Financial Times, 13 May 1996 Smart cards poised to mark revolution in data protection The poor image of the technology as "Big Brother's little helper" may be altogether undeserved, says Alan Cane The smart card -- a piece of plastic the size of a credit card with a computer embedded in it -- offers numerous benefits, but will force a re-evaluation of attitudes to privacy and data protection, says Demos, the independent think-tank. Its report, one of the first to analyse policy issues raised by the rapid proliferation of smart cards in areas such as finance, health and public administration, warns that the benefits will only accrue when people are confident the technology will not become "Big Brother s little helper", as the authors put it. Helpfully, Demos suggests policies to sidestep what it sees as a "sterile confrontation" between civil libertarians and authoritarian government and business interests in promoting the benefits of smart cards. "We have argued that people will trust in these technologies when they can choose anonymity where they want it and have greater control over the use of personal information held about them," say the authors. What distinguishes the smart card from other information technologies and gives it its power is the capacity to concentrate and manipulate a huge amount of information in a tiny space. A reading device is necessary to view the information, but smart cards compute as well as store data. Software can be incorporated to encode the data, rendering it unreadable to anyone without the right key. What can smart cards be used for? Their main use now is as telephone cards for public pay-phones, but they have the potential to identify individuals, to act as an electronic wallet for cashless shopping, and to provide a secure and portable information store. Medical histories could be stored on a smart card, for example, ready for recall by a doctor. Visionaries talk of virtually unlimited amounts of information distributed through society in a variety of forms -- the credit card model has been adopted for convenience rather than because of limitations inherent in microcomputers. Badges, pins and jewelry could all become "smart" accessories in the future. However, this sort of crystalgazing raises questions. For example, what information should be stored on a smart device? Who should be able to read it? The Demos researchers are critical of suggestions by Michael Howard, Britain's home secretary, that a smart card could be used as a national identity card: a government-issued, multi-functional card, with the populace having little or no choice about which applications were available on the card -- and perhaps no say about the privacy system employed. Regulation of the privacy system -- encryption -- is important. It is comparatively easy to devise encryption methods which are almost impossible to break within a reasonable period. That worries governments fearful of being unable to unpick communications from terrorists and the like. The US has attempted to forbid the export of the more powerful US cryptography systems. The Demos researchers argue that such tactics are counter-productive. They favour a private "key escrow", a system where cryptography users deposit the key to their system with a trusted private registry, approved and regulated by governments. "Government law enforcement agencies would have to obtain a court order on the basis that they had strong reason to believe that an individual or company that had escrowed their keys ... was guilty of some crime". The report proposes a radical reform of data protection legislation through some 10 supplementary conditions. Data users, for example, would have to get express consent from individuals for the use to which they would want to put the data. Rules on disclosure to third parties would be tightened, so that data users would have to receive specific permission from a data protection registrar in order to gain access to specific information. It argues that individuals should be able to choose the card they want, and decide what information and applications will be loaded. "Where [Michael Howard's] card is an essentially authoritarian instrument, our proposal is for a more market-based instrument in which the role of government is to align the incentives within the market to ensure privacy, trust and individual access and control," says the report. - On the Cards, by Perri 6 and Ivan Briscoe. Demos, 9 Bridewell Place, London EC4V 6AP. UK9.95. -----