Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, August 18, 1995                   TAG: 9508180055
SECTION: BUSINESS                    PAGE: A11   EDITION: METRO 
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON                                 LENGTH: Medium

U.S. TO LOOSEN LIMITS ON HIGH-TECH CODING

The Clinton administration will work with industry to craft a plan that lets U.S. companies export more high-tech coding devices that prevent unauthorized people from intercepting voice and data messages.

Michael Nelson, a specialist in information technology with the White House's Science and Technology Policy Office, said Thursday the administration is open to letting companies export devices that provide an even stronger electronic lock on communications than what is now permitted - as long as the government has a mechanism for unlocking the communication.

For years, computer and telecommunications companies and trade groups have been pushing the federal government to liberalize export restrictions on devices that scramble voice and data communications.

The government has said the restrictions are needed to protect national security. Officials fear that high-tech coding devices could fall into the hands of terrorists or drug dealers, who then would be able to hide their communications from law enforcement agencies.

U.S. companies have argued that the restrictions hurt them because they lose business to foreign companies from countries that don't have similar export controls.

``We haven't come here with a plan,'' Nelson said at a meeting of computer and telecommunications executives. ``We have guidelines we'd like to work with you to define ... and turn those guidelines into specifications.''

In addition, Nelson said the administration is open to the development of scrambling devices that would allow people or private entities - like a company or bank - to hold the electronic key necessary to unlock communications. Up to now, the administration has favored letting only the government hold these electronic keys.

Executives hailed Nelson's comments, saying they are a major shift in administration policy.

``This is a big deal. ... The administration has made a major change in policy,'' said Bill Sweet, marketing director of National Semiconductor Corp., one of the companies developing so-called encryption technology.

But others were more cautious.

Robert Holleyman, president of the Business Software Alliance, an industry group representing software publishers, called the administration's announcement ``a step in the right direction, but we are not entirely convinced that our concerns will be addressed.''

U.S. policy now permits companies to export encryption devices with electronic key lengths of up to 40 bits. Devices with a higher number of bits are stronger and harder to decode.

Ray Kammer, deputy director of the National Institute of Standards and Technology, said the administration is open to raising that to 64 bits - a much stronger electronic lock.

But Holleyman questioned whether there was a need to limit sales of scrambling devices abroad to 64 bits. That's because the revised administration outline ``will allow lawful government access (to coded communications) and, importantly, assure users the privacy and security they need for their communications,'' he said.

National Institutes of Standards and Technology, one of the key agencies developing policy in this area, plans to hold meetings with industry in September to help craft a plan for export liberalization and to come up with a system for private entities to hold electronic keys to unlock secured communications.