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http://blog.wired.com/27bstroke6/2007/03/its_too_secret_.html

(Excerpt): AT&T told an appeals court in a written brief Monday that the case against it for allegedly helping the government spy on its customers should be thrown out, because it cannot defend itself -- even by showing a signed order from the government -- without endangering national security.

A government brief filed simultaneously backed AT&T's claims and said a lower court judge had exceeded his authority by not dismissing the suit outright.

Because plaintiffs' entire action rests upon alleged secret espionage activities, including an alleged secret espionage relationship between AT&T and the Government concerning the alleged activities, this suit must be dismissed now as a matter of law," the government argued in its brief (.pdf).

The telecom giant and the government are appealing a June ruling in a federal district court that allowed the suit brought by the Electronic Frontier Foundation against the telecom to proceed, despite the government's invocation of a powerful tool called the "states secrets privilege," which allows it to have civil cases dismissed when national secrets are involved.

Links to the government and AT&T briefs at the above link, as well as a lot more analysis.

Basically, AT&T saying they can't tell people whether or not they gave the government information about them without them harming national security, and the government backing them.

Now that I'm an AT&T customer (not by choice), it wouldn't bother me if AT&T said "yeah, we have the NSA full access to our network, and this is why and what they are doing", but all of this crap about "we can't tell you" is a bunch of crap - everybody knows AT&T was/is helping the NSA, so they've scared off any potential criminal/terrorists.

it wouldn't bother me if AT&T said "yeah, we have the NSA full access to our network, and this is why and what they are doing"

They may not have choice in the matter, at least not in what they can say publicly. Don't forget this is a legal case and they have liabilities and agreements to defend. This was a lawyers' statement to the court, a legal matter and one relating to national security.

a bunch of crap - everybody knows AT&T was/is helping the NSA

A bunch of crap happens in the courts today, our legal system demands it and depends on it. What you see is just lawyers doing and saying what lawyers do and say in such cases. I don't get agitated about it.

The crux of the issue, though, if "everybody knows" - what's the real point of the lawsuit, if not get the details of actual NSA intercepts, and the only reason there was a lawsuit to begin with was after "everybody knew" - a Catch-22. The lawsuit was completely political, liberal (not libertarian) in nature - it's just a way to get to NSA, which they cannot successfully sue, through a lawsuit against AT&T. Liberals made it a practice that anything they don't like politically, whether legislated, administrated or voted by the people, they will overturn in "friendly" courts, often in San Francisco (where EFF is based) or Massachusetts (where EFF was based before).

I must say I've been very disappointed with EFF in recent years, as much as I was very happy when they started originally. Their focus changed substantially from libertarian into a technology equivalent of ACLU (EFF refers to "Digital Civil Liberties"), and except few activities, mainly related to DRM/DMCA and RIAA, I haven't seen much good coming from them.

http://en.wikipedia.org/wiki/Electronic_Frontier_Foundation

Even more liberal is the splitter group CDT -- staffed with lawyers from ACLU and Democrat Senators and campaigns.
http://en.wikipedia.org/wiki/Center_for_Democracy_and_Technology