New SPA Study: Export Regulations Preclude US Companies From a Cashing in
on Multi-Million Dollar Encryption Software Market

September 1, 1993 (Washington, DC) -- US software companies are losing
millions of dollars a year due to outdated export control laws that
penalize a growing segment of the software industry, according to a study
released today by the Software Publishers Association (SPA).

That segment is encryption software, which allows computer users to protect
information stored in their personal computers from electronic
eavesdroppers. Encryption software uses mathematical formulas, or
algorithms, to scramble information, making it difficult for anyone other
than authorized recipients to read.

In precluding US manufacturers from providing their encryption products to
the global marketplace, the government is placing American firms at a
distinct competitive disadvantage.

The computer revolution has spawned the need for encryption products to
secure data and protect privacy. Nonetheless, the US government is
concerned that widespread use of encryption may harm our national security
by preventing US security agencies from being able to intercept foreign
electronic communications. The SPA study shows, however, that the
government's policy does not reflect the reality of the international
marketplace, where foreign encryption products are proliferating. "Export
restrictions simply prevent US companies from generating foreign revenues
and creating new jobs," according to Ken Wasch, SPA's Executive Director.

The SPA study identifies 215 foreign hardware, software and combination
products that encrypt text, file and data. In testimony today before the
Computer Systems Security and Privacy Advisory Board, a federal policy
review board, SPA Government Affairs Representative Douglas Miller
testified that these foreign encryption products are being manufactured in
20 foreign countries, including Russia, Japan, South Africa, Germany,
India, the United Kingdom and Canada. "Of these 215 products, 84 employ
the Data Encryption Standard (DES)," said Miller.

DES is the algorithm used by the United States government to protect its
secrets, since it is believed to be unbreakable. While DES or DES-strength
encryption is legal to own and use in the United States, federal
regulations prohibit its commercial export in most circumstances.
Following a July 1992 agreement between the SPA and the U.S. government,
encryption substantially weaker than DES can now be exported. However,
many foreign customers demand to have their secrets protected by the use
of DES or its equivalent.

In addition to the products mentioned above, Miller identified 33 foreign
encryption software kits that employ the DES algorithm. "The kits are
installed by the user inserting a floppy diskette," said Miller. "The kits
allow DES encryption capabilities to be easily programmed into a variety
of applications."

On the domestic front, Miller identified 283 encryption products, of which
148 employ DES. "Because these products cannot be exported, their
manufacturers cannot compete with the rapidly growing number of foreign
firms in the encryption market," said Ilene Rosenthal, SPA's General
Counsel. "While current export regulations prevent the US software
industry from competing overseas, they are not effective in preventing the
export of DES encryption technology. DES encryption-software is available
worldwide via Internet, the world's largest computer network. It is also
spread through pirated copies of domestic programs employing DES."

"It cannot be any clearer: the existence of widespread and affordable
cryptographic products overseas is an indisputable fact," stated Ken
Wasch, SPA's Executive Director. "Based on that fact, unilateral export
controls keep US firms from competing in the global marketplace."

The Software Publishers Association is the principal trade association of
the personal computer software industry. Its 1,000 members represent the
leading publishers in the business, consumer, and education software
markets. The SPA has offices in Washington, DC, and Paris, France.

Software Publishers Association
1730 M St, Northwest, Suite 700, Washington, D.C. 20036

 ==========================================================
 From the 'New Product Information' Electronic News Service
 ==========================================================
 This information was processed from data provided by the
 above mentioned company. For additional details, contact 
 the company at the address or telephone number indicated.
 ==========================================================
 All submissions for this service should be addressed to:
 BAKER ENTERPRISES,  20 Ferro Dr,  Sewell, NJ 08080  U.S.A.
 Email:  RBakerPC (AOL/Delphi), rbakerpc@aol.com (Internet)
 ==========================================================
