Washington May Crash the Internet Economy By Jim Barksdale The U.S. computer industry is the envy of of the world. But it may not be long before we are asking ourselves: Why did we let our dominance in the software business slip away to competitors in other countries? That could well be the consequence of encryption legislation proposed by FBI Director Louis Freeh and supported by key congressional Republicans and members of the Clinton administration. Encryption is simply a mathematical way to scramble (encrypt) and unscramble (decrypt) digital information during transmission or storage. It is increasingly used to protect not just personal communications and medical and financial records, but also all the intellectual property businesses maintain on computer networks. Protecting this valuable information has become a highly competitive business around the globe, yet U.S. industry has been limited in how it can compete, because U.S.-based companies are not allowed to export anything stronger than 40-bit (or in some cases 56-bit) encryption. (The strength of encryption is largely a function of the length of its software "keys" measured in bits, the zeros and ones that comprise computer data.) Foreign producers, however, can distribute encryption products with 128-bit key length, so-called strong encryption, which is considered unbreakable by today's computing standards. The FBI has proposed to worsen this situation by also limiting the use of strong encryption in our domestic market. The FBI's proposal, in the form of the Oxley-Manton amendment to a House bill originally drafted to liberalize export controls on encryption, would require makers of encryption software to provide the government with immediate access to the information in a computer or network without the knowledge of the owner or user of the computer. We could still provide encryption products, but their value would be compromised considerably by a "backdoor" for law enforcement agencies to access information in the computer. We understand and share the FBI's concern about terrorists and other criminals using encryption to protect their activities from law enforcement surveillance, but the FBI proposal does not solve the problem. The criminals will still be able to buy advanced encryption technology outside the U.S., where it is freely available today. The encryption plan will cause bigger problems for law-abiding companies, however. We have some of the best software engineers on the planet at Netscape, but we simply do not believe it is possible to comply with the proposed FBI standard. If it became law, the federal government could put us in jail if we could not guarantee immediate access to data in everyone's computer. This could only result in having us remove valuable information security features from our products. But the Internet needs just the opposite: more security. As legal scholars have pointed out, the FBI proposal poses grave constitutional concerns. An additional problem is the likely result of the FBI plan: more crime. By taking away encryption as we know it today, the FBI proposal would expose computer users to assault by hackers intent on economic espionage, blackmail and public humiliation. At a recent congressional hearing, one witness testified that with $1 billion and 20 people using existing technology, he could efffectively shut down the nation's information infrastructure, including all computer, phone and banking networks. Another witness said he could do it for $100 million. The solution is to ensure that our public and private infrastructure is secured through strong encryption and other means. The FBI cannot catch every hacker. But there will be fewer and fewer of them trying to penetrate sensitive networks if those networks are adequately protected and communications secured through the use of strong encryption. Without the privacy and security that strong encryption guarantees, consumers and businesses will refrain from using the Internet, greatly damaging our economy. The Internet already contributes 1.5% to the U.S. gross national product. Estimates suggest the total value of goods and services traded over the Internet could reach $8 billion this year and $330 billion in five years. The U.S. holds an estimated 75% of the global software market and roughtly the same share of the global Internet economy, according to studies by the Global Internet Project, an international trade group. The FBI proposal, if adopted, could end this economic phenomenon overnight. The good news is that the House Commerce Committee voted against this proposal by 35-16 on Wednesday. However, similar amendments have already been approved in the House National Security and Intelligence committees. It's now up to the House Rules Committee-whose charman, Gerald Solomon (R., N.Y.), favors limiting encryption technology-to reconcile the votes of the five committees that have considered various forms of the bill. Perhaps most ominously, the Drug Enforcement Administration and the deputy Treasury secretary for financial crimes yesterday announced their support for the FBI's proposal. What we need instead is a voluntary approach, U.S. companies should continue to cooperate with law enforcement authorities in provideing technological expertise and emergency assistance. Because companies like mine are committed to dooing this, our country will be more secure. If government policies end our leadership in encryption technology, where will our law enforcement and national security officials turn for help? Mr. Barksdale is president and CEO of Netscape Communications Corp.