Sony/Philips has trouble exporting Web TV's (fwd)

[Ray Arachelian <sunder@brainlink.com>]

---------- Forwarded message ----------
Date: Sat, 2 Nov 1996 15:59:04 -0500 (EST)
From: v0!d <voidmstr@primenet.com>
To: Multiple recipients of list <wwwac@echonyc.com>
Subject: Sony/Philips has trouble exporting Web TV's (fwd)


>>
>>     From Electronic Buyers' News:
>>
>>     October 28, 1996
>>     Issue: 1030
>>     Section: News
>>
>>     CODE LIMIT EXCEEDED
>>
>>     By Jack Robertson
>>
>>     Washington - New Internet-television systems from Sony Corp. and
>>     Philips Electronics Co. are technically munitions under U.S. export
>>     controls and cannot be shipped to the companies' worldwide sales
>>     networks, it was disclosed last week.
>>
>>     Sony officials said the company's TV set-top box designed by WebTV of
>>     Palo Alto, Calif., includes a state-of-the-art 128-bit code encryption
>>     system for electronic commerce. This far exceeds the 40-bit encryption
>>     code permissible for export under the U.S. Munitions Control List.
>>
>>     Philips also makes a WebTV set-top Internet box at its Magnavox TV
>>     plant in Knoxville, Tenn., and is similarly barred from shipping the
>>     unit to sales channels around the world.
>>
>>     Both global electronic giants face immediate competition in the
>>     emerging TV-Internet surfing market from other Japanese, South Korean,
>>     and European set-makers that don't face the U.S. encryption
>>     controls. They now join the U.S. computer industry, which has long
>>     protested that the outmoded encryption export curbs are causing them
>>     to forfeit overseas sales of PCs and workstations to foreign rivals.
>>
>>     President Clinton last month proposed lifting the level of encryption
>>     export controls from the present 40-bit code word to 56 bits, but only
>>     if a trap door is embedded in the cipher to allow law enforcement
>>     agencies to decode wiretapped messages. Clinton is expected shortly to
>>     sign an executive order putting the new control limits into effect.
>>
>>     The pending 56-bit-code threshold doesn't help the Sony or Philips
>>     Web-surfing TV systems - nor most U.S. computer companies that build
>>     systems with encryption exceeding even the new control limit. Both
>>     Netscape and Microsoft Web-browsing software includes 128-bit code
>>     encryption, surpassing export curbs.
>>
>>     Zenith Electronics Co., maker of a Web-surfing TV set, isn't concerned
>>     about the encryption controls, since it sells only in the U.S. market
>>     where the curbs don't apply.
>>
>>     Divicom Inc., based in Milpitas, Calif., must get an export license
>>     from the U.S. State Department for every exported cable TV front-end
>>     encoder, which includes 128-bit code word, according to Tom
>>     Lookabough, the company's sales manager. He said the license review
>>     process can take eight weeks or more, a troublesome delay that foreign
>>     competitors don't face.
>>
>>     Divicom and Scientific Atlanta both said their new digital TV set-top
>>     boxes include encryption that exceeds allowable export limits - but
>>     virtually all sales so far are in the U.S. market. As digital-box
>>     production ramps up, the companies would like to sell overseas, but
>>     run into the export control ban that puts them at a severe
>>     disadvantage against the foreign competitors aggressively entering the
>>     set-top market.
>>
>>     President Clinton's encryption export control changes include an
>>     industry-favored provision to take the category off the State
>>     Department's Munitions Control List and shift responsibility to the
>>     Commerce Department.
>>



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