How Regulators Enticed Verizon to Sell Out Customers to the NSA
Verizon, the phone company whose disclosure of customer data to the federal government is at the center of the furor over cooperation by technology companies with top-secret national security programs, has offered a precise, clear, but little-noticed public explanation of why it did what it did.

The Verizon explanation is not in the vague and cryptic memo the company issued last week after the Guardian exposed its program. It came, instead, in the company’s annual filing with the Securities and Exchange Commission, included in Verizon’s annual report to shareholders. It said, “As part of the FCC’s approval of Vodaphone’s ownership interest, Verizon Wireless, Verizon, and Vodaphone entered into an agreement with the U.S. Department of Defense, Department of Justice and Federal Bureau of Investigation which imposes national security and law enforcement-related obligations on the ways in which Verizon Wireless stores information and otherwise conducts its business.”

That explanation was offered on February 26, months before the Guardian article. But it gets right to the heart of the matter, which is that there is a connection between Verizon’s status as a highly regulated company and its agreement to cooperate extensively with the government....

...Verizon needed FCC approval to sell part of its wireless business to a British company, Vodaphone. It needs FCC approval to do lots of other things, too, ranging from acquisitions to building wireless networks on new parts of the spectrum. In addition, the federal government is a big Verizon customer. The company’s Web site says, “We understand the public sector. We've worked with governmental organizations for decades. In fact, we are the leading provider of communications services to the U.S. federal government.”

These federal contracts are worth tens of billions of dollars to Verizon....