The FBI has gone through nearly all of its $500 millon budget for making old telephone switches wiretap friendly, but an FBI survey showed that nearly 40 percent of the nation's switches still aren't up to federal wiretapping standards, according to a new report from the Justice Department's inspector general.

When listening in to criminals, the FBI uses DCS-3000 to connect to wiretap-friendly telephone switches.

Colored photo-illustration: Frank Rodriguez/Wired A 1994 law known as the Communications Assistance to Law Enforcement Act or CALEA requires all telephone switches installed after 1995 to comply with detailed wiretapping rules, and Congress set aside a half billion dollars for the FBI to dole out to help carriers make older landline switches compliant.

Cell phone switches, however, are all compliant and nearly all FBI surveillance targets cell phones and pagers. In 2005, the feds got some 1800 criminal wiretap court orders, along with nearly 2,200 court orders for anti-terrorism and foreign intelligence wiretaps.

According to a redacted report (.pdf) from the DOJ's Inspector General, the FBI has only a little more than $5000 left in dedicated CALEA funds, which mostly went towards paying switch manufacturers to write wiretapping software and issue licenses to use that software for older switches.

The audit says it is not possible to tell if the money was well-spent, since neither the telecoms nor the switch makers are keen on sharing information.

Though the FBI has a well-earned reputation for bungling large technology projects, the FBI successfully built a sprawling surveillance network that taps into key telecom facilities around the country. The Digital Collection System comprises dedicated surveillance nodes around the country that run specialized software packages for criminal and intelligence wiretaps. The feds use a secure Sprint fiber optic network to interconnect the surveillance centers.

Though the internet was originally exempt, the government changed the rules later and as of May 2007, all cable, DSL and satellite internet companies also have to make their networks wiretap compliant. Even some universities have to comply as well.

Surveillance of VOIP calls jumped 400% in 2006, according to the report, despite the number of old wireline switches that are not yet compliant.

But the feds biggest complaint remains that wiretaps are too expensive.

Cox Communications, for instance, charges $1,500 for a 30 day wiretap or for 60 days of real-time call record information. Some telecoms have even shut off wiretaps after the FBI repeatedly failed to pay their spying bill.

Separately, the FBI also has secret contracts with a few carriers, paying each around $1.5 million a year to store telephone records for longer periods and to respond quicker to subpoenas and court orders.

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