Crypto Controversy Rages On

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Crypto Controversy Rages On

By Neil Munro
Staff Writer

Only a top-level deal brokered by the White House can break the acrimonious encryption dispute between the FBI and the information technology industry, industry officials say.

Both the FBI and industry executives are strenuously lobbying members of Congress in anticipation of the next vote over the extent of the government's controls on impossible-to-crack encryption technology, which can be used by companies to conduct electronic commerce and by criminals to hide their crimes.

Industry officials say the administration's plan would cripple the growth of electronic commerce, while FBI officials say curbs on encryption are needed for law enforcement.

Industry lobbyists face a difficult road ahead, despite their successful defeat of an FBI-backed plan to restrict domestic encryption technology during a Sept. 24 congressional vote.

The critical vote came when the House Committee on Commerce voted 36-16 to reject an FBI-backed proposal that would have required all software sold in the United States to include features allowing the FBI to quickly reveal private messages once a court granted permission. This measure was sponsored by Rep. Michael Oxley, R-Ohio, and Rep. Thomas Manton, D-N.Y. Similar proposals had earlier won approval in the House Committee on National Security and the House Select Committee on Intelligence.

After defeating the Oxley plan, the commerce committee then approved a measure sponsored by Rep. Ed Markey, D-Mass., and Rep. Rick White, R-Wash., which would sharply roll back government controls on encryption exports, a goal long sought by the high-tech industry.


House photo

Rep. Ed Markey,
D-Mass.

But industry now faces opposition from Rep. Gerald Solomon, R-N.Y., the chairman of the House Committee on Rules, which sets the terms for any debate over a final bill.

When the encryption bill is debated on the floor of the House of Representatives, Solomon will ensure that the House has the opportunity to vote either for the FBI-backed Oxley version or the industry-backed Markey/White versions of the bill, said Solomon's spokesman, Bill Teator.

"Industry has had its say on this issue for some time. ... It is time the other side has a say," Teator said.

"I honestly don't think there is anyone in the House who can predict how this will come together," said Peggy Peterson, a spokeswoman for Oxley. "There is a distinct possibility" that a debate by the House will be postponed if either the Oxley/Manton or Markey/White factions predict a loss for their side, she said.

However, the committee vote showed that FBI Director Louis Freeh "took his best shot at scaring members to death" and still lost, said John Scheibel, vice president and general counsel at the Computer and Communications Industry Association, based in Washington.

"Members of the Congress ... are beginning to have a clear understanding of the public-safety concern," said Barry Smith, chief of the digital telephony section of the FBI's office of public and congressional affairs. However, he declined to predict if the House will have a floor debate on the issue, but said the Senate would wait for a decision from the House before acting.

But by raising the FBI's demands from voluntary use of key-recovery technology to mandatory use of key-recovery technology, Freeh generated opposition from industry groups outside the information technology industry, including phone companies and auto companies, said Scheibel.


House photo

Rep. Rick White,
R-Wash.

In early September, the FBI's intense lobbying effort ensured that "we were up against the wall," Scheibel said. But help from these other industries helped them persuade members of the committee that the FBI's proposal would restrict free speech, cripple sales of U.S. software and hurt the development of worldwide electronic commerce while failing to prevent criminals from using foreign-developed encryption designed with key-recovery technology, he said.

The new allies were vital, said Scheibel, because committee members "had to understand that it was not just American business selling these [encryption] products that stood to lose, but all segments of industry that stood to lose," because it would cripple electronic commerce.

FBI officials argued in repeated public appearances during late September that the unregulated sale of encryption by industry would deny them the ability to use court-approved wiretaps against criminal gangs or to search seized computers for evidence of criminal activity. In 1996, encryption hid 7 percent of the suspect computer files seized with court-ordered search warrants and subsequently passed to the FBI's computer labs for analysis, Smith said.

But even if industry officials eventually persuade the House to reject the Oxley/Manton plan, they must also face opposition in the Senate, where Sen. John McCain, R-Ariz., and Sen. Robert Kerrey, D-Neb., have drafted a plan that would create strong legal and economic pressures for the use of key-recovery technology.

For industry, both the McCain/Kerrey and Oxley/Manton proposals are unacceptable, said Scheibel.

"People in industry would be happy to compromise ... but we need an honest process" in which President Bill Clinton must be willing to overrule the FBI's hard-line position enshrined in the Oxley and McCain/Kerrey bills, he said.

However, "I have not seen any willingness on the part of the administration to compromise this issue," he said.

"It is too early to tell how they will handle this," said Kim Willard, a spokeswoman for the Washington-based Business Software Alliance, an industry group led by Microsoft Corp.

But the FBI needs a compromise just as much as industry, Scheibel said. To promote the use of key-recovery technology, the FBI needs a law preventing lawsuits against companies that work with the FBI to decrypt criminals' data, he said.

"The administration strongly desires immunity for liability for third-party key holders, while industry strongly desires encryption-expert relief. Unless the two parties can find a middle ground, neither party will get what they want," said an industry executive.

Until that compromise happens, both industry and the FBI will try to bolster their position by winning favorable votes in Congress or decisions in courts, or else by highlighting new technology that supports their arguments.

However, "we are still looking to Congress for a solution. ... We don't know what else will pop up," said Willard.


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