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Also: Testimony before this subcommittee at our last hearing indicated that Bell System personnel have in the past delivered on request very revealing telephone toll records to investigators without any legal process whatsoever.
Further: It has been established that the Bell System electronically monitored a room used for meetings of Communication Workers Union members. The subcommittee is releasing today documents supporting this particular allegation.
Last: There are serious questions raised regarding pointed discrepancies between past testimony before Congress of Bell System officials and a number of these revealed practices.
Hopefully many of these serious questions of veracity can be answered for the record in today's proceeding. Today's testimony, as I indicated the last time, will be taken under oath in order to establish the seriousness and credibility of these hearings. I would like to now call the three witnesses forward.
I understand Mr. Caming has a short statement but I would like to call Mr. Connor and Mr. Mack to come forward to join Mr. Caming, if you would, at the table, as the three witnesses this morning.
And, gentlemen, if you will stand and please raise your right hand. Do you, Mr. Caming, Mr. Connor, and Mr. Mack, and each of you solemnly swear that the testimony you are about to give this subcommittee will be the whole truth and nothing but the truth, so help you God?
Mr. CAMING. I do.
Mr. CONNOR. I do.
Mr. KASTEN MEIER. You may be seated, and Mr. Caming, you may proceed, sir, with your statement.
TESTIMONY OF H. W. WILLIAM CAMING, ATTORNEY, GENERAL DEPARTMENTS, AMERICAN TELEPHONE & TELEGRAPH CO.; ACCOMPANIED BY JOHN E. MACK, DIRECTOR, SWITCHING ADMINISTRATION AND MAINTENANCE SYSTEMS CENTER, BELL TELEPHONE LABORATORIES, NEW JERSEY; AND EARL CONNOR, STAFF SUPERVISOR, SECURITY, OF CHESAPEAKE & POTOMAC TELEPHONE CO. OF WASHINGTON, D.C.
Mr. CAMING. Thank you.
With your indulgence, I will keep Mr. Mack for the moment back here because I have a briefcase there.
I might say before initiating my statement, Mr. Kastenmeier, that should any members of the subcommittee have any difficulty hearing me in the absence of microphones, I would greatly appreciate being apprised of that.
Mr. KASTENMEIER. Yes. It is unfortunate that the judiciary committee is itself short handed electronically, paradoxical as that may be. Mr. CAMING. I would also like to make one more comment that with respect to the questions which the chairman addressed himself to, I will be very pleased to discuss each of those in depth subsequent to my statement.
As the chairman knows, the statement is just an opening frame of reference for the inquiry of the subcommittee and to assist it.
Mr. KASTENMEIER. Mr. Caming, that will of course, be acceptable. I would hope we can develop it through a colloquy, through questions and through answers, and I should point out that we appreciate your being here, and Mr. Connor and Mr. Mack and other officials on very short notice. You would have preferred, I believe, a longer period of time in which to prepare your testimony, but you graciously agreed to come today and the committee does appreciate that.
Mr. CAMING. Thank you very kindly. I might say that we did prepare a statement that we feel will be complete, irrespective of the short time which we had at our disposal.
I am William Caming, attorney in the general departments of American Telephone & Telegraph Co. My areas of primary responsibility have since 1965 and to date included from a legal standpoint, oversight of matters pertaining to industrial security and privacy as they affect the Bell System. I might just say it is a pleasure to have with us today Mr. John E. Mack, who is the director of switching administration and maintenance systems center at Bell Telephone Laboratories, and with expertise in the fields particularly of electronic toll fraud; and Mr. Earl Connor, the staff supervisor in charge of security for the Chesapeake & Potomac Telephone Co., Washington.
It is a pleasure to appear before your subcommittee once again. I wish to thank you for the opportunity to reaffirm the Bell System's dedication and commitment to privacy of communications; to delineate again briefly our experiences with electronic surveillance, primarily in the area of wiretapping; and to discuss those measures we employ to combat the theft of telephone service by those clandestinely using electronic toll fraud devices.
You may recall that during my prior appearance before this subcommittee on April 26, 1974, I reviewed in depth the manner in which we safeguard privacy, and those statements are of equal efficacy and validity today. I adverted to our longstanding public espousal of legislation that would make wiretapping as such illegal. We have consistently said we strongly oppose any invasion of privacy of communications by illegal wiretapping and accordingly welcome Federal and State legislation designed to strengthen such privacy. This is still, of course, our position.
I described, too, how all Bell System companies conduct a vigorous program to ensure every reasonable precaution is taken to preserve privacy of communications through physical protection of plant and records and thorough instruction of employees.
I also mentioned how yellow pages directory advertising relating to wiretapping. eavesdropping, and debugging has long been banned. I explained, too, our concern for privacy and how it is reflected in the manner in which we thoroughly investigate every incident of alleged wiretapping, whether found by our employees in the course of their work or through a customer's request for a wiretap check. I have also reviewed the limited assistance we provide to law enforcement authorities engaged in the execution of court-ordered wiretaps, and to the Federal Bureau of Investigation in national security cases involving hostile acts of a foreign power and the like, upon
letter request personally signed by the Director of the Federal Bureau of Investigation, or the Attorney General of the United States.
Because of its continued timeliness, with the subcommittee's permission I would like to incorporate my statement of April 26, 1974, into my statement of today and for the convenience of the subcommittee, a copy of this statement is attached.
Turning now to another area of the subcommittee's initial inquiries, the Bell System has traditionally and consistently and unequivocally been concerned with the preservation of its customers' privacy. We firmly believe that whenever a communication is lawfully placed, its existence and contents must be afforded the full protection of the law.
But when wrongdoers break into the telephone network and by use of an electronic device seize its circuits so that calls can be illegally initiated—and the key word is initiated-we are faced with the formidable problem of gathering evidence of such fraud for purposes of prosecution and billing.
The Communications Act of 1934 imposes upon us the statutory obligation and duty to prevent such thefts of service. In essence, the act imposes upon each telephone company the duty to require all users of its services to pay the lawful charges authorized by tariffs on file with the appropriate regulatory bodies. No carrier may discriminate under the law between its customers by granting preferential treatment to any. Knowingly to allow those committing electronic toll fraud to receive "free service" would constitute such discrimination, in our opinion.
Furthermore, each telephone company is enjoined, under pain of criminal penalty, from neglecting or failing to maintain correct and complete records and accounts of the movements of all traffic over its facilities. Each carrier is also obliged to bill the Federal excise tax on each long-distance call.
To put for a moment the matter of electronic toll fraud into historical perspective, in the early 1960's a most ominous threat burst upon the scene, the advent of the so-called black and blue boxes, the first generation of a number. It was immediately recognized that if such fraud could be committed with impunity, losses of staggering proportions would ensue. This threat continues at flood level today, despite our constant vigilance and a large number of successful prosecutions over the past decade.
These devices are relatively inexpensive to make, and their use has grown at an alarming rate. We estimate blue boxes can be mass-produced at a cost of $25 to $50 per unit, and black boxes at a cost of a dollar or less. Our experience has shown that, among others, these devices have a unique appeal to the criminal element, whether it be a member of organized crime or an unethical, unscrupulous businessman. Not only may payment of the lawful telephone charges be evaded, but often more importantly, any record of the communication made concealed.
Perhaps at this point some brief definitions would be helpful. A black box is operated by the called party, so that anyone calling that particular number is not charged for the call. Contrariwise, a blue box is operated by the calling party and, because of its small size and portability, can be hidden on the person and at any time used to place an illegal call from any telephone to anywhere in the world.
Thus, from the outset, these and similar electronic toll fraud devices have been matters of serious concern. Telephone service is our only product, and its wholesale theft results in losses ultimately borne by the honest telephone user.
Such crimes have never enjoyed the protection of the law, neither before nor after the passage of title III of the Federal Omnibus Crime Control and Safe Streets Act in June 1968. A substantial number of distinguished courts, including several U.S. Circuit Courts of Appeals, have unequivocally held that persons stealing telephone service by trespassing upon the telephone network place themselves outside the protection of section 605 of the Communications Act, and of title III. In these criminal cases, our entire process of gathering evidence has been subjected to close and thorough and repeated judicial scrutiny: This jurisdictional oversight has continued to date, with some 270 convictions and a number of pending cases indicating the extent to which the courts at Federal and State levels have reviewed telephone company procedures for gathering such evidence. With virtual unanimity, the courts have held that the methods used have been lawful, independent of cooperation with law enforcement authorities, and wholly in the public interest.
It should be stressed, too, that prosecution has been and continues to be the only effective deterrent. As to the specific methods employed by the telephone companies to gather evidence of electronic toll fraud, we have found that a minimum amount of recording of a limited number of calls is indispensable, if a prosecution is to succeed.
Since the goods being stolen are the communication itself, for example, by a blue box user, there is no alternative at this state of the art, and I must emphasize that, but to make a limited recording of each illegal call, at least of the fraudulent dialing, ringing, and opening salutations for the following purposes: To identify the calling party, who the criminal is, the user of the blue box, and others with whom he may be acting in concert. Identification of the telephone line from which the fraudulent calls are originating must be followed by the more difficult identification of the specific individual making the calls. This is of paramount importance if prosecution and proper billing are to occur.
Establish the location from which the calls are originating. Most blue boxes are portable devices, some as small as a package of cigarettes, which are used by holding the device against the telephone mouthpiece, without the necessity of a direct electrical connection, that is, connecting by wiring into the telephone system, the telephone line.
Third, it is necessary to record the multifrequency tones being dialed, key pulsed, by the blue box after the line is illegally seized. And lastly, to determine whether the fraudulent call or a series of calls all being made through one seizure, were completed by the called party answering.
Distance as well as time is a factor in determining the proper billing charge for a long distance call. It is, therefore, necessary to ascertain each specific location called after the wrongdoer seizes the circuit. Let us assume, for example, that a blue-box user places a call from Washington, D.C. to the directory assistance operator at Chicago, which is 312-555-1212. I mention, Mr. Kastenmeier, that this is a small device. It is well, I think it is-if I can find the box, it is
about the size of a Marlboro cigarette pack, and they are even getting smaller. And to show the graphic comparison, I have taken the liberty of bringing one down, to show that we are talking about something that is virtually able to fit into it.
Now, going on, by then emitting a specific tone from his blue box device, which tone you can understandably recognize, we prefer not to mention in public, the user seizes the line, disconnecting the operator at Chicago, and he has the long distance circuit. He can then, by pressing a single button, and then dial a number such as my home number in Summit, N.J.-I don't know if you can hear that from here, but it is duplicative of the tones that the operators themselves have. He can dial from that point to any part of the country. He can also dial to London, Moscow, Sydney, and other parts of the world. And this is done regularly.
The ultimate destination of each blue-box call can, therefore, be determined only by recording the multifrequency tones key pulsed. Also, as I have previously explained, after seizing the circuit the bluebox user can make not only one but a series of calls, terminating one, say, to Sydney after 15 minutes, and then he can immediately send a call to Hawaii and follow that with a call to Durban, South Africa.
Should such fraudulent calls be key pulsed, the location of each party called and the determination of whether each such call was completed and answered can only be made through recording the telltale tones. Unless the tones are recorded at the very moment they are emitted, they are, of course, lost forever.
None of the foregoing information can be obtained by use of our regular plant testing equipment, such as a peg count register, which is a simple electromechanical counting device that will count blue-box tones, as they appear. Such equipment cannot identify the fraudulent caller, nor record the multifrequency tones key pulsed after the bluebox tone is emitted, nor determine whether one or a series of fraudulent calls were dialed in succession, nor whether each such call was completed, nor produce other necessary evidence. These essential evidentiary elements can only be adduced through recording.
Nor will inspection of the suspect location usually uncover the small, readily concealed devices. Moreover, seizure of the device would not in and of itself, establish that fraud by wire had been committed, nor by whom, nor the extent of the fraud. Nor can the automatic message accounting equipment that normally obtains the information essential for billing purposes produce the necessary evidence of electronic toll fraud.
Most importantly, the limited recording done is solely to gather evidence of calls illegally placed. This is not a wiretapping case, where the contents of the conversations themselves are sought as evidence of some crime other than the theft of telephone service itself.
Limited recording by the local telephone company is done from secure locations, admission to which is tightly controlled on a need-toknow basis. This is done to maximize the protection of customers' privacy by preventing intrusion by unauthorized personnel. These quarters are kept under lock and key when not in use.
To assure the privacy of lawful communications, the telephone companies first employ a series of investigatory measures other than voice