Recent reports highlight that the telephone meta-data collection efforts of the National Security Agency are being undermined by the proliferation of flat-rate, unlimited voice calling plans. The agency is collecting data for less than a third of domestic voice traffic, according to one estimate.
It’s been clear for the past couple months that officials want to fix this, and President Obama’s plan for leaving meta-data in the hands of telecom companies—for NSA to access with a court order—might provide a back door opportunity to expand collection to include all calling data. There was a potential new twist last week, when Reuters seemed to imply that carriers could be forced to collect data for all voice traffic pursuant to a reinterpretation of the current rule.
While the Federal Communications Commission requires phone companies to retain for 18 months records on “toll” or long-distance calls, the rule’s application is vague (emphasis added) for subscribers of unlimited phone plans because they do not get billed for individual calls.
The current FCC rule (47 C.F.R. § 42.6) requires carriers to retain billing information for “toll telephone service,” but the FCC doesn’t define this familiar term. There is a statutory definition, but you have to go to the Internal Revenue Code to find it. According to 26 U.S.C. § 4252(b),
the term “toll telephone service” means—
(1) a telephonic quality communication for which
(A) there is a toll charge which varies in amount with the distance and elapsed transmission time of each individual communication…
This Congressional definition describes the dynamics of long-distance pricing in 1965, but it pre-dates the FCC rule (1986) and it’s still on the books.
Distance subsequently became virtually irrelevant as a cost factor due to improving technology by the 1990s, when long-distance prices became based on minutes of use only (although clashing federal and state regulatory regimes frequently did result in higher rates for many short-haul intrastate calls as compared to long-haul interstate calls). Incidentally, it was estimated at the time that telephone companies spent between 30 and 40 percent of their revenues on their billing systems.
In any event, with the elimination of distance-sensitive pricing, the Internal Revenue Service’s efforts to collect the Telephone Excise Tax—first enacted during the Spanish American War—were stymied. In 2006, the IRS announced it would no longer litigate whether a toll charge that varies with elapsed transmission time but not distance (time-only service) is taxable “toll telephone service.”
I don’t see why telecom companies are required to collect and store for 18 months any telephone data, since it’s hard to imagine they are providing any services these days that actually qualify as “toll telephone service,” as that term is currently defined in the United States Code.