10 June 1999
Source:
http://www.seas.gwu.edu/seas/institutes/cpi/library/docs/cpi-1999-02.pdf
Lance J. Hoffman
David M. Balenson
Karen A. Metivier-Carreiro
Anya Kim
Matthew G. Mundy
June 10, 1999
Report GWU-CPI-1999-02
Cyberspace Policy Institute
The George Washington University
School of Engineering and Applied Science
2033 K St. NW Suite 340 . Washington, DC 20006
Phone: 202.994.5512 . Fax: 202.994.5505
Website:
http://www.seas.gwu.edu/seas/institutes/cpi/
Email: cpi@seas.gwu.edu
Lance J. Hoffman*
David M. Balenson**
Karen A. Metivier-Carreiro*
Anya Kim*
Matthew G. Mundy**
June 10, 1999
Report No. GWU-CPI-1999-02
*Cyberspace Policy Institute, School of Engineering and Applied Science,
The George
Washington University, Washington, DC
**NAI Labs, The Security Research Division of Network Associates, Inc., Glenwood, MD
This research was supported in part by Americans for Computer Privacy (ACP).
EXECUTIVE SUMMARY
Development of cryptographic products outside the United States is not only continuing but is expanding to additional countries; with rapid growth of the Internet, communications-related cryptography especially is experiencing high growth, especially in electronic mail, virtual private network, and IPsec products. This report surveys encryption products developed outside the United States and provides some information on the effect of the United States export control regime on American and foreign manufacturers.
We have identified 805 hardware and/or software products incorporating cryptography manufactured in 35 countries outside the United States. The most foreign cryptographic products are manufactured in the United Kingdom, followed by Germany, Canada, Australia, Switzerland, Sweden, the Netherlands, and Israel in that order. Other countries accounted for slightly more than a quarter of the world's total of encryption products. A full summary listing of the foreign cryptographic products can be found in an appendix to the report.
The 805 foreign cryptographic products represent a 149-product increase (22%) over the most recent previous survey in December 1997. A majority of the new foreign cryptographic products are software rather than hardware. Also, a majority of these new products are communications-oriented rather than data storage oriented; they heavily tend towards secure electronic mail, IP security (IPsec), and Virtual Private Network applications.
We identified at least 167 foreign cryptographic products that use strong encryption in the form of these algorithms: Triple DES, IDEA, BLOWFISH, RC5, or CAST-128. Despite the increasing use of these stronger alternatives to DES, there also continues to be a large number of foreign products offering the use of DES, though we expect to see a decrease in coming years.
New cryptography product manufacturers have appeared in six new countries since December 1997, and there has been a large increase in the number of products produced by certain countries. The new countries are Estonia, Iceland, Isle of Man, Romania, South Korea, and Turkey. The United Kingdom jumped by 20 products from 119 to 139, and Germany jumped from 76 products to 104. Also notable was Japan's increase, from six products to 18, and Mexico's, from a single product to six at the present time.
We identified a total of 512 foreign companies that either manufacture or distribute foreign cryptographic products in at least 67 countries outside the United States. A full summary listing of these is given in an appendix to the report.
On average, the quality of foreign and U. S. products is comparable. There are a number of very good foreign encryption products that are quite competitive in strength, standards compliance, and functionality.
We present sketches of some representative competitors to U.S. manufacturers of software and hardware with encryption capabilities; all are developing products with strong encryption and have as customers a number of large foreign or multinational corporations. The specific companies highlighted are Baltimore Technologies, Brokat, Check Point, Data Fellows, Entrust, Radguard, Seguridata Privada, Sophos, and Utimaco.
We found some examples of advertising used by non-U. S. companies that generally attempted to create a perception that purchasing American products may involve significant red tape and the encryption may not be strong due to export controls. This almost always appeared on Web sites.
We observed that companies vie to have encryption products that meet certain accepted worldwide standards. Encryption experts from all over the world have contributed to two important international standards efforts, IPsec and the Advanced Encryption Standard..
Finally, we suggested that our empirical product data could be combined with economic measures and economic theories to better explain why we are seeing the observed growth and to examine the effects of Internet growth, e-commerce development, and regulatory actions on the international cryptographic market over time, thus getting better insights into the implications of various policy options.
CONTENTS
2.1 U.S. Department of Commerce / National Security Agency Study
2.2 National Research Council CRISIS Report
2.3 President's Export Council Subcommittee on Encryption Report
3. SURVEY OF CRYPTOGRAPHIC PRODUCTS OUTSIDE THE U.S.
3.1 Overview
3.2 Data Collection Methodology
3.3 Results of Update to Cryptographic Products Survey3.3.1 More "Strong" Encryption is on the Market
3.3.2 New Countries and Growth Countries for Cryptographic Products
3.3.3 Growing Numbers of Foreign Products & Companies
3.3.4 Quality of Foreign Cryptographic Products
4. SOME COMPETITORS TO U. S. PRODUCTS EMPLOYING CRYPTOGRAPHY
5. FOREIGN MARKETING USE OF U.S. EXPORT CONTROLS
5.1 Introduction
5.2 Advertising Related to Cryptographic Controls
6. STANDARDS AND THEIR INFLUENCE
6.1 Pervasiveness of Standards6.1.1 IPsec
6.1.2 Advanced Encryption Standard (AES)
7.1 Foreign Development of Cryptography Continues to Grow
7.2 Communications-Related Cryptography Leads Storage Cryptography
APPENDICES
B. SUMMARY LISTING OF FOREIGN CRYPTOGRAPHIC PRODUCTS
C. FOREIGN ENCRYPTION MANUFACTURERS AND DISTRIBUTORS BY COUNTRY
This project has three main goals: to provide a comprehensive survey of foreign encryption products available worldwide; to identify specific foreign competitors likely to present a significant economic threat to U. S. manufacturers of software and hardware with encryption capabilities; and to provide evidence, if found, of potential threats to U. S. leadership in information technology as a result of U. S. export regulations on encryption products.
While this work was undertaken within a very short time frame, and with limited
resources, it still provides much new evidence to support the conclusions
in Section 7. This evidence can be augmented with additional information
as time permits. We do not offer opinions or analysis of key escrow or recovery
policies, do long-term technological forecasting, or offer detailed
political/social analysis of export control policies. Our goal is to provide
an accurate, up-to-date survey of encryption products developed outside the
United States and to provide some information on the United States export
control regime and its effect on American and foreign manufacturers.
One of our first tasks in this project was to examine prior relevant work. Several important documents were studied in this regard.
2.1 U.S. Department of Commerce / National Security Agency Study
The U.S. Department of Commerce Bureau of Export Administration (BXA) and the National Security Agency (NSA) jointly issued a study [Commerce/NSA Study 1996] that assessed the then current and future market for software products containing encryption and the impact of export controls on the U.S. software industry. Quoting from the press release that accompanied the study, " ... The study found that the U.S. software industry still dominates world markets. In those markets not offering strong encryption, U.S. software encryption remains the dominant choice. However the existence of foreign products with labels indicating DES (Data Encryption Standard) or other strong algorithms, even if they are less secure than claimed, can nonetheless have a negative impact on U.S. competitiveness. The study also notes that the existence of strong U.S. export controls on encryption may have discouraged U.S. software producers from enhancing security features of general purpose software products to meet the anticipated growth in demand by foreign markets. All countries that are major producers of commercial encryption products were found to control exports to some extent. The study found that because customers lack a way to determine actual encryption strength, they sometimes choose foreign products over apparently weaker U.S. ones, giving those foreign products a competitive advantage.'' [U.S. DoC 1996]
2.2 National Research Council CRISIS Report
A report [CRISIS 1996] was published in 1996 by the National Research Council's Committee to Study National Cryptography Policy. It examined a number of issues related to our study. Based on work by a committee chaired by former Deputy Secretary of State Kenneth Dam and populated by a number of professionals from the law, intelligence, and computer science communities, it concluded that the United States should promote widespread commercial use of technologies that can prevent unauthorized access to electronic information, that the export of the Data Encryption Standard (DES) should be allowed to provide (what was then considered) an acceptable level of security, and that the United States should progressively relax but not eliminate export controls.
The report also states ``widespread commercial and private use of cryptography in the U.S and abroad is inevitable in the long run and its advantages, on balance, outweigh the disadvantages''. The committee concludes by noting ``the interests of the government and the nation would be best served by a policy that fosters a judicious transition toward a broad use of cryptography''.
2.3 President's Export Council Subcommittee on Encryption Report
The President's Export Council Subcommittee on Encryption (PECSENC) is chartered by the Secretary of Commerce to provide the private and public sector with the opportunity to advise the U.S. Government on the future of commercial encryption export policy. The members of the PECSENC consist of representatives from industry, academia, nonprofit foundations, state and local law enforcement, and elsewhere in the private sector. In September1998, its Working Group on International Issues issued a report [PECSENC 1998, included as Appendix D] that found "the difference between U.S. encryption controls and those of other nations is a serious -- but not the only -- factor determining success in the computer security market." It also concluded that, "the adverse impact of controls on U.S. industry is palpable. For many software applications, business customers simply demand security and encryption; it is a checklist item, and its absence is a deal breaker."
The report also highlighted an example of a non-U. S. company using the difference in export control regimes as "leverage" to ultimately attempt to dominate particular applications:
"... Brokat, a German company that scarcely existed four years ago, now has 250 employees and offices in several countries including the United States. Brokat's specialty is Internet banking and electronic commerce, but it broke into that business on the strength of being able to offer stronger encryption than German banks could obtain in Netscape or Microsoft browsers. It is now a major player in this niche, with 50% of the European Internet banking market and enough U.S. customers to justify a 20-person U.S. branch office. Meanwhile, encryption constitutes 10% or less of Brokat's revenue, and it has expanded its initial Internet banking offerings to include support for other forms of electronic commerce. Loss of U.S. competitiveness in the electronic commerce software market obviously raises concerns not just about encryption software but other software opportunities. Indeed, it foreshadows a weakening of the U.S. position as a leader in electronic commerce generally."
The report also was concerned that "the persistent emphasis in U.S. export
control policy over the past two years on key recovery, or "lawful access,"
has also taken a toll on the credibility of U.S. security products. ... Foreign
governments and competitors, particularly in Europe, have misinterpreted
this U.S. policy, perhaps deliberately. In essence, foreign customers are
told often by their governments as well as local security companies that
all U.S. encryption products come with a back door allowing the U.S. government
to read the contents. In part this is the result of outmoded "Recovery"
supplements to U.S. export rules that demand an unrealistic level of U.S.
government access to key recovery products."
3.1 Overview
The principal investigator and the subcontractor of this current project also studied the worldwide availability of cryptographic products since April 1993 as part of what has become known as the "TIS Survey" [TIS 1997]. The results of this earlier work have been presented to the Computer Systems Security and Privacy Advisory Board (CSSPAB) of the National Institute of Standards and Technology (NIST) and presented by Stephen T. Walker, President of Trusted Information Systems, to two Congressional subcommittees [Walker 1993, Walker 1994]. The survey was also provided to numerous government agencies and departments as part of their efforts to understand the availability of cryptographic products and its impact on U.S. export control policies.
The TIS Survey continued until December 1997, at which time it identified 656 foreign cryptographic products from 29 countries. The survey also identified 963 domestic products, for a worldwide total of 1619 products produced and distributed by 949 companies (474 foreign and 475 domestic) in at least 68 countries.
Our goal for this current study was to update the foreign product portion of the TIS Survey. We focused mainly on discovering new products from foreign manufacturers and also spent some time updating entries for the existing foreign products in the database.
Information collected by the TIS Survey was assembled into an MS Access database. The database includes two tables, one for cryptographic products and a second table for companies that either produce or distribute cryptographic products. Each entry in the product table includes the following information:
Name/Version
Manufacturer and Country
Platforms
- PC, Mac, Workstation, Mainframe, DOS, Windows, UNIX, etc.
Interfaces
- RS232, X.21, X.25, V.21, V.24, RJ-11, etc.
Type
- HW, SW, HW/SW combo
What It Encrypts
- Data, Files, Directories, Disks, Communications, Voice, Fax, Tape, Email, etc.
Embodiment
- Program, Kit, Chip, Board, Box, Tokens, PCMCIA, Smart Card, Phone, etc.
Cryptographic Algorithms
- DES, Triple DES (3DES), Blowfish, IDEA, CAST, Proprietary, RC2/4/5, SKIPJACK, Stream Ciphers, RSA, El Gamal, DH, DSA, ECC, MD2/4/5, SHA-1, etc.
How Distributed
- Mass-Market, Direct, Shareware, Internet, etc.
Company Information
- Name, Country, Address, Contact Information, etc.
3.2 Data Collection Methodology
We used the following methods of data collection: issue a call for information and examine the results, plumb existing work available to us, and use the World Wide Web to conduct searches for new products and information.
The call for information to elicit information from the computer cryptography community regarding new products (Appendix A) was posted in the following newsgroups and mailing lists (IETF is the Internet Engineering Task Force [IETF]):
The Call and Survey were also posted on the Web site of the Cyberspace Policy Institute of The George Washington University [CPI 1999]. Additionally, project team members sent the survey out to individuals who they believed might know of foreign products.
The existing work available to us included trade magazines, journals, buyers guides [CSI, ICSA Survey], and other print material.
Most of our new information on foreign cryptography products was found by using Web search engines and gathering information from Web pages.
3.3 Results of Update to Cryptographic Products Survey
Our effort to update the cryptographic products survey focused mainly on discovering new products from foreign producers, but also involved updating information on some of the existing foreign products in the database. Since we did not set out to update information on cryptographic products produced in the U.S., the number of domestic cryptographic products changed only slightly (when we came across something and thus updated the information). However, we expect that the number of cryptographic products produced in the U.S. has in fact also increased. NAI Labs plans to further update the domestic portion of the survey in the near future.
The updated foreign cryptographic product survey (see summary table on following page) now identifies a total of 805 hardware and/or software products incorporating cryptography manufactured in 35 countries outside the United States. The most foreign cryptographic products are manufactured in the United Kingdom, followed by Germany, Canada, Australia, Switzerland, Sweden, the Netherlands, and Israel in that order. Other countries accounted for slightly more than a quarter of the world's total of encryption products. A full summary listing of the foreign cryptographic products can be found in Appendix B.
The 805 foreign cryptographic products resulting from the current update represents a 149-product increase over the December 1997 survey. A majority of the new foreign cryptographic products are software rather than hardware.
Another notable finding is that a majority of new foreign cryptographic products are oriented toward communications rather than data storage applications; and these heavily tended towards secure electronic mail, IP security (IPsec), and Virtual Private Network (VPN) applications. The results also showed a lot of activity in IPsec implementation, which is likely prompted by the recent emergence of new IPsec specifications from the IETF [IPSEC].
The updated foreign cryptographic product survey also identified a total of 512 foreign companies that either manufacture or distribute foreign cryptographic products in at least 67 countries outside the United States. A full summary listing of these is given in Appendix C.
3.3.1 More "Strong" Encryption is on the Market
The updated foreign cryptographic products survey also showed increasing use of "strong" alternative cryptographic algorithms to DES, which uses a 56-bit key. Altogether, we identified at least 167 foreign cryptographic products that use Triple DES, IDEA, BLOWFISH, RC5, or CAST-128, which support larger key lengths. Despite the increasing use of these stronger alternatives to DES, there also continues to be a large number of foreign products offering the use of DES, though we expect to see a decrease in coming years.
We identified at least 123 foreign cryptographic products that use Triple DES, which employs either two traditional DES keys, for an effective key length of 112 bits, or three DES keys, for an effective key length of 168 bits.
We identified at least 54 foreign cryptographic products that use the International Data Encryption Algorithm (IDEA), a Swiss-developed symmetric block cipher with a 128-bit key length [Lai 1990, Lai 1991].
We identified at least 36 foreign cryptographic products that use BLOWFISH, a symmetric block cipher developed by Bruce Schneier with a variable key length ranging from 32 to 448 bits [Schneier 1993, Schneier 1994]. Many of these products appear to use BLOWFISH with the full 448-bit key length.
We identified at least 2 foreign cryptographic products that use RC5, a symmetric block cipher developed by Ron Rivest (one of the RSA inventors) with a variable length key up to 2040 bits [Rivest 1996].
We identified at least 12 foreign cryptographic products that use CAST-128,
a symmetric block cipher developed by Carlisle Adams of Entrust Technologies
in Canada with a variable length key up to 128 bits [Adams 1997].
Foreign Cryptographic Survey Results (as of May 1999) The updated survey identified a total of 805 foreign cryptographic products from 35 countries:
At least 167 of these foreign cryptographic products implement "strong" cryptographic algorithms, including Triple DES, IDEA, BLOWFISH, RC5, or CAST. We identified 512 foreign cryptography companies (including distributors as well as manufacturers) in at least 67 countries. |
Table 1. Foreign cryptographic products survey results
3.3.2 New Countries and Growth Countries for Cryptographic Products
The update identified six new countries producing cryptographic products. The countries that have started producing encryption products since December 1997 are Estonia, Iceland, Isle of Man, Romania, South Korea, and Turkey.
We also noticed a large increase in the number of products produced by certain countries, such as the United Kingdom, which jumped by 20 products from 119 to 139, and Germany, which jumped from 76 products to 104.
Japan also showed a large increase, jumping from 6 products in the December 1997 survey to 18 products in the updated survey. Most of the new products come from Mitsubishi Electronic Corporation, which has introduced a number of hardware and software cryptographic products that make use of a Japanese cryptographic algorithm known as MISTY, which uses a 128-bit key, as well as Triple DES [Matsui 1996, MISTY].
Mexico also increased, from a single "freeware" product in the December 1997 survey to six products in the updated survey, due to the discovery of five new commercial cryptographic products from Seguridata Privada S.A. de C.V., which is described in greater detail in Section 4.
Figure 2. Growing numbers of foreign cryptographic products and companies
3.3.3 Growing Numbers of Foreign Products & Companies
The TIS Survey was initiated in April 1993 and conducted on an ongoing basis through December 1997. Figure 2 depicts the evolution of the survey in terms of the increasing numbers of foreign cryptographic products and companies (manufacturers and distributors) identified each year of the survey effort and after the recent update. Overall, there clearly continues to be increasing and expanding development of foreign cryptographic products.
3.3.4 Quality of Foreign Cryptographic Products
NAI Labs has obtained a number of foreign cryptographic products over the life of the survey effort. The products were all purchased via routine channels, either directly from the foreign manufacturer, a foreign distributor, or an U.S. distributor. We have also downloaded a large number of foreign cryptographic products over the Internet via the World Wide Web.
The quality of cryptographic products varies greatly both within and outside
the U.S. We have encountered poor quality products both within and outside
the U.S., and we have encountered good quality products both within and outside
the U.S. On average, the quality of foreign and U.S. products is comparable.
There are a number of very good foreign encryption products that are quite
competitive in strength, standards compliance, and functionality. We highlight
some of these in the next section.
After updating the cryptography product database, based on prior surveys and new information, we searched out information on the foreign manufacturers that were representative competitors to U. S. manufacturers of software and hardware with encryption capabilities. We did this by examining traditional sources such as business magazines, major newspapers, and trade publications; interviewing industry leaders and security professionals; and using various Web-based search methods [Lexis-Nexis, ABI/Inform, FirstSearch, Gale] to find appropriate combinations of keywords (encryption, U.S., US, United States, foreign, overseas, regulation, export, export controls).
We identified a substantial number of foreign companies that are developing a number of products with strong encryption and have as customers a number of large foreign or multinational corporations. We sketch nine of these in this section to provide a representative sampling. All but one already provide strong encryption (as defined in Section 3.3.1).
Some of the material below has references to cryptographic algorithms, protocols,
and other computer science terms that may not be familiar to some readers.
More information on these can generally be found in [Stallings 1999] and
[Rivest 1978].
Baltimore Technologies Plc., IRELAND/UNITED KINGDOM/AUSTRALIA
Baltimore Technologies plc. was formed by the merger in January 1999 of Zergo Holdings plc. (UK) and Baltimore Technologies Ltd. (Ireland). Its regional headquarters are located in Dublin (Ireland), Plano (Texas) and Sydney (Australia). Corporate headquarters are located in London, UK [Baltimore 1999a].
Baltimore develops and markets security products and services for a wide range of e- commerce and enterprise applications. Its products include Public Key infrastructure (PKI) systems, cryptographic toolkits, security applications and hardware cryptographic devices. Baltimore's security toolkits include PKI-Plus, ECS Desktop, C/SSL, J/SSL, SMT, CST, and J/CRYPTO. The PKI-Plus toolkit provides clients with the functionality to support a Public Key Infrastructure and provides encryption capabilities with full strength DES, Triple DES and IDEA. ECS Desktop is a high level GSS toolkit that supports 64-bit DES and 128-bit Triple DES. C/SSL and J/SSL are cryptographic toolkits for developing SSL 3.0 applications written in C and Java respectively. C/SSL supports 56-bit DES and 128-bit Triple DES, IDEA and RC4. J/SSL supports 56-bit DES, and 128-bit Triple DES and RC4. SMT (Secure Messaging Toolkit) provides developers the ability to add security to messaging (email) applications. The encryption algorithms supported are 56-bit DES, 128-bit Triple DES, and 40-bit, 64 bit, and 128-bit RC2. CST (Crypto Systems Toolkit) is a set of cryptographic components enabling developers to build strong information security systems. It contains implementations of a variety of encryption algorithms including DES, Triple DES with up to 192 bits key length, IDEA, BSA4, BSA5, RC2, RC4, up to 2048-bit RSA, and DSA. J/CRYTPO is a cryptographic class library for Java applications that supports 56-bit DES, 112-bit Triple DES, and RC4 encryption, and 512-, 1024- and 2048-bit RSA key exchange and digital signature.
Security application solutions include FormSecure, MailSecure, MailSecure Enterprise, and WebSecure. Of its security applications, FormSecure which provides PKI security for Web browser forms uses DES and triple-DES encryption with 128-bit keys. MailSecure provides secure email for MS Outlook, Exchange and Eudora using 128-bit DES, Triple DES and RC2. MailSecure Enterprise, a centralized secure email product, provides encryption with 128-bit Triple DES. WebSecure enhances web server to browser communication in cases where export versions of specific browsers are limited to 40 bits of encryption by diverting all web traffic to its Java programs that use 128-bit RC4 encryption.
Baltimore's hardware cryptographic device, HS4000-Assure provides a security kernel for high speed servers and workstations and features 56-bit DES and 112-bit Triple DES data encryption, and up to 4096-bit RSA key exchange and digital signatures. ``Baltimore has customers in over forty countries including some of the world's leading financial, e-commerce, telecommunications companies and government agencies. Customers include: ABN-AMRO Bank, Australian Tax Office, Bank of England, Bank of Ireland, Belgacom, Digital Equipment, European Commission, Home Office (UK), IBM, Lehman Brothers, Ministry of Defence (UK), NatWest, NIST (USA), PTT Post (Netherlands), S.W.I.F.T., Tradelink (Hong Kong), TradeVan (Malaysia) and VISA International'' [Baltimore 1999a].
``Baltimore has also formed alliances with other major global providers of
information security technology and services, including ActivCard, Axent
Technologies, CDC, Certicom, Chrysalis, CISCO, Dascom, DataKey, GemPlus,
Gradient, Hewlett-Packard, ICL, Isocor, Kyberpass, Logica, Netscape, Oracle,
Racal and Valicert'' [Baltimore 1999a].
Brokat Infosystems AG, GERMANY
BROKAT was founded in 1994. Its headquarters is in Stuttgart, Germany. Subsidiaries are located in Great Britain, Ireland, Luxembourg, Austria, Switzerland, Singapore, Australia, South Africa and the United States. Brokat develops secure solutions for Internet-banking, Internet-brokerage and Internet-payment by allowing companies through the use of its products to develop secure electronic banking and electronic commerce solutions [Brokat 1999a]. Its main product, Brokat Twister, is a software package enabling secure electronic business solutions and provides Java-based 128-bit encryption. Brokat's X-PRESSO Security Gateway provides Twister with a secure Internet channel, using strong SSL encryption. It supports 128-bit IDEA and Triple DES for data encryption, and RSA up to 2048 bits for key exchange and digital signatures.
In its press release of May 19, 1999 Brokat claims a sales increase of 125% in the third quarter of 1998/1999 compared to the same quarter in the previous year [Brokat 1999b].
More than 100 financial service companies use Twister. Brokat customers include Deutsche Bank, Bank 24, Allianz, Fortis Bank Luxembourg the Zurich Kantonalbank, Hypo Bank of Munich, and The Swiss National Telephone Company [Andrews 1997].
Brokat's "Product Partners" include AOL Bertelsmann Online, Corporate
Interactive, Inc., Intershop Communications, Micrologica, Netscape
Communications, Giesecke & Devrient, and Concord-Eracom.
Check Point Software Technologies Ltd., ISRAEL
``Check Point provides secure enterprise networking solutions through an integrated architecture that includes network security, traffic control and IP address management. Check Point solutions are aimed at enabling customers to implement centralized policy-based management with enterprise-wide distributed deployment'' [Check Point 1999a].
``The company's integrated architecture includes network security (FireWall-1, VPN-1, Open Security Manager and Provider-1), traffic control (FloodGate-1 and ConnectControl) and IP address management (Meta IP)'' [Check Point 1999b].
``Check Point products protect and manage the corporate assets of the majority of Fortune 100 companies and other leading companies and government agencies across the globe. As of April 1999, the company had more than 30,000 registered customers with over 77,000 installations worldwide and 17,000+ networks worldwide using its VPN solution. The Meta IP and Meta DNS products had some 15,000 installations worldwide'' [Check Point 1999b].
The company's international headquarters are located in Ramat-Gan, Israel. International subsidiaries are located in the United Kingdom, France, Germany, Japan, Singapore, Australia, the Middle East and Canada. U.S. subsidiaries are located in northern and southern California, Colorado, Georgia, Illinois, Massachusetts, Michigan, New York, North Carolina, Philadelphia, Texas, Virginia and Washington.
In an April 19, 1999 press release, Check Point announced that ``revenues for the first quarter ending March 31 were $43,772,000 compared to $31,956,000 for the same period in 1998, an increase of 37%. Net income for the quarter was $19,703,000, or $0.49 per share compared to net income of $15,149,000, or $0.39 per share in the same quarter in 1998, an increase of 30% in net income and 26% in net income per share. Check Point experienced growth across all geographic regions, particularly in Japan. Revenues from the U.S. accounted for 45% of revenues, Europe 34% and Rest of World 21%. In addition, revenues from Technical Services reached 17% in the first quarter. OEM revenues, including those from Nokia and Sun Microsystems, represented 11% of revenues'' [Check Point 1999c].
Based on figures from 1997, Check Point is the leading vendor of firewalls with a 23% share in the firewall market -- a revenue of $83 million in firewall sales [Inter@ctive Week 1998].
Checkpoint's firewall solution, Firewall-1 provides a comprehensive set of security solutions which includes VPN through the support of encryption algorithms such as 40- and 56- bit DES, 168-bit Triple DES, 40-bit RC4, 40- and 128-bit CAST, and 48-bit FWZ-1 (FWZ-1 is Check Point's 48-bit exportable proprietary symmetric encryption algorithm).
Check Point's VPN solution products include VPN-1 Gateway, VPN-1 SecuRemote, VPN-1 Accelorator Card, and VPN-1 Appliance. VPN-1 Gateway products are software solutions that provide encryption supporting the following algorithms: 40- and 56-bit DES, 168- bit Triple DES, 40-bit RC4, 40- and 128-bit CAST, and 48-bit FWZ-1. VPN-1 SecurRemote provides VPN support for remote and mobile users. It supports 40- and 56-bit DES, 168-bit Triple DES, 40-bit CAST, and 48-bit FWZ-1. VPN-1 Accelorator Card provides hardware-based data encryption using 56-bit DES and 168-bit Triple DES. VPN-1 Appliance uses 40- and 56-bit DES, 40-bit RC4, and 48-bit FWZ-1.
Check Point's Open Platform for Secure Enterprise Connectivity (OPSEC) is
an alliance that delivers the industry's first enterprise-wide security
framework. OPSEC provides a single framework that integrates and manages
all aspects of secure enterprise networking through an open, extensible
management framework. Via the OPSEC Alliance, Check Point Software's products
seamlessly integrate with "best-of-breed" products from more than 200 leading
industry partners. A complete listing of OPSEC partners can be found at
http://www.opsec.com/.
Data Fellows Ltd., FINLAND
``Data Fellows develops, markets and supports data security products for corporate computer networks. Its products include anti--virus software, and data security and cryptography software. Its main offices are in San Jose, California and Espoo, Finland, and it has branch offices as well as corporate partners, VARs and other distributors in over 80 countries around the world. Its products have been translated into over 20 languages'' [Data Fellows 1999a].
Data Fellows' F-Secure cryptography products are a family of cryptography software to protect the integrity and confidentiality of sensitive information. Its family of products include F- Secure VPN+, F-Secure VPN, F-Secure SSH, F-Secure FileCrypto, and F-Secure Desktop. F- Secure VPN+ provides IPSec protocol based security for secure networking between remote offices, business partners and travelling salesmen using 56-bit DES, 168-bit Triple DES, 128-bit Blowfish, and 128-bit CAST. F-Secure VPN (Virtual Private Network) is an SSH security protocol based solution for pure LAN-to-LAN encryption using a variety of user selectable algorithms including Triple DES, Blowfish, RSA, and IDEA (optional). The symmetric algorithms all use at least 128 bits. F-Secure SSH Server provides users with secure login connections, file transfer, X11, and TCP/IP connections over untrusted networks using 128-bit Triple DES and 128-bit IDEA. F-Secure SSH Terminal&Tunnel provides the user with secure login connections over untrusted networks and to create local proxy servers for remote TCP/IP services. F-Secure SSH Tunnel&Terminal products support the following cryptographic algorithms: 56-bit DES, 168-bit Triple DES, 128-bit IDEA, 128-bit Blowfish, 256-bit Twofish, and 128-bit ARCFour (an RC4 compatible stream cipher). F-Secure FileCrypto is a product that encrypts and decrypts files using 256-bit Blowfish and 168-bit Triple DES. F-Secure Desktop provides encryption and decryption of files, directories, and Windows 95/NT 4.0 folders using 256-bit Blowfish and 168-bit DES.
``The Company's net sales have doubled annually since it was founded in 1988. Turnover has reached $3.3 million, $7.6 million and $14.1million in the fiscal years 1995, 1996 and 1997, respectively'' [Data Fellows 1999a].
``Data Fellows has customers in more than 100 countries. These include many
of the world's largest industrial corporations and best-known telecommunications
companies; major international airlines; several European governments, post
offices and defense forces; and several of the world's largest banks. Customers
include NASA, the US Air Force, the US Department of Defense Medical branch,
the US Naval Warfare Center, the San Diego Supercomputer Center,
Lawrence-Livermore National Laboratory, IBM, Unisys, Siemens-Nixdorf, EDS,
Cisco, Nokia, Sonera (formerly Telecom Finland), UUNet Technologies, Boeing,
Bell Atlantic, and MCI'' [Data Fellows 1999a].
Entrust Technologies, CANADA
Entrust is a Canadian company that spun off from Northern Telecom (Nortel). It develops cryptographic products in Canada and exports them from there. It now has offices across the United States, Canada, the United Kingdom, Switzerland, Germany, and Japan.
Entrust develops products for trusted electronic transactions. Its products include solutions for secure Internet transactions including digital certificate services and public-key infrastructures (PKI) products.
Entrust File Toolkit delivers a set of application programming interfaces (APIs) to add encryption and digital signatures to store-and-forward (email, e-forms) applications. It supports DES, Triple DES, RSA and RC2. Entrust Session Toolkit is designed for third-party applications that need to protect data communications in real-time. It supports DES, Triple DES, and RC2. Entrust/Solo is a product that provides data encryption, digital signature and data compression functionality for the desktop and e-mail using DES, Triple DES and CAST.
The company's more than 800 corporate customers include J.P. Morgan, the Salomon Smith Barney unit of Citigroup, ScotiaBank, S.W.I.F.T, FedEx, the Canadian Government and several U.S. government agencies.
Entrust's industry partners include development partners such as Hewlett-Packard,
Network Associates, Oracle, Nortel Networks and others, 25 channel partners
including Hewlett- Packard and Compaq OEM Partners: IBM, Tandem, Check Point
and others, specifiers and referral partners such as PriceWaterhouse Coopers,
Deloitte & Touche; KPMG Peat Marwick, Ernst & Young, and others,
and service provider partners such as BCE Emergis, EDS, Scotiabank and others
[Entrust 1999].
Radguard, ISRAEL
RADGUARD was founded in 1994 as a member of the RAD Group of data communications companies. Privately held, the company is backed by American and foreign corporate investors. The company's international headquarters are located in Tel Aviv, Israel; its US headquarters are in Mahwah, NJ.
Radguard is a pioneer and leader in the secure Virtual Private Network (VPN) market. Incorporating security technologies and industry standards into high-performance hardware architectures, Radguard provides solutions to Internet-based virtual private networking, secure non-Internet transmission, safe Internet connectivity and client encryption. Its VPN and network security products include cIPro, CryptoWall, and NetCryptor. cIPRO is an internetworking security system for VPNs. The cIPRO family uses DES and up to 168-bit Triple DES for encryption. CryptoWall is an encrypting firewall that supports subnet-to-subnet security in TCP/IP environments. It supports DES for data encryption and RSA for key exchange and digital signature. NetCryptor is a hardware-based encryption device that employs DES.
Customers include NTT Data, a subsidiary of Japan's Nippon Telephone and
Telegraph (NTT), Germany's major car makers and component suppliers including
BMW, Bosch, BEHR, Drxlmaier, Audi, Freudenberg, DaimlerChrysler, Volkswagen
and Hella.
Seguridata Privada S.A. de C.V., MEXICO
SeguriDATA is a Mexican company founded in 1996 with the purpose of participating actively in the construction of security standards in Mexico and Latin America by means of integration in committees, with products in electronic security. It has offices in Peru and Spain as well as Mexico. The company provides confidentiality and authenticity of electronic documents with applications to electronic commerce, financial transactions and confidential systems of communications.
Its products include SeguriDOC, SeguriEDIFACT, SeguriLIB, SeguriPROXY, and
SeguriTELNET. SeguriDOC offers Triple DES for confidentiality of archived
data. SeguriEDIFACT provides security for EDI communications using Triple
DES. SeguriPROXY provides security between web server and web browser sessions
using 128-bit RC4.
Sophos Plc., UK
Sophos Plc was founded in 1980 and moved into data security in 1985, producing software and hardware for data encryption, authentication and secure erasure. Its virus detection product has positioned the company as a leading supplier of enterprise-wide virus protection tools. Subsidiaries include Sophos Pty Ltd, Australia, established in April 1999, Sophos Plc, France, established in May 1998, Sophos GmbH, Germany established in October 1997, and Sophos Inc, USA, a wholly owned subsidiary of Sophos Plc based in Massachusetts, USA [Sophos 1999]. Sophos data security products include D-Fence 4 HMG, D-Fence 4 SPA, E- DES, and PUBLIC. D-FENCE HMG is a disk authorization and encryption system for HMG, providing encryption and authentication of floppy and hard disks using SEVERN BRIDGE, a U.K. Government standard algorithm. D-FENCE SPA is a data encryption system for PCs and laptops using SPA (Sophos Proprietary Algorithm) for encryption of floppy and hard disks. SPA is a 64-bit block cipher with 64-bit keys. E-DES and PUBLIC are products used for secure file storage and transmission. E-DES encrypts files using DES or SPA, while PUBLIC encrypts files using 512-bit RSA or MDH in combination with DES or SPA.
Customers include government, financial institutions and multi-national
corporations.
Utimaco Safeware AG, GERMANY
Utimaco Safeware AG has subsidiaries in Belgium, France, Finland, Great Britain, Austria, the Netherlands, Norway, Sweden and Switzerland and additional distribution partners (Value-Added-Resellers) in almost all European countries, in the USA, Australia, Asia and in South Africa. Utimaco also has strategic alliances with IBM Deutschland Informationssysteme GmbH, SIEMENS AG and Toshiba Europe.
Utimaco develops IT security solutions for the areas of mobile/desktop security (authentication, access control, encryption), network security (authentication, encryption), e- commerce security (digital signature, encryption) and security infrastructure (smart card reader).
``Utimaco has three development centres. The SafeGuard product line focussing on the "Mobile/Desktop Security" area is developed in Munich, Germany. The development of the SafeGuard product family for "Network Security" and the smart card technology and card reader family CardMan is done in Linz, Austria. The third development centre near Brussels (Holsbeck), Belgium, is responsible for the SafeGuard "E-Commerce Security" product line (digital signatures, e-mail security) and the CryptWare technology (high-performance implementations of standardized basis-crypto algorithms and interfaces)'' [Utimaco 1999a].
Products for mobile/desktop security include SafeGuard Easy, and SafeGuard Desktop. SafeGuard Easy is a security program for the online-encryption of hard disks and diskettes. It operates with the encryption algorithms Blowfish, STEALTH, 56-bit DES and 128-bit IDEA to guarantee the confidential storage of sensitive data. SafeGuard Desktop is a security solution for OS/2 operating systems offering boot and virus protection as well as user logon, and allows online encryption of hard disks and floppies with DES, IDEA, STEALTH, Blowfish, and XOR.
Utimaco network security products include SafeGuard LAN Crypt and SafeGuard VPN. SafeGuard LAN Crypt provides protection of selected files against access by persons who are physically capable of accessing the data carrier. The solution guarantees the security of encrypted data through a key length of 128 bits and globally accepted, strong algorithms such as IDEA. SafeGuard VPN provides Virtual Private Networks with secure data transmission using 168-bit Triple DES and 128-bit IDEA.
Utimaco's E-commerce security products include CryptWare Board, CryptWare Server, Cryptware Toolkit, and SafeWare Sign&Crypt. Cryptware Board comes with a DES chip, but allows any other encryption algorithm to be easily installed. The CryptWare Server is a cryptographic black box designed for applications with high security requirements and/or high- speed cryptographic capabilities. It employs DES and 1024-bit RSA. The CryptWare Toolkit is a library that provides all necessary cryptographic and administrative functions to build secure electronic messaging systems. It supports RSA, Triple DES, IDEA, RIPEMD160, MD5, and SHA-1. SafeWare Sign&Crypt offers signing and verification of electronic documents. It can provide encryption with 128-bit IDEA.
The breakdown of Utimaco Group sales by industry in the last business year,
1997/98, is as follows: 29.7% for public institutions, 29.3% for banks, 26.8%
for industry and commerce and 14.1% for insurance companies. In the last
business year 57 percent of sales were made outside Germany. Its customers
include Bertelsmann (Gtersloh) Colonia Nordstern Versicherungsmanagement
AG (Cologne), Daimler-Benz Aerospace AG (Kiel), Dresdner Bank, Eduscho GmbH
(Bremen), Frankfurter Sparkasse (Frankfurt), Goldwell GmbH (Darmstadt),
Innenministerium Mecklenburg-Vorpommern (Schwerin), Landesamt fr
Datenverarbeitung, (Potsdam), Motorola GmbH (Taunusstein), Otto Versand
International GmbH (Hamburg), Oberverwaltungsgericht Thringen (Weimar), Price
Waterhouse (Frankfurt), Police Forces (Belgium), Isaserver (Belgium), State
Police (Belgium), Unisys for Christelijke Mutualiteiten (Belgium), The European
Commission (Belgium and Luxembourg), Danfoss A/S (Denmark), ICL Pathway Ltd.
(Great Britain), Robert Fleming & Co. Ltd. (Great Britain), Standard
Chartered Bank (Great Britain), Conseil de lÆUnion Europenne (Luxembourg),
KPN Telecom (The Netherlands), ABN AMRO Bank N.V. (The Netherlands), Nycomed
Amersham Group (Norway), Schweizer Post (Switzerland), DDJ, and Justizdirektion
des Kantons Zrich (Switzerland).
5.1 Introduction
As Under Secretary of Commerce William A. Reinsch noted in recent Congressional testimony, "encryption remains a hotly debated issue. The Administration continues to support a balanced approach that considers privacy and commerce as well as protecting important law enforcement and national security equities. We have been consulting closely with industry and its customers to develop a policy that provides that balance in a way that also reflects the evolving realities of the market place" [Reinsch 1999]. As the Commerce Department struggles to craft and finely tune export regulations to satisfy these objectives, many foreign cryptography manufacturers are citing these regulations as reasons for their prospects to not "buy American". Even foreign governments sometimes overtly use these regulations. For example, "In a letter sent [in January 1999] to India's Central Vigilance Commission (CVC)--an intelligence agency comparable to the United States' National Security Agency--the Indian Defense Research and Development Organization said the limits the U.S. government places on exported encryption products render the products too weak for reliable use. The CVC responded that it might mandate that all Indian financial institutions buy security software from India" [Dunlap 1999].
5.2 Advertising Related to Cryptographic Controls
Trade magazines, industry reports, and news articles were searched for consumer preference data, including checklists, ease of use'' and ``best buy'' ratings, etc., to try to find anecdotal justification or rebuttal of the claim that consumers strongly prefer U.S.-made encryption products and systems incorporating U.S.-made encryption, as asserted, for example, in [Ernst 1999].
We did find a reference to a U. S. government study that acknowledged that "in many countries surveyed, exportable U. S. encryption products are perceived to be of unsatisfactory quality" [Commerce/NSA 1996] {date given as June 1995, page ES-3, possibly a draft, in [Olbeter 1998]}. We also found some information from companies that claimed or implied that their products are more secure and/or easier to use than American products burdened by U.S. export controls. Descriptions of the various export control regimes are found in [Baker 1998, Koops 1999, and GILC 1998].
Examples of the statements of foreign companies are given below.
Brokat Infosystems AG (Germany)
Brokat, on its web page [Brokat 1999c] discusses "Secure Communication using
128-bit encryption" and states that "In comparison to other solutions, XAGENT
allows very secure communication. Highly sensitive information can be exchanged
using this consultation tool. All data is encrypted with the 128-bit Twister
security component. Even so-called 'weak' Internet browsers, which only use
a 40-bit encryption due to US government export restrictions can be 'topped
up' accordingly for the duration of the session."
Baltimore Technologies plc. (Ireland/United Kingdom/Australia)
Baltimore Technologies states that WebSecure, a product designed to provide
secure web server to browser communication is useful because "US export
restrictions dictate that most web servers and browsers cannot perform 128-bit
encryption for security. Instead, export versions of browsers like Internet
Explorer and Netscape Navigator and export versions of web servers like Netscape
Enterprise Server and Microsoft Internet Information Server are limited to
40 bits of encryption, which is not secure enough for most applications"
[Baltimore 1999b].
Cybernetica (Estonia)
Cybernetica advertises "... full strength cryptographic security with long keys and no backdoors" and its Web pages for their products prominently feature this selling point.
[Cybernetica 1999a] [Cybernetica 1999b]
In their Frequently Asked Questions list on the Web, they go on to celebrate the differences between their product and U. S. products:
Strong crypto? What algorithms are supported? And what key lengths?IDEA. Triple DES. Blowfish. RSA. Diffie-Hellman. The end user has the opportunity of selecting the algorithms he trusts. And, if the user so requires, support for further algorithms may be added. You can use as long keys as the algorithms you have selected allow you to. There are no "political" restrictions on key lengths to be used in the Privador system.What about back doors, key recovery etc?
There are no back doors built into the Privador system. We can - and will - prove it if so required.How come you don't care about export restrictions?
Because there are none. The Privador System is entirely developed by Cybernetica, the first private-law R&D institution in Estonia. The laws of the Republic of Estonia allow us to export strong cryptographic technologies to almost any country in the world.
Utimaco Safeware AG (Germany)
On its web site, Utimaco states that [Utimaco 1999b] "... As a German manufacturer, Utimaco guarantees that no national key depositing requirements (ESCROW) exist which could jeopardize the security of the solution..."
Figure 3. Homepage of Utimaco Safeware AG
Note Utimaco's home page, illustrated in Figure 3. It is user-friendly for
speakers of a
number of languages. It makes the point that Utimaco has representatives
in a number of European countries. If the user clicks on his or her country
(either on the map or on the country abbreviation in the vertical list),
he or she is transported to a page in their native language that further
presents Utimaco and its products and services. As an example, Figure 4 shows
the homepage of Utimaco Norway that the user is transported to when Norway
is selected from the map.
Figure 4. Homepage of Utimaco Safeware Norge AS
Data Fellows Corporation (Finland)
Data Fellows makes the readers of its web page aware of U. S. export restrictions and states that its products are designed with "much more security" than U. S. products:
"... The encryption technology used in the F-Secure products has been developed in Europe and thus does not fall under the US ITAR export regulations. F-Secure products can be used in every country where encryption is legal, including the United States of America..." [Data Fellows 1999b]"... F-Secure FileCrypto uses well-known fast block cipher algorithms. You can choose either three-key 3DES or Blowfish. Both algorithms have been analyzed by the world's leading cryptographers. They are known to be strong and safe. These algorithms provide security with a minimum of 168-bit keys. They provide much more security than DES-based or U.S. products that fall under U.S. ITAR export restrictions." [Data Fellows 1999c].
JCP Computer Services (United Kingdom)
JCP takes on U.S. products directly based on export controls [JCP 1999]:
"Many companies are using or considering using implementations of these algorithms which originate in the US. The US government prohibits export of strong cryptographic tools, and, except under specific conditions, only permits the export of weak implementations. These 'crippled' cryptographic tools do not provide sufficient protection to allow Internet e-commerce and communications to proceed securely. In an amateur attack on a US export-strength cryptographic routine, the key was broken in 56 hours. And such times will decrease markedly as computer processing power continues to improve."JCP has developed full strength implementations outside of the US using industry proven standard algorithms. JCP are the leading company outside the US producing high performance cryptographic tools in Java, which has become the Internet's standard programming language. The product provides a set of packages that implement specific cryptography algorithms for use within any Internet application."
SSH Communications Security (Finland)
SSH states on their web site [SSH 1999] that "The software from SSH is free
from strict US export restrictions" as one of "six good reasons why SSH IPSEC
Express is the best choise (sic)"; it goes on "IPSEC is supposed to be an
international standard. However, because of export restrictions in different
countries. (sic) SSH is one of the few to deliver full standards compliance
and strong security virtually anywhere in the world."
RPK Security, Inc. (New Zealand, Switzerland, United Kingdom)
RPK advertises on its web site of its flagship RPK Encryptonite Engine [RPK
1999], "Developed outside the U.S., the RPK Encryptonite Engine is not subject
to US government regulations. It is available with strong encryption worldwide,
with dramatically better performance at significantly lower implementation
cost compared with competing technologies." Reading further on its web site,
one finds that "RPK's cryptographic research and product development is based
in New Zealand, Switzerland and the U.K, with worldwide sales and marketing
operations in San Francisco, CA."
6.1 Pervasiveness of Standards
From the material above, one can see that companies vie to have encryption products that meet certain accepted worldwide standards. If the products do not, they often will not interoperate successfully with other computer systems. This section highlights two important international standards efforts. Note the contribution of encryption expertise from all over the world to both.
6.1.1 IPsec
Today's widespread and pervasive use of the Internet has accentuated the need for security for the underlying Internet Protocol (IP). The IETF has developed the IP Security (IPsec) protocol as an integral element of Internet security. IPsec is a proposed standard Internet protocol designed to provide cryptographic-based security, including authentication, integrity, and (optional) confidentiality services. While the use of IPsec is currently optional, its use will be mandatory for the next version of the Internet Protocol, IPv6 [IPSEC]. As a result of the dramatic impact IPsec will have on improving the security of the Internet, there has been enormous interest in developing implementations of IPsec. This interest has extended throughout the entire world, due to the global nature of the Internet and need for cryptographic-based security. Many freely available and commercial implementations of IPsec are available or are under development. Ted Ts'o of MIT, co-chair of the IETF IPsec Working Group, maintains a list of companies implementing (or planning to implement) IPsec. The list currently cites implementations from 49 companies around the world. At least nine of the companies are from outside the U.S. There is also one effort, the KAME Project, being conducted by a combination of several Japanese companies (Fujitsu, Hitachi, IIJ Research Laboratory, NEC, Toshiba, and Yokogawa) [KAME 1999].
Another important aspect of IPsec is that it supports encrypted "tunnels", whereby an IP packet is completely encrypted as it travels from one point of a network to another. Encrypted tunnels are one of the primary means for establishing Virtual Private Networks, or VPNs, which emulate private networks over public, shared IP networks, such as the Internet.
IPsec is designed to be independent of any specific cryptographic algorithms; it can support several, but it will require one strong algorithm, Triple DES; the relatively weak DES will be permitted but not required. Specifications have also been developed for the use of the IDEA, BLOWFISH, RC5, and CAST strong cryptographic algorithms with long key lengths for IPsec [Stallings 1999].
6.1.2 Advanced Encryption Standard (AES)
In 1997, NIST solicited algorithms for the Advanced Encryption Standard (AES), to replace the Data Encryption Standard (DES) [FIPS PUB 46-2] as a government encryption standard. Individuals and companies from eleven different foreign countries proposed 10 out of the 15 candidate algorithms submitted to NIST [Smid 1998]:
"Of the five submissions likely to be chosen for the next round, about half
will be from outside the U.S. It is very possible that the next U.S. government
encryption standard will have been designed outside the U.S." [Schneier
1999].
Based on the research described above, we arrive at two conclusions:
1. Foreign development of cryptographic products is not only continuing but is expanding to additional countries.
2. Communications-related cryptography is experiencing high growth, especially in electronic mail, VPN, and IPsec products.
7.1 Foreign Development of Cryptography Continues to Grow
There are now 805 cryptography products produced in 35 countries outside the United States. In at least 67 countries, 512 foreign manufacturers and distributors are involved. In just three weeks, with limited resources, we identified 149 foreign cryptographic products new to market since the December 1997 TIS survey.
It is difficult to gauge how many additional products would be identified, given sufficient time and resources, but it is safe to anticipate that we would identify many more products from the countries within the database, and possibly several additional countries.
Development of cryptographic products in nations around the world is increasing. Moreover, as additional nations seize opportunities in e-commerce, nation-centric islands of competence develop, as do ultimately international markets. Often these islands of competence are developed by bright young entrepreneurs and computer scientists who have trained elsewhere (often the United States) and then play key roles in jump-starting their native countries' e- commerce. This fits nicely in the theory of technoglobalization, as espoused by Robert Reich, discussed more in Section 8.
7.2 Communications-Related Cryptography Leads Storage Cryptography
Within the 149 new products we discovered, communications-related products, as opposed to data storage encryption, were predominant. It appears that the efforts of the Internet Engineering Task Force (IETF) to provide standardized protocols for the Internet has facilitated the development of solutions and products to communications related problems. We conjecture that this and the expansion of e-commerce have resulted in a high growth of communications related cryptographic products such as those for electronic mail, VPNs, and IPsec.
Ipsec's support of encrypted tunnels will greatly improve security for private,
enterprise- based networks. As the comfort level of users (and organizations)
grows, and as the potential and actual gains of (consumer to business and
business to business) e-commerce become apparent, there will be increased
worldwide need for communications-related cryptography.
To date there have been only a few efforts to attempt to quantify the impact of regulatory measures on the international cryptographic market [Olbeter 1998, BSA 1998, CDT 1997]. The TIS survey and this effort to update the foreign products inventory of the database have been one of the few ways to quantitatively assess the state of the market over time. As noted in Section 7, we saw developments both in countries already producing cryptographic products and expansion into new countries that did not have cryptographic product development as of December 1997. We saw a number of firms become multinational.
In the face of continuing U. S. export controls on encryption products, technology, and services, some American companies have financed the creation or growth of foreign cryptographic firms. We have seen some U. S. companies (e.g., PGP, RSA, Sun) buy some foreign expertise, leaving it in place (rather than bringing the talent back to the United States). With this expertise offshore, the relatively stringent U. S. export controls for cryptographic products can be avoided, since products can be shipped from countries with less stringent controls. All of these facts indicate that both nations and companies see opportunities in this rapidly changing technological market, and it could be argued that globalization plays a major role in future growth for this market.
This is not a case of the technology slipping away from the United States. The technological expertise is already available in many places around the world. Indeed, we noted earlier that the majority of submissions for the Advanced Encryption Standard (AES) have been designed outside the United States. This may be simply an example of the general thesis of economists David Mowery and Nathan Rosenberg [Mowery 1989], who argue that, in general, foreign firms' technological sophistication has caught up with that of the United States in many cases. In those cases, they reason
"Since foreign firms now are more technologically sophisticated and technology is more internationally mobile, however, the competitive advantages that accrued in the past from basic research and a strong knowledge base have been eroded. Faster international transfer of new technologies is undercutting a major source of America's postwar superiority in high-technology markets." (p. 218)
Our empirical product data could be combined with economic measures and economic theories to better explain why we are seeing the observed growth in encryption products and companies around the world, and to examine the effects of Internet growth, e-commerce development, and regulatory actions on the international cryptographic market over time.
Porter [1990], for example, tests his theses by using quantitative measures from several nations, by industrial sector. His national economic profiles include primary goods, machinery, and specialty inputs and services data for each industrial sector. Given appropriate quantitative measures, similar work could be done for the international cryptography market.
As the global information-based economy continues to grow, and as the nature
of industrial research and development continues to shift from nation-centric
to international collaboration, we will continue to witness more rapid
technological development and global economic growth. We should be able to
put together previous economic work [Duysters 1996] with material already
available on the information technology sector [Mowery 1996, Rosenberg 1992]
and the data in this study to better understand the changes we are seeing
in the global marketplace and thus be able to more easily adjust national
laws for a global economy.
[ABI/Inform] ProQuest Direct, http://proquest.umi.com/pqdweb.
[Acey 1999] Acey, Madeleine, TechWeb, CMPNet, in New York Times Technology, http://www.nytimes.com/techweb/TW_Key_Escrow_Bill_Slammed_By_Parliament_Inquiry.html, 5/19/99.
[Adams 1997] C. Adams, The CAST-128 Encryption Algorithm, RFC 2144, May 1997.
[Andrews 1997] Andrews, Edmund L., "U. S. Restrictions of Exports Aid German Software Maker," New York Times, April 3, 1997.
[Argentina 1999] Description of PGP and links to download it, in Firma Digital y Documento Electrónico, http://www.sfp.gov.ar/firma.html, downloaded May 27, 1999.
[Baker 1998] Baker, S. and Hurst, P., The Limits of Trust: Cryptography, Governments, and Electronic Commerce, Kluwer Law International, 1998.
[Baltimore 1999a] Baltimore Company Profile, http://www.baltimore.ie/corporate/profile.html.
[Baltimore 1999b] WebSecure, http://www.baltimore.ie/products/websecure/index.html.
[Brokat 1998] Brokat Offering Prospectus, http://www.brokat.com/int/ir/facts/annual_report.html.
[Brokat 1999a] Brokat Company, http://www.brokat.com/int/company/index.html.
[Brokat 1999b] Brokat Continues Success in Third Quarter, http://www.brokat.com/int/press/1999/pr19990519-01.html.
[Brokat 1999c] Consulting Via Internet With XAgent From Brokat, http://www.brokat.com/int/press/1999/pr19990318-02.html.
[BSA 1998] Business Software Alliance, The Cost of Government-Driven Key Escrow Encryption, 1998, http://www.bsa.org/ceoforum/pdfs/key_escrow.pdf
[CDT 1997] Center for Democracy and Technology, The Risks of Key Recovery, Key Escrow, and Trusted Third Party Encryption, a report by an ad hoc Group of Cryptographers and Computer Scientists, Washington, 1997.
[Check Point 1999a] Check Point Corporate Information and News, http://www.checkpoint.com/corporate/index.html.
[Check Point 1999b] Check Point Corporate Profile, http://www.checkpoint.com/corporate/ corporate.html.
[Check Point 1999c] Check Point Software Technologies Ltd Reports Financial Results for First Quarter 1999, http://www.checkpoint.com/press/1999/q1earnings041999.html.
[Commerce/NSA1996] A Study of The International Market for Computer Software with Encryption, Prepared by the U.S. Department of Commerce and the National Security Agency for the Interagency Working Group on Encryption and Telecommunications Policy, January 11, 1996.
[CPI 1999] Non-U.S. Cryptographic Product Survey Call-for-Information, http://www.seas.gwu.edu/seas/institutes/cpi/cryptosurvey/call4info.html
[CSI 1997] Computer Security Products Buyers Guide 1997, Computer Security Institute, San Francisco, 1997.
[Cybernetica 1999a] Cybernetica English Web Site, http://www.cyber.ee/infosecurity/products/privador/intro.html.
[Cybernetica 1999b] Cybernetica Estonian Web site, http://www.cyber.ee/infoturve/tooted/privador/index.html.
[CRISIS 1996] Cryptography's Role in Securing the Information Society, Kenneth W. Dam and Herbert S. Lin, Editors; Committee to Study National Cryptography Policy, National Research Council, 1996.
[Data Fellows 1999a] Data Fellows Company Fact Sheet, http://www.datafellows.fi/df-info/.
[Data Fellows 1999b] F-Secure Cryptography Products, http://www.datafellows.fi/f-secure/.
[Data Fellows 1999c] F-Secure FileCrypto - On-the-fly encryption, http://www.datafellows.fi/ f-secure/filecrypto/on-the-fly.htm.
[FIPS PUB 46-2] National Institute of Standards and Technology. FIPS PUB 46-2: Data Encryption Standard. December 30, 1993.
[Dunlap 1999] "All Tied Up: U.S. Trade Rules Hobble VARs, ISVs Alike Dealing With Encryption." by Charlotte Dunlap & Amy Rogers, Computer Reseller News, February 8, 1999.
[Duysters 1996] Duysters, Geert. The Dynamics of Technical Innovation: The Evolution and Development of Information Technology. Cheltenham, U.K.: Edward Elgar.
[EDS 1996] EDS, "When governments hamper encryption, they hamper commerce", advertisement, Washington Post, June 20, 1996.
[Entrust 1999] Products: Entrust/SOLO, http://www.entrust.com/solo/index.htm.
[Ernst 1999] Ernst & Young, Retail and Consumer Products: Key Technologies, http://www.ey.com/industry/consumer/retailit/key.asp, April 22, 1999.
[FirstSearch] FirstSearch, http://gilligan.prod.oclc.org:3055/html/fs_areas.htm.
[Gale] Gale Business Resources (integrated), http://www.galenet.com/servlet/GBR.
[Gibson 1998] Paul Gibson, "The $237 billion conundrum", Electronic Business, Highlands Ranch, November 1998.
[GILC 1998] Global Internet Liberty Campaign, "Online International Encryption Policy Survey, http://www.gilc.org/crypto/crypto-survey.html.
[Greenspan 1997] Greenspan, Alan, Remarks at the Conference on Privacy in the Information Age, Salt Lake City, utah, March 7, 1997, http://www.federalreserve.gov/boarddocs/speeches/19970307.htm
[Grossman 1999] Wendy Grossman, "Connected - Analysis: Encryption proves a slithery beast to control," Daily Telegraph (London), January 21, 1999.
[Hornstein 1999] Testimony of Richard Hornstein before the Telecommunications, Trade and Consumer Protection Subcommittee of the Committee on Commerce, U. S. House of Representatives, Washington DC, May 18, 1999.
[ICSA Survey] ICSA Certified Cryptography Products ("Buyer's Guide"), list is at http://www.icsa.net/services/consortia/cryptography/certified_products.shtml.
[IKE] Harkins, D., and D. Carrel, D., The Internet Key Exchange (IKE), RFC 2409, November 1998.
[IPSEC] S. Kent and R. Atkinson, Security Architecture for the Internet Protocol, RFC 2401, November 1998.
[IPSECIPM] Ted T'so, IPSEC/ISAKMP Company List, Companies which are Implementing (or Planning to Implement) IPSEC/ISAKMP, http://web.mit.edu/tytso/www/ipsec/.
[IPSECWG] IPsec WG Charter, http://www.ietf.org/html.charters/ipsec-charter.html.
[JCP 1999] JCP Computer Services, http://www.jcp.co.uk/secProduct/security_cdk_index.htm.
[KAME 1999] KAME Project, http://www.kame.net/.
[Koops 1999a] Koops, B-J, Crypto Law Survey, http://cwis.kub.nl/~frw/people/koops/lawsurvy.htm.
[Koops 1999b] Koops, B-J, The Crypto Controversy: A Key Conflict in the Information Society, Kluwer Law International, The Hague, 1999.
[Lai 1990] Lai, X., and Massey, J., A Proposal for a New Block Encryption Standard, Proceedings EUROCRYPT '90, Springer Verlag, 1990.
[Lai 1991] Lai, X., and Massey, J., Markov Ciphers and Differential Cryptanalysis, Proceedings of EUROCRYPT '91, Springer-Verlag, 1991.
[Lexis Nexis] Lexis-Nexis, http://www.lexis-nexis.com.
[Matsui 1996] Mitsuru Matsui, New Block Encryption Algorithm MISTY, Mitsubishi Electric Corp., 1996.
[MISTY] MISTY - Mitsubishi Electronic's Encryption Algorithm, http://www.mitsubishi.com/ghp_japan/misty/200misty.htm.
[Mowery 1989] Mowery, David C. and Nathan Rosenberg. Technology and the Pursuit of Economic Growth. Cambridge UK: Cambridge University Press, 1989.
[Mowery 1996] Mowery, David C. (ed.). The International Computer Software Industry: A Comparative Study of Industry Evolution and Structure. New York: Oxford University Press.
[Olbeter 1998] Olbeter, Erik R. and Christopher Hamilton, Finding the Key: Reconciling National and Economic Security Interests in Cryptography Policy, Economic Strategy Institute, Washington, DC, March 1998.
[PECSENC 1998] Report of the President's Export Council Subcommittee on Encryption Working Group on International Affairs, September 1998, http://209.122.145.150/PresidentsExportCouncil/PECSENC/iwgfind.htm.
[Porter 1990] Porter, Michael E., The Competitive Advantage of Nations, New York: The Free Press, 1990.
[Randata 1999] Media Release, ``Boost For Smart Aussie Company: SNS The First To Be Granted U.S. Export Licence For High Security Cryptography,'' Sept. 7 1998. http://www.randata.com.au/infb1x.htm.
[Reich 1990] Robert B. Reich, "Does Corporate Nationality Matter?", Issues in Science and Technology, Winter 1990-91, pp. 40-44.
[Reinsch 1999] Reinsch, William A., Testimony before the House Committee on Commerce, Subcommittee on Telecommunicaations, Trade and Consumer Protection, May 25, 1999.
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[Rivest 1996] [Rivest 1996] R. Rivest and R. Baldwin, The RC5, RC5-CBC, RC5- CBC-Pad, and RC5-CTS Algorithms, RFC 2040, October 1996.
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[Schneier 1993] Schneier, B., Description of a New Variable-Length Key, 64-bit Block Cipher (Blowfish), Proceedings of Workshop on Fast Software Encryption, Springer Verlag, 1993.
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Please forward this message to others who are interested on the topic. A WWW-version of this message can be found at http://www.seas.gwu.edu/seas/institutes/cpi/cryptosurvey/call4info.html
*********************************************************** NON-U.S. CRYPTOGRAPHIC PRODUCT SURVEY CALL FOR INFORMATION ***********************************************************
The George Washington University and NAI Labs, The Security Research Division of Network Associates (formerly the research division of Trusted Information Systems) are conducting a survey to identify cryptographic products manufactured outside the United States and are examining product specifications to assess their functionality and security.
We are soliciting input from those with knowledge of cryptographic products through the use of this survey form. If you know of cryptographic products that are manufactured in countries other than the United States, please complete this form and submit it to the Cyberspace Policy Institute (CPI) NO LATER THAN TUESDAY MAY 18, 1999. You may submit this form via email to cpi@seas.gwu.edu or fax at (202) 994-5505 in Washington D.C.
In addition, we ask you to send or post this survey to anyone or place that would have knowledge of cryptographic products. Inquiries about this survey may be made to the Cyberspace Policy Institute at cpi@seas.gwu.edu or (202) 994-5512. This survey may also be found on the CPI Web site at
http://www.seas.gwu.edu/seas/institutes/cpi.
Your cooperation is greatly appreciated.
Professor Lance J. Hoffman, The George Washington University David Balenson, NAI Labs, The Security Research Division of Network Associates
*****************************************************************
NON-U.S. CRYPTOGRAPHIC PRODUCT SURVEY
DATE:
COMPLETED BY:
Your Name:
Phone:
E-mail:
NAME AND ADDRESS OF MANUFACTURER
Name:
Address:
City: State:
Zip Code:
Country:
URL:
MANUFACTURER CONTACT INFORMATION
Name: Title:
Phone: FAX:
E-mail: 800#:
PRODUCT DESCRIPTION
Name (including model and version information):
Product-specific URL:
Is it software-only, hardware-only, or a software/hardware combination?
What does it encrypt (e.g., disk, file, communications, FAX, voice, magnetic tape, electronic mail)?
If embedded software or hardware, what platforms does it support (e.g., PC, Mac, UNIX workstation, IBM mainframe), else if standalone hardware, what interfaces does it support (RS-232, telephone, V.24, V.35)?
If software, is it in the form of a kit or as an end-user program, else if hardware, what is the embodiment (e.g., chip, board, PCMCIA card, smart card, box, phone)?
What algorithms does it employ for data encryption (including proprietary algorithms and key length)?
If applicable, what algorithms does it employ for key management (including proprietary algorithms and key length)?
If applicable, what algorithms does it employ for data authentication (including proprietary algorithms)?
How is the product sold or distributed (e.g., store front, mail order, telephone order, World Wide Web, anonymous ftp over the Internet)?
If applicable, what is the quantity one purchase price?
(Optional) Approximate number of units sold or distributed?
(Optional) Approximate date product was first available?
Please provide a list of the names and relationships of any associated companies (e.g., parent company, sister company, distributors). Include full address and contact name, title, phone, FAX, and e-mail address.Other information:
PLEASE PROVIDE A COPY OF ANY RELEVANT PRODUCT LITERATURE.
Send completed forms and product literature via e-mail to cpi@seas.gwu.edu or via fax to the Cyberspace Policy Institute at 202-994-5505 in Washington D.C.
THANK YOU!
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This survey is part of an ongoing worldwide study of cryptographic products
started in April 1994 by Trusted Information Systems and Dr.Lance J. Hoffman
of the George Washington University. The December 1997 summary results of
the survey are available on the World Wide Web at
http://www.nai.com/products/security/tis_research/crypto/crypt_surv.asp.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The following table is a summary listing of the foreign products currently contained in the cryptographic product database. We cannot guarantee the accuracy and completeness of this information. In many cases, products may support additional platforms or interfaces, encrypt additional types of information, include additional embodiments, or support additional encryption algorithms. Additional information will be available on the NAI Labs Crypto Products Survey Web page at http://www.nai.com/products/security/tis_research/crypto/crypt_surv.asp.
[Pages 36-46 of manufacturers and products omitted; see original.]
The following table is a summary listing of the foreign companies that manufacture or distribute cryptographic products.
[Pages 47-52 of manufacturers and distributors omitted; see
original.]
September 18, 1998
The following findings have been adopted by the PECSENC as a reflection of conditions of international competition prior to the U.S. Government's liberalization of encryption export controls announced on September 16, 1998. The liberalization may affect many of these findings, and the findings will be used as a baseline for a review of the effects of the liberalization in future sessions of the PECSENC.
1. The difference between U.S. encryption controls and those of other nations is a serious -- but not the only -- factor determining success in the computer security market. With or without controls, both U.S. and foreign products are likely to continue to coexist, and other factors are likely to continue to slow deployment of security products. Many foreign companies, for example, especially those influenced by governments, will continue to favor domestic security solutions, and many computer users will not deploy serious security technology until there have been major incidents with losses that can be attributed to lack of encryption.
2. Nonetheless, the adverse impact of controls on U.S. industry is palpable. For many software applications, business customers simply demand security and encryption; it is a checklist item, and its absence is a deal breaker. While simply counting the number of foreign encryption software products in the market is not an accurate measure of the impact of controls, one particularly serious risk is that non-U.S. companies will use their ability to export stronger encryption as "leverage" to dominate particular applications.
This has happened in at least one field - Internet banking - and may occur in other areas of electronic commerce. Brokat, a German company that scarcely existed four years ago, now has 250 employees and offices in several countries including the United States. Brokat's specialty is Internet banking and electronic commerce, but it broke into that business on the strength of being able to offer stronger encryption than German banks could obtain in Netscape or Microsoft browsers. It is now a major player in this niche, with 50% of the European Internet banking market and enough U.S. customers to justify a 20- person U.S. branch office. Meanwhile, encryption constitutes 10% or less of Brokat's revenue, and it has expanded its initial Internet banking offerings to include support for other forms of electronic commerce. Loss of U.S. competitiveness in the electronic commerce software market obviously raises concerns not just about encryption software but other software opportunities. Indeed, it foreshadows a weakening of the U.S. position as a leader in electronic commerce generally.
3. The persistent emphasis in U.S. export control policy over the past two years on key recovery, or "lawful access," has also taken a toll on the credibility of U.S. security products. Key recovery continues to find a market. Business wants to ensure that data are available for corporate purposes, including litigation. Key recovery is seen as an important feature for stored business data (though not for communicated data in transit).
But the use of export controls to drive the key recovery market further than it would go by itself is hurting U.S. industry. Foreign governments and competitors, particularly in Europe, have misinterpreted this U.S. policy, perhaps deliberately. In essence, foreign customers are told often by their governments as well as local security companies that all U.S. encryption products come with a back door allowing the U.S. government to read the contents. In part this is the result of outmoded "Recovery" supplements to U.S. export rules that demand an unrealistic level of U.S. government access to key recovery products. In part it reflects the hostility of many foreign governments toward U.S. key recovery and access policies. It also reflects the fact that some countries will simply never rely on security products that are not home-grown, and misunderstanding U.S. key recovery policies may simply be a handy stick to beat U.S. products with. But it is unfortunate that the U.S. government has provided such a large and easily wielded stick.
4. U.S. controls are driving many U.S. companies into "cooperative arrangements" with foreign encryption suppliers. These cooperative arrangements allow U.S. companies to provide complete security solutions by encouraging their foreign partners to marry foreign-made crypto with U.S. commercial applications. These cooperative arrangements are highly risky under U.S. law, but they are not unlawful per se. Given the stakes, many companies have been prepared to take risks under U.S. law, and it is expected that more will do the same. The result is that U.S. policy has fostered the development of cryptographic software and hardware skills outside the United States. German, Swiss, Canadian, Russian, and Israeli cryptography companies have all benefited form this unintended consequence of U.S. encryption policy.
5. The U.S. government has made efforts to "level the field" of disparate export controls for encryption through negotiations under the Wassenaar Agreement. The U.S. proposal that 56-bit encryption become a new "floor" for encryption exports under Wassenaar, while certainly better than current policy, is likely to be implemented at least a year and perhaps several years too late. In response to the U.S. KMI initiative, which conditionally decontrolled 56-bit encryption in December 1996, other countries also decontrolled 56-bit DES but more or less unconditionally. The countries include Canada and apparently the United Kingdom. And by 1996, other countries, such as Germany, already were approving the export of 56-bit DES to virtually any country for virtually any purpose. Most recently, the exhaustion of a 56-bit DES key using a machine built for a quarter million dollars has entirely discredited DES as a serious security tool for valuable secrets. Single DES remains a useful tool for assuring privacy against a wide variety of potential adversaries and snoops, but decontrolling 56-bit encryption will not provide a significant boost to the competitiveness of U.S. technology for serious security applications.
6. Process and timing: In 1995, the State Department approved routine license applications for the export of encryption in less than a week on average. This was when the State Department had jurisdiction over encryption and NSA staffed the State Department's office and handled all encryption license applications.
This is no longer the case. The Commerce Department has staffed up heavily in the encryption field, but its processes now include parallel reviews by the FBI and NSA under a 30-day deadline that can be extended further with a simple "no" vote by either agency. For whatever reason, these agencies are now taking the full 30 days -- and often 90 days. Against a backdrop of continued export liberalization over the past four years, this degradation in export control performance strikes a jarring note.
The Commerce Department's performance in this area is not necessarily out of line with the performance of other countries. The German government often takes two to three months to approve a license for a new product and six weeks to approve a license for routine shipments. The difference is that German companies know with certainty that a license will be issued at the end of the process; and the German government imposes no key recovery requirement on exporters. Therefore, they can make commitments to deliver products that require a license even before they get the license. In the United States, both the FBI and NSA have at times cast votes intended to roll back existing policies, and they have at a minimum managed to stall licenses that seemed to fit existing policy. A key recovery policy, for example, has been applied sporadically to U.S. multinationals and with some inconsistency to other exports. For this reason, it is not prudent for exporters to assume that a license will be issued or to make commitments on the assumption that the license will be issued - even when existing policy makes it seem likely that a license will eventually be granted. Because an RFP by a foreign company may provide only 30 days for responsive proposals, and the proposals often must include an assurance that an export license will be obtained, some U.S. companies lose bidding opportunities simply because the U.S. government does not process licenses quickly enough.
In other respects, of course, Commerce Department practice is a large improvement over State's performance. This is particularly true for controversial licenses, on which Commerce typically forces a decision over a course of months. In contrast, State Department licenses could be held up for months without any explanation and there were no deadlines for resolving interagency disputes. Nonetheless, it seems clear that the Commerce Department and the other participants in the encryption licensing process should adopt additional procedures to speed the granting of relatively non-controversial licenses.
[END]
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