FYI: PRIVACY Forum Digest V02 #18 - Can Wiretaps Remain Cost- Effective?

[Dave Farber <farber () central cis upenn edu>]

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Date:    Wed, 26 May 93 10:46:32 PDT
From:    Robin Hanson <hanson () ptolemy arc nasa gov>
Subject: Can Wiretaps Remain Cost-Effective?

U.S. Phone companies spend more than 4000 times as much running the
phone system (~$138b) as U.S. police spend on legal domestic phone
wiretaps ($30m), to listen to phone conversations without the consent
of either party.  So even if wiretaps are worth several times what
police spend on them, and even if spy agencies spend a similar amount
on wiretaps, we can justify only the slightest modification of our
phone system to accommodate wiretaps.  Yet the new wiretap chip, and
last year's FBI digital telephony bill, both threaten to raise our
phone bills by far more than they reduce our taxes for police.

Dorothy Denning claims that wiretaps are worth "billions of dollars
per year", based on amounts fined, recovered, etc.  But this is just
the wrong way to estimate the value of police services, according to
standard texts on law enforcement economics.  Instead, the value of
each wiretap should be not far from how much police (or spies) would
be willing to pay extra for that wiretap.  Given alternatives to use
hidden microphones, informants, offer immunity, investigate someone
else, or to decriminalize or raise the punishment for some crimes, it
seems hard to imagine police would on average be willing to pay four
times as much as they do now.  Even then, the option to wiretap the
average phone line would be worth only twelve cents a month.

Yet phone companies must perceive substantial costs to supporting
wiretaps, even relative to wanting to stay on the good side of police;
why else would police be complaining about lack of support?
Government policies attempting to preserve wiretaps in the face of
technological change would discourage a full global market for phone
systems, while government decree would displace marketplace evolution
of standards for representing, encrypting, and exchanging voice.  Do
you think these factors would raise the average $78 monthly phone bill
by more than twelve cents?  Even the wiretap chip itself, sold for $26
each while private chips without wiretap support sell for $10, would
cost people who buy a new phone every five years an extra 27 cents per
month.  And FBI estimates of phone company costs to develop new
software to support wiretaps suggest software costs alone could be
over $6 per phone line.

The central question is this: would police agencies still be willing
to pay for each wiretap, if each wiretapping agency were charged its
share of the full cost, to phone users, of forcing phones to support
wiretaps?  And why not let the market decide the answer?  Currently,
police must pay phone company "expenses" to support wiretaps.  So why
not let phone companies sell police the option to perform legal
wiretaps on given sets of phone lines, at whatever price the two
parties can negotiate?  Phone companies could then offer discounts to
customers who use phones with wiretap chips, and each person could
decide if the extra cost and risk of privacy invasion was worth the
price to make life easier for the police.  Or why not increase the
punishment for crimes committed using wiretap-avoiding technology?

If it turns out wiretaps aren't worth their cost, so be it.  Less than
one part in 1000 of police budgets are spent on wiretaps, and wiretaps
weren't even legal before 1968.

Robin Hanson  hanson () ptolemy arc nasa gov 
415-604-3361  MS-269-2, NASA Ames Research Center, Moffett Field, CA 94035
510-651-7483  47164 Male Terrace, Fremont, CA  94539-7921 

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