Wednesday December 20, 3:49 pm Eastern Time
Around-The-Globe: Federal Bureau Of Interference
By Arik Hesseldahl

The country's highest law enforcement agency, the Federal Bureau of Investigation, sure does seem to do a lot of whining these days.

Every time a foreign company moves to acquire all or part of a domestic telecommunications or Internet company, the FBI begins to thrash about in fits of panic over its ability to conduct wiretaps or other electronic surveillance in the name of national security.

In the latest fiasco, the FBI has expressed concerns about Deutsche Telekom's (NYSE: DT $34 billion deal to acquire the U.S. wireless phone company Voicestream (Nasdaq: VSTR. The deal also includes Powertel (Nasdaq: PTEL, which Voicestream agreed to acquire for $6 billion in August.

Since Deutsche Telekom is majority-owned by the German government, the FBI wants to ensure that it will be able to track wireless calls made on the Voicestream's network for the purpose of criminal investigations.

Without a specific agreement, the FBI has complained in a petition to the Federal Communications Commission that foreign-owned telecom companies won't feel the same necessity to cooperate with criminal investigations.

The forces of globalization have not been kind to the FBI's ability to conduct electronic surveillance. Back in the days when the phone system was run by only one company, AT&T (NYSE: T, the Bureau could call upon a cadre of its former employees who had gone on to private security jobs at ``Ma Bell'' to assist with investigations.

To a large extent that's still true, says Jim Atkinson, an electronic security consultant and president of the Granite Island Group in Gloucester, Mass.

``The FBI is pissing and moaning because they're worried they won't get the interface with their contacts inside these companies that they've always had,'' he says.

That interaction between the agency and its network of former employees often includes the passing of information to the Bureau on the sly, without going through the usual time-consuming formal procedures, like obtaining court orders.

But meeting the FBI's conditions can slow mergers down and cost the companies involved and their shareholders. When Japan's Nippon Telephone & Telegraph (NYSE: NTT, which is more than half-owned by the Japanese government, moved to acquire ISP Verio, the FBI's national security concerns held up the deal for three months. And NTT was forced to create a separate division within Verio, staffed and run only by U.S. citizens, to work exclusively as the interface between the ISP and the FBI.

So far Deutsche Telekom says it is working with the FBI to address those concerns. But multibillion-dollar mergers are hard enough already--with antitrust and other regulatory concerns--without the FBI getting into the act.