-----BEGIN PGP SIGNED MESSAGE----- The Washington Post Sunday, May 30, 1993 Pages H1, H4 Business section CHIPPING AWAY AT PRIVACY? Encryption Device Widens Debate Over Rights of U.S. to Eavesdrop by John Mintz and John Schwartz Washington Post Staff Writers The two men were well-dressed, Bill Frezza recalls. They walked into his New Jersey office a few days after his company, Ericsson-G.E. Mobile Data, Inc., announced the introduction of a portable device for sending and receiving electronic messages. The two asked knowledgeable questions about whether the product incorporated "encryption" technology, which scrambles signals to frustrate eavesdroppers. They wanted to buy some of the expensive, high-tech devices. With cash. "They were not tekkies," concluded Frezza, the firm's marketing chief. By the time they left (empty-handed, since there were no devices to sell yet), Frezza had decided they were drug dealers. The New Jersey incident illustrates why law enforcement and intelligence agencies are working so hard to keep a finger on new communications technologies emerging around the world. They fear these advances will give criminals and terrorists a new advantage - -- by making it all but impossible for authorities to tap their telephones and computer lines. The problem, say the feds, is that the bad guys are always the first to get the hot new toys -- whether they are fast cigarette boats, automatic weapons or computerized gadgets that ensure privacy. So the authorities -- over sharp protests from civil libertarians -- are continually looking for ways to defeat encryption technologies and continue monitoring communications. This conflict, simmering for years, came to a boil on April 16, when the White House announced it was imposing a new scheme for encrypting voice and data communications. The system, which employs a scrambler device dubbed the "Clipper Chip," leaves a deciphering "key" in the federal government's pocket. Whitfield Diffie, a pioneering cryptographer at Sun Microsystems Inc., compares Clipper to "the little keyhole in the back of the combination locks used on the lockers of schoolchildren. The children open the locks with the combinations, which is supposed to keep other children out, but the teachers can always look in the lockers by using the key." The government will stock up on phones and computers equipped with Clipper, and many companies that do business with the government will need to buy the same gear. The administration also hopes Clipper will catch on across the business landscape. Meanwhile, federal officials have been drawing up legislation to require telecommunications companies to grant law enforcement special access to U.S. communications networks. "We feel we need these tools to do our job," said James K. Kallstrom, the FBI's chief of investigative technology. Kallstrom said if the FBI can't get industry to make the changes, disaster could occur. "I don't have a lot of dead bodies laying around here or dead children from an airplane explosion that we haven't been able to solve -- yet." For Jim Bidzos, president of a California-based encryption firm called RSA Data Security Inc., the controversy "comes down to one simple question: Do you have the right to keep a phone call or a computer transmission private? The government says no." David Sobel, an attorney with Computer Professionals for Social Responsibility, an advocacy group for high-tech industries, said the fight over Clinton's Clipper chip is the opening shot in "the battle for the future direction of the nation's data highways." Spooking the 'New Agers' The Clinton White House's decision to cast its lot with the FBI and the super-secret National Security Agency (NSA) has its ironies. The young computer wizards who manage the information industry helped elect Clinton, and they share with him a dream of a 21st-century telecommunications revolution. But many of the industry's "new agers," as one White House official calls them, think Clinton is selling out to spooks and spies. The FBI and NSA had won support in the Bush administration for Clipper, first proposed several years ago. Then within weeks of the Democrats' move into the White House, top law enforcement and national security officials won over the Clinton team. One White House official said they were "taken with the aura of making national security decisions inside the White House.... You see the stakes differently." The FBI and state and local law enforcement officials told the incoming Clinton team that resolving this issue was one of their highest priorities, industry sources said. Mike Godwin, counsel for the Electronic Frontier Foundation, which is mobilizing the communications industry against Clipper, said that "like all liberals, Clinton has an interest in being seen as a good law-and-order guy." Clinton's National Security Council is now conducting a closed-door review of those subjects -- which the industry criticizes for being secret, and on Friday corporate critics will converge on the White House. Old Ways, New Days To understand the FBI's and NSA's concern about the new information age, it helps to recall the state of communications a quarter-century ago. In the 1950s and 1960s, there was only one phone company, AT&T, and it worked closely with the NSA and law enforcement, industry experts said. Similarly, the computer business was dominated by International Business Machines Corp. AT&T and IBM were huge, discreet and overtly patriotic bureaucracies -- proud members of the military-industrial complex. When the administration of President Gerald Ford filed an antitrust suit against AT&T in the 1970s, the Defense Department opposed it on national security grounds, since the firm was seen as key to the nation's mastery of the global communications system. When the antitrust suit succeeded in 1984 and a federal judge dismantled AT&T, the NSA was scared, government officials said. Instead of the one mighty AT&T, there are now seven regional "Baby Bell" companies and hundreds of new telecommunications players in the U.S. market, some foreign-owned. The computer business also has been balkanized, with some firms run by youngish rebels of the post-Vietnam War generation who sneer at authority. (The founders of Apple Computer Inc., started in business selling "blue boxes" -- machines that help users scam the phone company -- to students at the University of California at Berkeley.) The FBI and NSA are uncomfortable speaking about the nation's vital communications secrets with some of these newcomers, government officials said. Adding to law enforcement worries is the technology itself: Where the system was once just copper wires on poles, now it's a dizzying tangle of satellites, microwave towers, fiber-optic cables and cable TV systems, all linked up and bouncing signals around in cyberspace. "They feel this onslaught, being drowned by this technology revolution that's overrunning their capabilities," one White House source said of the NSA and FBI. "They're feeling very threatened.... They fear the horse is getting out of the barn." Dealing With Digits The government's response to the new world has been twofold: an attempt to make the nation's phone and communications networks more open to government taps, and a drive to limit the spread of data encryption. The biggest worry for law enforcement is the high-tech modernization of the nation's communications system, especially the "digitalization" of phone networks. This translates conversations and data into the "0"s and "1"s of computer talk. Anyone who has heard the squeal of a fax machine knows it doesn't sound like conversation. The FBI wants a guarantee that when a court approves a wiretap, it can gain access through special "ports" to conversations or data streams that can be retranslated from digital language. The FBI is "panicky," said one Baby Bell executive, over the increasing sophistication of the U.S. phone system. "They're sitting over there with their simple little pair of alligator clips" that were once used to tap phone lines. The FBI's Kallstrom offers an example of the limits imposed by changing technology: In the mid-1980s in New York City, because digital switches that control cellular phone networks were not designed with law enforcement in mind, investigators looking into drug dealers, mobsters, terrorists and all other miscreants had only five "ports," or entry points, from which to tap cellular phones. "For years, criminals had a free pass to engage in criminal activity there," he said. "It's a mini-version of what'll happen in the future." The FBI says it wants to maintain the status quo, meaning its ability to keep monitoring calls. "You want to maintain what?" said Nathan Myhrvold, a Microsoft Corp., vice president. "That's just such a crazy thing to say in the computer industry," where product cycles are measured in months. In March 1992, the FBI took the offensive in the battle to keep the taps open. That's when it surprised industry with a legislative proposal that would require telecommunications firms to guarantee law enforcement access to its new information networks. This "digital telephony" proposal was later withdrawn after a bitter outcry from communications and computer companies. The firms opposed, among other things, provisions that the Federal Communications Commission must draw up rules on this highly complex matter in secret and on a highly expedited schedule, and that the phone companies' customers finance the modifications through rate increases that could cost many billions of dollars. Federal officials have been drafting new legislation, sources said, but have been tight-lipped about its content. Encryption Anxieties On top of the surveillance problems posed by a digital network, law enforcement also is vexed by the rise of inexpensive encryption technologies, used in everything from personal computer messages to electronic commerce. Businesses that zip sensitive secrets across the globe need to guard against industrial espionage, and some encryption systems are virtually unbreakable -- not only by industrial pirates, but also by the NSA and FBI. The government hopes Clipper will replace chips providing unbreakable encryption for conversations. The NSA also is promoting a chip to encrypt data, called "Capstone." Both use a classified encryption algorithm, or formula, called "Skipjack." Using these technologies, government officials retain their own master keys, actually long strings of numbers, to decrypt messages. To assuage the fears of civil libertarians, the government will split each key in two -- like the two pieces of a treasure map torn down the middle -- and place the pieces with two government agencies. A police officer who gets a judge's approval for a wiretap must go to the two agencies to tap the line. Administration sources said that if the current plan doesn't enable the NSA and FBI to keep on top of the technology, then Clinton is prepared to introduce legislation to require use of its encryption technology, which is crackable by the NSA, and ban use of the uncrackable gear. "It's an option on the table," said a White House official. Stephen Bryen -- formerly a top trade security official in the Pentagon and now president of a small Silver Spring-based firm that develops encryption technology -- says that he realized recently that "I've got a competitor, and it's the U.S. government." He said it is almost unprecedented for government to compete directly with industry in this way. "It's hard to compete against taxpayer money," he said. "The playing field's not level." So far, Clipper's launch has been less than auspicious. A coalition of top computer and telecommunications firms and trade groups -- including IBM, Microsoft and about 25 others -- has sent letters to Clinton raising a list of 150 pointed questions about the decision. On Friday, an association of firms that make computers said that with Clipper, government officials may find it "difficult to resist" monitoring communications it shouldn't. It recommended the government slow deliberations on the question. Details about Clipper's technology are classified. Without knowing about it, Clipper's critics say they can't evaluate how secure it is -- the central issue for those wanting privacy. Dorothy Denning, a Georgetown University cryptography expert briefed on the chip by government officials, says Clipper strikes a balance between strong data security and restricted government access. "I was impressed," she said. In any case, many in industry say they doubt Clipper will gain favor in the market. Data security shoppers may avoid a product with a famous security hole installed by the government. Paul Jones, vice president for government marketing at a Virginia-based encryption firm called Guardata, said a security consultant for a big labor union recently told him, "Do you think I'm dumb enough to buy something endorsed by the NSA?" For the same reason, Clipper would be a hard sell overseas, where companies might fear U.S. intelligence agencies would spy on them. The federal government, said Bidzos of RSA Data Security, "is forcing a showdown we just can't win" overseas. Rep. Edward J. markey (D-Mass.), chairman of the House telecommunications subcommittee, fears the government may eventually ban encryption. "In a digitally linked world, where encryption is the key to privacy," he said, "banning encryption may be like banning privacy." Frezza of Ericsson GE said despite his personal reluctance to sell high-tech gear to criminals, the government's effort to limit encryption software is bought so easily. "The genie is already out of the bottle," he said. "We're all going to look back on this date in five years and laugh that anyone tried to control this technology." -----BEGIN PGP SIGNATURE----- Version: 2.2 iQCVAgUBLAloa5RLcZSdHMBNAQGtcgQAjhCYLsOMh/SbxVHEJByUvdXXbMfuf30p l7JFINuhOOaqDx3c2azJMEPSHxFWG4q4yCQ3xOOlAQFMWKycGFR8ZU+hTH0M2ltc K4imn1G4v0hQ3BLauA4P4eOv7Zr4ehhDH6qq/zr6iAr3JTZiANvs9DujetQherb4 YHvOKsvu9Bs= =i5rB -----END PGP SIGNATURE----- Paul Ferguson | The future is now. Network Integrator | History will tell the tale; Centreville, Virginia USA | We must endure and struggle fergp@sytex.com | to shape it. Stop the Wiretap (Clipper/Capstone) Chip.