Nicholas Merrill Spent Decades Fighting Surveillance. Now He Built America’s Most Private Phone Company
Nicholas Merrill Spent Decades Fighting Surveillance. Now He Built America’s Most Private Phone Company
Nicholas Merrill has dedicated his entire career to pushing back against mass government and corporate surveillance. But one thing he’s desperate for you to stop doing is calling the anonymous cellular service he’s selling a “burner phone.”
Yes, his ultimate goal is a future where any person in the U.S. can access a fully functional smartphone with full cellular coverage and data without sharing their personal identity—not even with the phone company itself. But the “burner phone” label carries unfair, unfair stigma: it implies these anonymous devices are only for illegal, shady, or subversive activity, calling to mind drug deals or secret whistleblower meetups in dim parking garages.
With his new startup launching today, Merrill says he is not selling disposable devices for covert activity. Instead, he’s offering cellular service for existing phones that makes near-complete mobile privacy the permanent, ordinary default for everyday American life. “We’re not here to cater to people doing bad things,” Merrill explains. “We want to help ordinary people who aren’t doing anything wrong feel more comfortable in their daily lives, not constantly watched and exploited by massive surveillance and data mining operations. It shouldn’t be controversial to say the vast majority of people want that.”
That vision is the core of Phreeli—a name chosen to echo “speak freely”—the new privacy-focused carrier Merrill built to be the most surveillance-resistant cellular provider available to U.S. consumers. Phreeli offers a very different layer of protection than what users get from end-to-end encrypted apps like Signal or WhatsApp. Those tools hide the content of your conversations, and even in Signal’s case, block access to metadata like who you’re talking to. Phreeli goes a step further: it offers full anonymity. It cannot hand over users’ identifying information to government agencies or data brokers because it barely collects any in the first place. The only personal detail the company requires from new users when they sign up for a Phreeli number is a U.S. ZIP code—the minimum data Merrill says his company is legally required to keep for tax purposes.
By asking for almost no personally identifiable information, Merrill is addressing one of modern tech’s most stubborn, underdiscussed privacy gaps: no matter how many surveillance-resistant messaging apps you use, your traditional cellular carrier always logs which of your customers’ phones connected to which cell tower, and when. Carriers have repeatedly turned that sensitive data over to data brokers willing to pay for it, and complied with every demand from the FBI or ICE that comes with a court order.
Merrill knows these government data demands firsthand. Back in 2004, he launched a landmark, 11-year legal battle against the FBI and the U.S. Department of Justice. As an ISP owner in the post-9/11 era, he received a secret national security order demanding he turn over a customer’s data—and he refused. After that battle, he spent another 15 years leading the Calyx Institute, a nonprofit that builds privacy tools like a tracking-resistant Android build and a no-logs free VPN.
“Nick is someone who is deeply principled and unafraid to stand by those principles,” says Cindy Cohn, executive director of the Electronic Frontier Foundation, which has fought government surveillance for decades. “He’s careful and thoughtful, but at his core, he’s kind of fearless.”
A few years ago, Merrill realized he could fight surveillance at a far more fundamental level: by becoming the phone company itself. “I started to see that if I controlled the mobile provider, I’d have even more opportunities to build privacy for people,” he says. “If we can build our own global network of cell towers one day, we can set our own privacy rules for what those towers collect and see.”
Of course, building or buying a national network of cell towers would cost billions, way out of reach for his small 12-person startup. So instead, Phreeli operates as a mobile virtual network operator (MVNO), meaning it pays an established major carrier—T-Mobile, in Phreeli’s case—to use its existing infrastructure.
The setup acts like a built-in privacy buffer: The cell towers belong to T-Mobile, but customer contracts and all decisions about what personal data to collect are controlled entirely by Phreeli. “You can’t control the towers, but what you can do is separate a person’s personally identifiable information from their activity on the phone network,” Merrill says.
Surprisingly, offering phone service without collecting a customer’s name is legal in all 50 U.S. states, according to Merrill. The bigger technical challenge was accepting anonymous payments without relying on cash mailed in envelopes. To solve that, Phreeli built a new encrypted system called Double-Blind Armadillo, which uses cutting-edge zero-knowledge proof cryptography. Through this mathematical system, Phreeli can confirm a user has paid their monthly bill without keeping any record that links a specific credit card to a specific phone number. Users can also prepay their bills with privacy-focused cryptocurrencies like Zcash or Monero that are extremely hard to trace. (Phreeli only offers prepaid service, since it can’t track down anonymous users to collect unpaid bills.)
Phreeli also lets users adjust their own balance between privacy and convenience. If users share an email address at sign-up, they can more easily recover their account if they lose their phone. To get a physical SIM card, users can share a mailing address—which Phreeli deletes immediately after the SIM ships—or they can download a digital eSIM, even via Phreeli’s hidden site on the Tor anonymity network if they choose.
The “armadillo” name for the system (and the company’s logo mascot) is intentional: it reflects this sliding privacy scale. Armadillos always have a base layer of armor, but they can choose to expose their soft underbelly or curl up into a fully protected ball.
Merrill argues that even if users choose the more convenient, less secretive end of the spectrum, Phreeli is still far less surveillance-friendly than every major existing U.S. carrier, which have long been one of the weakest links in digital privacy. For example, all major carriers comply with law enforcement “tower dump” requests that hand over data on every phone that connected to a given tower during a set time period. They have also repeatedly sold customer data—including precise location data—to corporate data brokers. In 2022, the FCC fined AT&T, Verizon, and T-Mobile a combined $200 million for selling this sensitive user information to data brokers. (AT&T’s fine was later overturned by an appeals court ruling that limited the FCC’s enforcement power.) Many data brokers then turn around and sell that data to federal agencies including ICE and other Department of Homeland Security branches, allowing those agencies to easily bypass limits on domestic spying.
Phreeli doesn’t claim to be a perfect cure-all for surveillance. Even if your carrier doesn’t link your movements to your identity, the operating system on your phone or the apps you use can still track you. But Merrill says the bar for being the most privacy-focused carrier in the U.S. is surprisingly low. “The promise of this company is that we’ll be far more private than the three big U.S. phone carriers, and I know we’re going to overdeliver on that,” he says. “I don’t see any way we mess that up.”
The 20-year fight that led to Phreeli
Merrill’s journey as a privacy activist started by accident, on a February day in 2004 in New York City, when three pages of paper arrived at his small ISP’s office. An FBI agent knocked on the door of Calyx Internet Access, which was headquartered in a warehouse space one block from Manhattan’s Holland Tunnel. When Merrill answered, he met an older man with white hair, wearing a trench coat straight out of a vintage crime comic, who handed him a sealed envelope.
The agent waited while Merrill opened and read the letter. The first two paragraphs ordered him to turn over almost all data he had on one customer, identified only by their email address, and said the demand was authorized under a provision of the Patriot Act. The third paragraph was a gag order: he couldn’t tell anyone he had even received the letter. Then the agent left, without answering any of Merrill’s questions, leaving him alone to decide what to do.
Merrill immediately noticed the letter had no judge’s signature. It was a National Security Letter (NSL), a little-known, highly controversial tool the Bush administration used to demand information without a warrant, as long as it was tied to a “national security” investigation.
Merrill had launched Calyx in the early 1990s, starting with a bank of modems in the unused fireplace of a New York apartment, and grew the business into hosting websites for major corporate clients like Mitsubishi and Ikea. But he used that revenue to offer free or discounted hosting to progressive nonprofits he supported like the Marijuana Policy Project and Indymedia, and to host connections for friends—including the customer named in the NSL.
Merrill has never publicly revealed the target’s identity, and declined to share it for this article. But he knew the man, and he never struck him as a national security threat. If he was, Merrill thought, why not just get a warrant? The customer later told Merrill he had been pressured by the FBI to become an informant and refused, and the bureau retaliated by putting him on the no-fly list and pressuring potential employers not to hire him. (The FBI did not respond to requests for comment on the case.)
Merrill immediately decided to risk defying the gag order—with no idea what punishment he could face—and called his lawyer, who told him to reach out to the New York chapter of the ACLU, which happened to be one of Calyx’s hosting clients. Minutes later, he was sitting in the ACLU’s Financial District office talking to a young attorney named Jameel Jaffer. “I wish we could say we reassured him with our expertise on NSL law, but that’s not what happened,” Jaffer says. “None of us had ever seen one in person before.”
Merrill, for his part, knew that every lawyer he showed the letter to could add another charge to any future prosecution. “I was terrified,” he says. “I fully expected someone could show up at my apartment that night, throw a hood over my head, and drag me away.”
Despite his fear, Merrill never complied with the FBI’s order. Instead, he and his pro bono legal team from the ACLU (and later the Yale Media Freedom and Information Access Clinic) sued to challenge the NSL’s constitutionality. That fight lasted 11 years and took over his entire life.
Merrill and his lawyers argued the NSL amounted to an unconstitutional search and violated his free speech rights—and they won. But Congress only made minor changes to the NSL law, leaving the gag order provision intact, so the legal battle dragged on for years. Even after the NSL was fully rescinded, Merrill kept fighting for the right to talk publicly about the entire episode.
“This was a time when most people in Nick’s position were hiding under their desks. But he felt a civic obligation to speak out about surveillance powers that had gone too far,” says Jaffer, who represented Merrill for the first six years of the case. “His courage made a huge impression on me.”
The fight against the FBI consumed Merrill’s life so completely that he eventually shut down his original ISP, too stretched thin to run it, and took a series of ordinary IT jobs. “I had this huge weight on my shoulders,” he says. “I was constantly on the phone with lawyers, and I was scared all the time.”
By 2010, Merrill won the right to publicly identify himself as the recipient of the NSL. By 2015, he beat the gag order entirely and released the full letter, with only the target’s name redacted. While he and the ACLU never got the Supreme Court precedent they wanted, the case pushed Congress to amend the Patriot Act and rein in NSLs’ most unconstitutional powers.
After years of legal and legislative fights, Merrill came away disillusioned with the courts and Congress as a way to protect privacy. Instead, he landed on a new strategy. “The third way to fight surveillance is with technology,” he says. “That was my big realization.”
Shortly after winning the right to go public with his NSL battle in 2010, he founded the new Calyx Institute, a nonprofit named after his old ISP focused on building free privacy tools. Its privacy-focused fork of Android, which strips out Google’s tracking tools and sets Signal as the default for calls and texts, now has nearly 100,000 users. It runs servers for anonymous encrypted XMPP chat that serve around 300,000 users, plus a no-logs VPN and nodes for the Tor network, tools Merrill estimates have been used by millions of people.
As he became a leading voice in the digital privacy world, Merrill started to notice the growing gap around cellular privacy in an increasingly mobile-first world. He met many hard-core anti-surveillance activists who went to great lengths to avoid sharing personal data with carriers: buying SIM cards with cash under fake names, or ditching cellular service entirely and only using Wi-Fi. “Eventually those people never even get invited to parties, because no one can reach them,” Merrill says.
All of these workarounds are legal, so why not build a phone company that collects minimal (or no) personal data for ordinary users who aren’t extreme privacy activists? By 2019, he had consulted with lawyers and incorporated Phreeli. He chose to structure it as a for-profit startup after learning nonprofits can’t operate as U.S. telecom companies under current tax law. Last year, he finally raised $5 million, almost all from a single angel investor, who Merrill declined to name—naturally, they value their privacy.
Building a phone company that works like any other, accepts payments, and stores almost no customer identifying information was a huge technical challenge. To solve it, Merrill worked with Zooko Wilcox, one of the creators of Zcash, the leading privacy-focused cryptocurrency. Zcash is built on zero-knowledge proofs, a new cryptographic system that lets users prove a fact (like that they’ve paid a bill) without revealing any underlying personal information (like their name or credit card number).
For Phreeli, Wilcox suggested building a system of “zero-knowledge access passes.” He compares the old system to showing your driver’s license to get into a bar: “You have to give the bouncer your home address just to prove you’re over 21,” he says. With zero-knowledge proofs, you can create an unforgeable credential that proves you’re of age, without sharing your name, address, or even your exact birth date. “A process that used to require identification becomes just a process that requires authorization,” he says. “You see the difference?”
That same system lets Phreeli confirm users have prepaid their bill without linking their name, address, or payment details to their phone account—even if they pay with a traditional credit card. The end result, Merrill says, is a user experience that’s almost identical to what you get from any major carrier, but with a radical difference in how much data is collected about you.
Wilcox, who has long bought his own SIM cards with cash under a fake name, says Phreeli makes anonymous cellular service accessible to ordinary people, not just privacy die-hards. “I don’t know of anyone who has offered this credibly before,” he says. “It’s not the usual telecom that strips your data for profit, it’s not a sketchy hacker burner phone—it’s a phone where privacy is just normal.”
Even so, many consumers have grown skeptical of tech companies that market privacy as an afterthought feature for their products. But Cohn says Merrill’s decades of work prove he’s not just selling privacy as a marketing gimmick. “Having watched Nick for a long time, all of this is a means to an end for him,” she says. “And that end is privacy for everyone.”
Merrill may hate the idea that Phreeli is just a company full of burner phones, but he acknowledges that some users will inevitably use its privacy protections for illegal activity—just like every other surveillance-resistant tool, from Signal to Tor to cash. But he says that’s not a reason to deny privacy to everyone else.
Phreeli does block spam and robocalls even without knowing users’ identities, Merrill says: it limits how many calls and texts each user can send, and bans accounts that show signs of abuse. “If people think this is going to be a safe haven for abusing the phone network, that’s not going to work here,” he says.
But he accepts that a small number of users will misuse the service, just like a small number of people misused the pay phones that once sat on every American city block. “You put a quarter in, you didn’t have to identify yourself, and you could call whoever you wanted,” he says. “And 99.9 percent of the time, people weren’t doing bad stuff.” The small minority who misused that privacy, he argues, didn’t justify the shift to the all-seeing cellular system we all live in today, where a phone call not tied to the caller’s personal data is almost unheard of.
“The pendulum has swung so far in favor of total information awareness,” says Merrill, referencing the Bush-era intelligence term that describes the mass surveillance system that set him on this path 21 years ago. “Things we used to take for granted have just slipped through our fingers.”
“Other phone companies are selling you an apartment with no curtains—where the windows can’t even have curtains,” he says. “We’re just saying: no, curtains are normal. Privacy is normal.”
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