts to regulate internet privacy will also likely face a reversal from skeptical Republicans who will combine excuses for national security with a “hands off” attitude on telecommunications regulation.
• Community Broadband: The issue of turning back bans on public/municipal broadband will have to be won on the state level. We do not expect to see many friends for municipal broadband in Republican-dominated Washington. The influence of the Koch Brothers, notoriously opposed to public internet projects, has only gotten stronger after this election.

With a GOP-sweep across the Executive and Legislative branches, we expect more deregulation, which is likely to further entrench the broadband duopoly in the United States, if not further expand it with additional consolidation-related mergers and acquisitions, at least among the small and mid-sized players.

On a more personal level, I have been involved in public policy battles surrounding telecommunications issues since 1988. In the late 1980s, I fought for increased competition and regulatory relief for home satellite (TVRO) dishowners and we joined forces to help pass the 1992 Cable Act, which laid the foundation for the emergence of competitors DirecTV and Dish Networks — the first serious competition to the cable industry. That law was vetoed by President George H.W. Bush, but that veto was overridden by the U.S. Congress — the only bill to successfully become law during the first Bush Administration over his objection. Republicans pay cable bills too.

(Image courtesy: Steve Rhodes)

Administrations come and administrations go, but we are still here.

The need for robust consumer protection, true competition, and a level playing field never changes. Your involvement remains essential regardless of what party is in power in Washington. Some battles will be more challenging, but not all. Direct consumer action can make an impact on companies concerned about their brand and public image. Just as consumers are passionate about rising cable bills, broadband is always a hot button issue, especially where service is unavailable or comes only at a price that resembles extortion.

The president-elect says that America doesn’t win anymore. We sure haven’t been winning on broadband, either on speed, pricing, or availability, in comparison to Europe and Asia. The solution is not to turn the problem over to the same companies that created the conditions for broadband malaise we are dealing with now. As seen in fiercely competitive markets like France, true competition is often the only regulation you need. A duopoly answers to itself. Having the choice of four, five, six, or more competing providers answers to customers. Consolidated and entrenched markets resist innovation and the need to compete stagnates. Corporate welfare and ghost-written telecom laws that forbid community broadband restricts economic growth and kills jobs, stranding countless rural residents from the digital economy. That -is- business as usual in too many states where groups like the American Legislative Exchange Council (ALEC) facilitate legislative fixes and legal protectionism that restricts or disadvantages competition.

If Mr. Trump truly believes the words he has spoken, he must be vigilant. He must not surround himself with the same politicians and their minders that created the very problems he promises to fix. The voters that elected him to office expect nothing less than blowing up business as usual. But the nation’s capital has a better track record of changing the politician while resisting change to the status quo.

We wish President Trump success for our country, but we’ll be watching to make certain his rhetoric meets the reality.

AT&T made a fortune spying on average Americans and sold what they learned to law enforcement agencies who only needed a paid account to access the data, not a subpoena signed by a judge.

The newest revelations of AT&T’s Project Atmosphere by the Daily Beast sucked the oxygen out of the room from collective gasps of those learning the enormity of private information AT&T is selling to any government agency willing to pay. The first news story about the program came in a 2013 New York Times report. But new evidence suggests AT&T’s project may represent the most extensive private surveillance program ever uncovered.

“The for-profit spying program that these documents detail is more terrifying than the illegal NSA surveillance programs that Edward Snowden exposed… If companies are allowed to operate in this manner without repercussions, our democracy has no future,” Evan Greer, campaign director at Fight for the Future, told Newsweek.

AT&T stores details for every call, text message, Skype chat, or any other form of communication that passes through its infrastructure, and has kept that data as far back as 1987, according to the Times 2013 Hemisphere report. The scope and length of the collection has accumulated trillions of records and is believed to be larger than any phone record database collected by the NSA under the Patriot Act.

AT&T’s Hemisphere program operates in the shadows and does not require compliance with the kinds of federal privacy laws and constitutional protections required to be honored by the nation’s law enforcement agencies. AT&T’s database allows anyone with a procedural administrative warrant (no judge’s signature required) to search through trillions of call records and obtain precise cellular location data to discover where a person is located, who he speaks to, and often why.

A suspect claiming to be in one location at the time of a crime can be challenged when AT&T’s data reveals a subject’s cell phone was actually located somewhere else. If a prosecutor wants to know who a suspect has called for the last five years, he can order a report from AT&T showing every call, every number dialed, how long the call lasted, and details about the person called (and who they, in turn, called).

Privacy advocates call the revelations “chilling” and claim AT&T goes well beyond the kind of surveillance practiced by federal government agencies revealed by Edward Snowden.

AT&T customers have it worst, because the company has direct access to any type of communication made over AT&T’s network. But customers of other telecommunications companies are also affected because communications regularly travel over networks owned and operated by AT&T. The spying program involves cell phone lines, landlines, and internet connections.

The secretive project also turns out to be extremely profitable for AT&T.

Spying is profitable.

“AT&T customers are outraged but this affects everyone,” Greer told Newsweek. “AT&T went far beyond complying with legal government requests and actually built a powerful data mining product to sell our private information to as many government agencies and police departments as they could.”

Taxpayers cover almost all the costs because AT&T Hemisphere clients are government agencies. Small rural police departments pay at least $100,000 for access to AT&T’s data, but significant-sized suburbs and cities can pay AT&T well into the millions.

The 2013 Times report mischaracterized AT&T’s effort as a “partnership” between AT&T and the U.S. government. The Obama Administration’s Justice Department defended AT&T’s efforts calling Hemisphere “an essential, and prudently deployed, counter-narcotics tool.”

But the Justice Department may have been smoking some of the contraband they seized when they made that claim, because this week’s revelations show the program was used for far more than fighting the War on Drugs. Law enforcement agencies have accessed AT&T’s database as part of investigations of everything from Medicaid fraud to homicide.

AT&T’s pay-per-spy program was developed independent of law enforcement agencies and was designed, packaged, and marketed to make AT&T a fortune from American taxpayers. It has raked in millions of dollars annually, according to the Daily Beast.

No pesky warrants are required, only a solemn promise to keep Hemisphere a secret if an investigation that uses the data ever becomes public. AT&T specifically engineered an “end run” that may ultimately prove illegal because law enforcement agencies may have created phony or misleading evidence to cover up for AT&T:

But those charged with a crime are entitled to know the evidence against them come trial. Adam Schwartz, staff attorney for activist group Electronic Frontier Foundation, said that means AT&T may leave investigators no choice but to construct a false investigative narrative to hide how they use Hemisphere if they plan to prosecute anyone.

Once AT&T provides a lead through Hemisphere, then investigators use routine police work, like getting a court order for a wiretap or following a suspect around, to provide the same evidence for the purpose of prosecution. This is known as “parallel construction.”

“This document here is striking,” Schwartz told The Daily Beast. “I’ve seen documents produced by the government regarding Hemisphere, but this is the first time I’ve seen an AT&T document which requires parallel construction in a service to government. It’s very troubling and not the way law enforcement should work in this country.”

The federal government reimburses municipalities for the expense of Hemisphere through the same grant program that is blamed for police militarization by paying for military gear like Bearcat vehicles.

AT&T isn’t feeling threatened by this week’s revelations or their implications, releasing a lukewarm statement implying Hemisphere is just a way for AT&T to efficiently respond to law enforcement subpoenas:

“Like other communications companies, if a government agency seeks customer call records through a subpoena, court order or other mandatory legal process, we are required by law to provide this non-content information, such as the phone numbers and the date and time of calls.”

AT&T is being misleading, according to ACLU technology policy analyst Christopher Soghoian.

“They say they only cooperate with law enforcement as required, and frankly, that’s offensive when they are mining the data of millions of innocent people, and really built a business and services around the needs of law enforcement,” Soghoian told the Daily Beast.