Crypto controls to cost U.S. citizens $7.7bn

Attempts to restrict encryption on the Internet will cost Web users in the States $7.7 billion a year, according to a report released by a group of software executives that included Microsoft's Bill Gates.

The executives said at a news conference that the government's proposals for tapping into secret data and placing limits on exports of encryption software are expensive and increasingly irrelevant. Industry and law enforcement officials have been at odds over encryption for years, with the industry wanting strict U.S. export limits lifted and the FBI favouring stricter controls at home and abroad.

Gates, one of several chiefs at the Business Software Alliance news conference, said it was too late to prevent people from getting access to powerful encryption codes now that they are available outside the United States. "That's a change in the world of spying and law enforcement that we cannot effect,'' he said. And, as Novell chairman and CEO Eric Schmidt, put it: "The genie is out of the bottle."

The FBI has proposed a system known in the industry as ‘key escrow'. Under that system, companies that require their information to be encoded would have to give the ‘key' to a government-authorised third party. In this way, keys would be available to law enforcement officials should an investigation be deemed necessary.

Maintenance and administration of these keys is where the price tag resides. "The total cost of the kind of key escrow encryption system envisioned by the U.S. government is $7.7 billion a year and $38.5 billion over five years," the Business Software Association report said.