Germany insists on taking all the NSA concerns and government spying seriously. If you think about it from their point of view, how can you blame them? Verizon Communications Inc. (NYSE: VZ) now reportedly will lose its contract with the German government due to fear of letting intelligence agencies from the United States listen in on sensitive communications.
Verizon has provided Internet and communications services to a number of German agencies and government departments for years. While the services were not supposedly covering security departments, the logic behind dropping Verizon is easy to see.
Consider Vodafone Group PLC (NASDAQ: VOD), which is from the United Kingdom. It and Verizon were partners on Verizon Wireless for years, up until Verizon bought them out of it in 2013. Vodafone recently has warned that government snooping in the national and international telecom arena is not just rampant, but that snooping is often via direct wires right into the base installation infrastructure (without naming the nations) by mandate.
Germany has been considering what to do on the heels of NSA and U.K. snooping reports after the Edward Snowden scandal. The final straw was likely the reports that the NSA had snooped in on Chancellor Angela Merkel’s calls.
The real risk here is not just Verizon, and not just carriers in general. European nations are proposing more secure networks AND dumping their reliance on American telecom and networking equipment carriers. After all, there were also reports that the NSA was even tampering with equipment orders prior to delivery to get an edge on intelligence and data gathering.
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The German government’s current contract with Verizon will expire in 2015, but now that looks like it will not be renewed. Maybe this is just another blow to American companies doing business with foreign governments and entities. Until the NSA issue is put to bed (if it ever is), this is not likely the last contract loss for an American telecom services, communications services or equipment maker that will be losing overseas contracts.
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