Last month, shareholders asked AT&T and Verizon, the nation’s largest phone companies, to be more transparent about government requests for user information, including demands made by the National Security Agency (NSA) under the Foreign Intelligence Surveillance Act (FISA). The shareholders want the telecom giants to follow the example of the nation’s largest Internet companies, including Google, Yahoo, Apple, Microsoft and Facebook, which all publish transparency reports.
AT&T’s response, in a word, is “No.”
In a 32-page letter sent to the Securities and Exchange Commission, AT&T said it wants to exclude the shareholder proposal from its next annual meeting because it pertains to “ordinary business operations” that are the purview of the company’s management and board, not rank and file shareholders. In the letter, AT&T asked the SEC staff to “concur that it will take no action if the Company excludes the Proposal from its 2014 Proxy Materials.”
The New York State Common Retirement Fund, which manages $160.7 billion on behalf of more than one million state employees and retirees, is leading the effort for greater transparency. “AT&T’s failure to disclose what customer information it shares with U.S. and foreign governments presents significant risk to shareholder value,” said New York State Comptroller Thomas P. DiNapoli, trustee of the fund.
In seeking to exclude the proposal, AT&T is aiming to avoid a testy debate at the company’s next annual meeting about its role in the government’s controversial national security surveillance programs. The phone giants are facing intense scrutiny following the blockbuster revelations from former NSA contractor Edward Snowden, who leaked classified documents describing the participation of tech and telecom companies in the NSA’s snooping programs.
“AT&T’s attempt to prevent its shareholders from even considering a proposal that the company issue surveillance transparency reports, when Internet companies like Google and Twitter have been issuing such reports for years, squarely raises the question: What exactly is the company hiding?” says Kevin Bankston, Policy Director of New America Foundation’s Open Technology Institute. Verizon didn’t return a request for comment.
Verizon and AT&T have thus far refused to discuss their involvement with the government’s snooping initiatives, including a program authorized by the USA PATRIOT Act, in which the telecom giants reportedly work with the government to provide daily access to the phone records of tens of millions of U.S. citizens, including the number called, when the call was made, and the length of the conversation. The program is authorized by the Foreign Intelligence Surveillance Court (FISC) — a secret court made up of 11 federal judges appointed by U.S. Chief Justice John Roberts.
The silence of the phone giants stands in stark contrast to the major Internet companies, including Google, Microsoft, Facebook, and Yahoo, which have been aggressively waging a legal battle with the government to be more forthcoming about government data demands. The Internet companies have expressed outrage over recent reports that the U.S. government is secretly tapping into their networks in order to obtain information about the companies’ users.
“While the rest of the Internet community — including major online companies and digital rights advocates — has united to demand more transparency around government surveillance, this move by AT&T signals a shift from awkward silence on the NSA scandal to outright hostility toward reformers’ push for surveillance accountability,” says Bankston.
AT&T and Verizon have little incentive to challenge the government’s surveillance programs. Both companies have lucrative contracts with the government — including defense and intelligence agencies — worth hundreds of millions of dollars annually. In August, a senior U.S. intelligence official described the role of the phone companies in government surveillance programs: “The telecommunications companies are ordered to comply with this. That’s their role in this. As in a wide variety of other contexts, they get served with an order and they comply with the court’s order.”
In response to AT&T’s letter to the SEC, Eric Sumberg, a spokesperson for New York State Comptroller DiNapoli, issued the following statement: “AT&T is trying to prevent the vital issue of customer privacy from coming before its shareholders. This issue is an important one for customers and shareholders alike and we feel strongly that it should be on AT&T’s ballot this spring.”