THE WHITE HOUSE

                  Office of the Press Secretary

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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
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"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.
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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 American's 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.