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Data Secrecy Rift

This seems worth posting in full:


   The New York Times, August 14, 1995, pp. D1, D8.

   Rift Emerges Over Computer Data Secrecy Issue

   By John Markoff

   Some of biggest names in the computer industry sent
   separate letters to the White House last week in
   pre-emptive moves aimed at a proposed regulation originally
   intended to insure that law-enforcement officials have
   access to encoded telephone and computer communications.
   The proposal may be released as soon as this week.

   But as the Government's task force on the encryption issue
   prepared to disclose the closely held details of the
   proposal -- the latest version of a measure revealed more
   than three years ago but subsequently reconsidered in the
   face of industry opposition -- unexpected divisions emerged
   from the last-minute, scattershot lobbying.

   The splits are developing at a crucial moment, with the
   Government's interagency task force also apparently divided
   between those favoring maximum governmental access to
   communications and those who support a loosening of export
   restrictions. Most industry executives had hoped to present
   a united front in favor of the more liberal position -- a
   goal that now appears to be in jeopardy.

   The two major groups sending letters to Vice President Al
   Gore, the Administration's point man on technology issues,
   were a group of computer hardware manufacturers and a group
   of the largest makers of software.

   In a letter sent to the Vice President last Thursday, eight
   executives, including James Treybig, chairman of Tandem
   Computers Inc.; Gil F. Amelio, chairman of the National
   Semiconductor Corporation; Edward McCracken, chairman of
   Silicon Graphics Inc.; Eugene Shanks Jr. president of the
   Bankers Trust New York Corporation, which conducts
   international electronic commerce, and Stephen T. Walker,
   chairman of Trusted Information Systems, urged that the
   Government immediately establish a new standard to control
   the export of technology that is used to encode
   communications, so that outsiders cannot tap in.

   A day later, however, a group of software publishers,
   including William H. Gates, chairman of the Microsoft
   Corporation; Jim P. Manzi, president of the Lotus
   Development Corporation and a senior vice president of
   I.B.M., Robert Frankenberg, chairman of Novell Inc.; Mark
   B. Hoffman, chairman of Sybase Inc., and Carol Bartz,
   chairwoman of Autodesk Inc., wrote arguing that the
   possible restrictive regulations that may soon be offered
   by the Government would fail to remove the current
   obstacles that keep American companies from competing in
   lucrative international markets.

   Many off-the-shelf programs cannot be marketed abroad
   without alteration under current regulations. For example,
   before American publishers can sell the popular Lotus Notes
   program abroad, they must replace its encoding system with
   a weakened version so that foreign communications can be
   monitored by American intelligence agencies. These
   restrictions date to the 1970's when advanced computer
   technology was treated as the equivalent of military
   technology and subject to the same strict controls.

   The software publishers have been able to sell their highly
   effective communications encoding products in this country,
   while sales abroad, they contend, have been hurt. Their
   letter also said that although the Administration agreed
   last year to work with industry toward a compromise, "there
   has been only minimal consultation with the software
   industry with respect to basic questions."

   "We're worried the Government is about to announce the son
   of Clipper," said Robert W. Holleyman 2d, president of the
   Business Software Alliance, referring to the Government's
   original proposal for changing the standard. This proposal,
   released in April 1993, would have replaced the cold
   war-era restrictions with a coding standard that allowed
   sales of strong encryption programs, but would have given
   United States law-enforcement agencies access to all
   communications through a back door with a numerical key.

   "The Administration has been trying to resolve how to keep
   U.S. companies competitive, but there remain individuals in
   the Government who want to do anything they can to slow the
   proliferation of new encryption technologies," Mr.
   Holleyman said.

   In April 1992, the Administration proposed a hardware-based
   system for protecting the privacy of telephone calls and
   computer data transmissions. The standard, known as the
   Clipper Chip, included a special "backdoor" that would
   permit law-enforcement officials to listen to conversations
   and monitor data exchanges.

   The original Clipper system called for a two-part key for
   decoding scrambled conversations. The two parts of the key
   -- actually two large numbers -- were to be held by two
   independent Government agencies. Under the plan, when a
   law-enforcement agency had a warrant to listen to a
   conversation encoded by Clipper, it would obtain the keys
   from the separate agencies. By merging the keys, it could
   obtain a key that would unlock the coded conversation.
   The Clipper proposal met with angry opposition both from
   advocates for civil liberties, who argued it would
   undermine the right to privacy, and by high-technology
   executives who said Clipper would be unacceptable for
   foreign users who would not want their conversations to be
   readable by the United States Government.

   The announcement of the new proposal may be imminent. Two
   trade associations, the Software Publishers Association and
   the American Electronic Association, are planning a
   conference on cryptography policy for Friday.

   Several people familiar with Administration policy
   discussions said the Government had until recently remained
   divided and that the director of the Federal Bureau of
   Investigation, Louis J. Freeh, has been the most vocal
   advocate of placing strict limits on any use of
   unsanctioned encryption technology.

   After the bombing of the Federal building in Oklahoma City,
   the F.B.I., circulated a proposed antiterrorism bill on
   Capitol Hill that would have banned even the domestic use
   of coding software except for systems approved by the