NeuStar acquires VoIP CALEA compliance leader Fiducianet

As part of it pursuit for more homeland security business and it efforts to grow its portfolio of third-party trusted services to communications providers, NeuStar acquired Herndon, Va.-based law enforcement compliance company, Fiducianet, this week.

Fiducianet was founded by 29-year FBI veteran Mike Warren in January 2002 and began operations in May of that year with the industry's first service bureau for Communications Assistance for Law Enforcement Act (CALEA) compliance.

"He is a giant in the law enforcement community," said Jeffrey Ganek, chairman and CEO of NeuStar. "He will be an important addition to the NeuStar management team."

Joining Warren under NeuStar will be Douglas McCollum, general counsel and vice president of services at Fiducianet. He is a former assistant U.S. attorney and has 26 years experience in carrier compliance with Bell Atlantic and Verizon.

The financial details of the acquisition were not disclosed. However, Ganek said that Fiducianet had more than $1 million in revenue last year, which was up about 300% from the year before. "We think that type of growth will continue," he said.

In addition to its CALEA compliance solution, Fiducianet also provides fraud management and service assurance solutions to traditional and VoIP-enabled wireline, wireless and cable service providers. Among Fiducianet's customers are CTC Communications, Time Warner Communications, Northwest Telephone and Cbeyond Communications.

The primary focus for NeuStar will be to bring the CALEA platform to a broader market, particularly the VoIP market. "Service providers are legally on the hook to solve this problem," Ganek said. "Fiducianet has the platform that solves it. They can do it better and more efficiently than carriers can themselves."

Ganek called the acquisition an important step in expanding its position in the IP market.

NeuStar and Fiducianet are providing solutions for traditional CALEA compliance on circuit switched networks, but Ganek said that VoIP providers face more complex problems trying to comply with law enforcement requirements.

"Our customers face tremendous administrative costs to comply with existing legislation," Ganek said. "Besides, the bad guys know it is harder to get surveillance on IP networks so that's where they gravitate."

NeuStar senior vice president and CTO Mark Foster said Fiducianet is one of the few companies 100% focused on CALEA, fraud management and other services related to IP. Earlier discussions among groups such as the IETF to establish standards for complying with VoIP lawful intercept resulted in leaving the effort to individual vendors. Non-standard interception functions have in part made the problem harder to solve, especially compared to the legacy environment where the functionality is baked into circuit switches.

"The challenge is dealing with a single level of granularity as to what type of session you need to monitor. You have to be able to detect when a session that is to be lawfully intercepted is in fact being initiated," Foster said.

Fiducianet saw the number of requests from law enforcement go from more than one million in 2001 to over two million in 2003. Its service bureau model is designed to help service providers in the VoIP space cope with the continued increase.