The FCC has awarded a key government number portability contract to the Ericsson (NASDAQ: ERIC) subsidiary Telcordia in a huge blow to Neustar despite security concerns by some in the intelligence community.
While the commission has yet to announce the move officially, The New York Times reported that it voted earlier this month behind closed doors to give Telcordia the nod. All five commissioners agreed on the move, although the two Republicans disagreed with the reasoning offered by the three Democrats on the commission.
Neustar has administered the number portability system since 1997.
The contract is said to be worth as much as a billion dollars over seven years, and it has accounted for roughly half of Neustar's revenue over the last several years. Telcordia, which is based in New Jersey and owned by Ericsson, reportedly told the FCC during "an intense bidding process" that it could do the job less expensively than Neustar. Telcordia also reportedly enjoyed strong backing from "many" large carriers.
The local-number-portability administrator (LNPA) was created to handle the Number Portability Administration Center (NPAC), which enables users to take their phone numbers with them when they switch service providers. The NPAC manages the routing of all calls and texts for more than 650 million U.S. and Canadian phone numbers for more than 2,000 carriers.
Security of the NPAC is crucial, since law-enforcement agencies need to make sure numbers in the database are not erased or tampered with. The FBI and other law-enforcement agencies reportedly query the database roughly 4 million times a year as part of criminal and intelligence probes, as they seek to determine which carrier provides the service for a particular number.
Some in the intelligence community have voiced concerns about giving control of the system to a foreign-owned company, saying it may leave the LNPA more vulnerable to attackers, The New York Times reported. Telcordia garnered unwanted headlines a few months ago when officials learned it had improperly used a Chinese citizen and perhaps other foreign nationals to do computer coding on the system after the company was given preliminary approval for the job, violating stipulations that only "vetted U.S. citizens" were to be involved.
Telcordia was compelled to rewrite the database computer code to ease concerns that other countries could gain access to the code, potentially enabling them to learn the targets of law enforcement and espionage investigations. Neustar played up those concerns during the bidding process, charging that the incident should disqualify Telcordia from the job. The FCC clearly did not agree.
- see this New York Times report
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