I hadn't seen this article fly by yet, so... ----- New Scrambler Designed to Protect Privacy, But Allow Police Monitoring By Christopher Drew, Chicago Tribune Knight-Ridder/Tribune Business News WASHINGTON--Apr. 19--As a step toward the development of vast new data "superhighways," the federal government has designed a powerful device that would protect the privacy of electronic communications by encoding them but still allow police to eavesdrop. Critics say the project, announced Friday by the Clinton administration, raises serious questions about the protection of civil liberties as more people use cellular and cordless phones and computer-based communications. They also warned that the device is not likely to help law-enforcement agents foil high-tech criminals unless it becomes the most widely used commercial encryption system - and drives private competitors out of the business. "'A.k.a. Big Brother,' that's what I call it," said Stephen Bryen, a former Pentagon official who runs a company developing a rival encryption system. Bryen said it was "very disturbing" that the government has gone so far with the previously classified project "without consulting with experts in the industry" whose investments could be wiped out. One high-ranking federal official, Raymond Kammer, acknowledged that such concerns are part of an "appropriate debate" that needs to be held over the project. "Maybe it turns out that society, as it debates this, finds it unacceptable," said Kammer, acting director of the National Institute for Standards and Technology. "I'm not sure. This is the start of that debate." Millions of people who exchange information via computers and make calls from cordless and cellular phones, which are especially vulnerable to interception, could be affected. Experts say an era is dawning in which traveling executives exchange electronic memos and negotiate sensitive deals via hand-held communicators using vulnerable wireless transmitters. In endorsing the plan, the White House described it Friday as an outgrowth of federal efforts to capitalize on advances in telephone and computer technology while preventing drug dealers and terrorists from finding new ways to mask their misdeeds. In last year's campaign, President Clinton pledged to invest billions of dollars in faster and more secure data links to enhance the standing of U.S. firms in the global economy. But as the computer industry has developed systems to enable businesses to scramble data transfers and telephone conversations as a safeguard against industrial espionage, a growing number of criminals also have begun using them to foil court-authorized wiretaps. Under the new plan, engineers at the National Security Agency invented a new coding device, called the "Clipper Chip," which is said to be much harder to crack than encoding systems now on the market. The government licensed two California companies - Mykotronx and VLSI Technology - to make the computer chips. The chips will form the "brains" inside small scrambling devices that can be attached to individual telephones. To spur the venture, the Justice Department will soon purchase several thousand of the devices. Military and spy agencies also are expected to use them. Private businesses would not be required to use the technology. But federal officials hope their sponsorship will establish the Clipper chips as the new industry standard and crowd out competing systems. Indeed, AT&T announced Friday that it will use the new chips in a desktop device for encrypting telephone conversations that it expects to sell for $1,195. But in return for gaining the extra encoding power built into the new system, users would have to accept the fact that government code-breakers would always hold the keys to tap into the information. In an effort to prevent abuses of civil liberties, federal officials said, they will set up a system in which they would have to match two coding keys held by different officials to unscramble any communications. National-security and law-enforcement officials could bring the keys together only under court- authorized operations. But Bryen said it is hard to see how the Clipper chips project will provide much help to the FBI. Even if the new coding devices drove others off the U.S. market, Bryen said, sophisticated criminals would simply buy encoding devices overseas, as many already do. Multinational and foreign-based companies also could prove leery of a system that has a built-in point of entry for U.S. authorities. The FBI separately is seeking legislation that would force telephone companies to modify their equipment to keep other advances in technology from hampering its ability to perform wiretaps. AT&T and other phone companies have opposed this idea. END!B&?TB-SCRAMBLER Transmitted: 93-04-18 23:12:00 EDT