

Here is an article I found today in comp.security.misc. I'll send my reply in
a separate post to comp.off.eff.org so thayt you guys can get original text.
Have fun! ;(

Oleg

   Relay-Version: VMS News - V6.1B5 17/9/92 VAX/VMS V5.5-2; site nic.csu.net
   Path: nic.csu.net!csus.edu!netcom.com!netcomsv!decwrl!uunet!dove!csrc.ncsl.nist.gov!clipper
   Newsgroups: comp.security.misc
   From: clipper@csrc.ncsl.nist.gov (Clipper Chip Announcement)
   Date: Fri, 16 Apr 1993 15:17:33 GMT
   Sender: news@dove.nist.gov
   Distribution: na
   Organization: National Institute of Standards & Technology
   Lines: 280

   Note:  This file will also be available via anonymous file
   transfer from csrc.ncsl.nist.gov in directory /pub/nistnews and
   via the NIST Computer Security BBS at 301-948-5717.
	---------------------------------------------------

			    THE WHITE HOUSE

		     Office of the Press Secretary

   _________________________________________________________________

   For Immediate Release                           April 16, 1993


		   STATEMENT BY THE PRESS SECRETARY


   The President today announced a new initiative that will bring
   the Federal Government together with industry in a voluntary
   program to improve the security and privacy of telephone
   communications while meeting the legitimate needs of law
   enforcement.

   The initiative will involve the creation of new products to
   accelerate the development and use of advanced and secure
   telecommunications networks and wireless communications links.

   For too long there has been little or no dialogue between our
   private sector and the law enforcement community to resolve the
   tension between economic vitality and the real challenges of
   protecting Americans.  Rather than use technology to accommodate
   the sometimes competing interests of economic growth, privacy and
   law enforcement, previous policies have pitted government against
   industry and the rights of privacy against law enforcement.

   Sophisticated encryption technology has been used for years to
   protect electronic funds transfer.  It is now being used to
   protect electronic mail and computer files.  While encryption
   technology can help Americans protect business secrets and the
   unauthorized release of personal information, it also can be used
   by terrorists, drug dealers, and other criminals.

   A state-of-the-art microcircuit called the "Clipper Chip" has
   been developed by government engineers.  The chip represents a
   new approach to encryption technology.  It can be used in new,
   relatively inexpensive encryption devices that can be attached to
   an ordinary telephone.  It scrambles telephone communications
   using an encryption algorithm that is more powerful than many in
   commercial use today.

   This new technology will help companies protect proprietary
   information, protect the privacy of personal phone conversations
   and prevent unauthorized release of data transmitted
   electronically.  At the same time this technology preserves the
   ability of federal, state and local law enforcement agencies to
   intercept lawfully the phone conversations of criminals. 

   A "key-escrow" system will be established to ensure that the
   "Clipper Chip" is used to protect the privacy of law-abiding
   Americans.  Each device containing the chip will have two unique


				   2


   "keys," numbers that will be needed by authorized government
   agencies to decode messages encoded by the device.  When the
   device is manufactured, the two keys will be deposited separately
   in two "key-escrow" data bases that will be established by the
   Attorney General.  Access to these keys will be limited to
   government officials with legal authorization to conduct a
   wiretap.

   The "Clipper Chip" technology provides law enforcement with no
   new authorities to access the content of the private
   conversations of Americans.

   To demonstrate the effectiveness of this new technology, the
   Attorney General will soon purchase several thousand of the new
   devices.  In addition, respected experts from outside the
   government will be offered access to the confidential details of
   the algorithm to assess its capabilities and publicly report
   their findings.

   The chip is an important step in addressing the problem of
   encryption's dual-edge sword:  encryption helps to protect the
   privacy of individuals and industry, but it also can shield
   criminals and terrorists.  We need the "Clipper Chip" and other
   approaches that can both provide law-abiding citizens with access
   to the encryption they need and prevent criminals from using it
   to hide their illegal activities.  In order to assess technology
   trends and explore new approaches (like the key-escrow system),
   the President has directed government agencies to develop a
   comprehensive policy on encryption that accommodates:

	--   the privacy of our citizens, including the need to
	     employ voice or data encryption for business purposes;

	--   the ability of authorized officials to access telephone
	     calls and data, under proper court or other legal
	     order, when necessary to protect our citizens;

	--   the effective and timely use of the most modern
	     technology to build the National Information
	     Infrastructure needed to promote economic growth and
	     the competitiveness of American industry in the global
	     marketplace; and 

	--   the need of U.S. companies to manufacture and export
	     high technology products.

   The President has directed early and frequent consultations with
   affected industries, the Congress and groups that advocate the
   privacy rights of individuals as policy options are developed.



				   3

   The Administration is committed to working with the private
   sector to spur the development of a National Information
   Infrastructure which will use new telecommunications and computer
   technologies to give Americans unprecedented access to
   information.  This infrastructure of high-speed networks
   ("information superhighways") will transmit video, images, HDTV
   programming, and huge data files as easily as today's telephone
   system transmits voice.

   Since encryption technology will play an increasingly important
   role in that infrastructure, the Federal Government must act
   quickly to develop consistent, comprehensive policies regarding
   its use.  The Administration is committed to policies that
   protect all Americans' right to privacy while also protecting
   them from those who break the law.

   Further information is provided in an accompanying fact sheet. 
   The provisions of the President's directive to acquire the new
   encryption technology are also available.  

   For additional details, call Mat Heyman, National Institute of
   Standards and Technology, (301) 975-2758.

   ---------------------------------


   QUESTIONS AND ANSWERS ABOUT THE CLINTON ADMINISTRATION'S
   TELECOMMUNICATIONS INITIATIVE




   Q:   Does this approach expand the authority of government
	agencies to listen in on phone conversations?

   A:   No.  "Clipper Chip" technology provides law enforcement with
	no new authorities to access the content of the private
	conversations of Americans.

   Q:   Suppose a law enforcement agency is conducting a wiretap on
	a drug smuggling ring and intercepts a conversation
	encrypted using the device.  What would they have to do to
	decipher the message?

   A:   They would have to obtain legal authorization, normally a
	court order, to do the wiretap in the first place.  They
	would then present documentation of this authorization to
	the two entities responsible for safeguarding the keys and
	obtain the keys for the device being used by the drug
	smugglers.  The key is split into two parts, which are
	stored separately in order to ensure the security of the key
	escrow system.

   Q:   Who will run the key-escrow data banks?

   A:   The two key-escrow data banks will be run by two independent
	entities.  At this point, the Department of Justice and the
	Administration have yet to determine which agencies will
	oversee the key-escrow data banks.

   Q:   How strong is the security in the device?  How can I be sure
	how strong the security is?  

   A:   This system is more secure than many other voice encryption
	systems readily available today.  While the algorithm will
	remain classified to protect the security of the key escrow
	system, we are willing to invite an independent panel of
	cryptography experts to evaluate the algorithm to assure all
	potential users that there are no unrecognized
	vulnerabilities.

   Q:   Whose decision was it to propose this product?

   A:   The National Security Council, the Justice Department, the
	Commerce Department, and other key agencies were involved in
	this decision.  This approach has been endorsed by the
	President, the Vice President, and appropriate Cabinet
	officials.

   Q:   Who was consulted?  The Congress?  Industry?

   A:   We have on-going discussions with Congress and industry on
	encryption issues, and expect those discussions to intensify
	as we carry out our review of encryption policy.  We have
	briefed members of Congress and industry leaders on the
	decisions related to this initiative.

   Q:   Will the government provide the hardware to manufacturers?

   A:   The government designed and developed the key access
	encryption microcircuits, but it is not providing the
	microcircuits to product manufacturers.  Product
	manufacturers can acquire the microcircuits from the chip
	manufacturer that produces them.

   Q:   Who provides the "Clipper Chip"?

   A:   Mykotronx programs it at their facility in Torrance,
	California, and will sell the chip to encryption device
	manufacturers.  The programming function could be licensed
	to other vendors in the future.

   Q:   How do I buy one of these encryption devices? 

   A:   We expect several manufacturers to consider incorporating
	the "Clipper Chip" into their devices.

   Q:   If the Administration were unable to find a technological
	solution like the one proposed, would the Administration be
	willing to use legal remedies to restrict access to more
	powerful encryption devices?

   A:   This is a fundamental policy question which will be
	considered during the broad policy review.  The key escrow
	mechanism will provide Americans with an encryption product
	that is more secure, more convenient, and less expensive
	than others readily available today, but it is just one
	piece of what must be the comprehensive approach to
	encryption technology, which the Administration is
	developing.

	The Administration is not saying, "since encryption
	threatens the public safety and effective law enforcement,
	we will prohibit it outright" (as some countries have
	effectively done); nor is the U.S. saying that "every
	American, as a matter of right, is entitled to an
	unbreakable commercial encryption product."  There is a
	false "tension" created in the assessment that this issue is
	an "either-or" proposition.  Rather, both concerns can be,
	and in fact are, harmoniously balanced through a reasoned,
	balanced approach such as is proposed with the "Clipper
	Chip" and similar encryption techniques.

   Q:   What does this decision indicate about how the Clinton
	Administration's policy toward encryption will differ from
	that of the Bush Administration?  

   A:   It indicates that we understand the importance of encryption
	technology in telecommunications and computing and are
	committed to working with industry and public-interest
	groups to find innovative ways to protect Americans'
	privacy, help businesses to compete, and ensure that law
	enforcement agencies have the tools they need to fight crime
	and terrorism.

   Q:   Will the devices be exportable?  Will other devices that use
	the government hardware?