23 September 1997: Link to related messages: http://jya.com/gak-costs2.htm

22 September 1997
Source Bellovin: Mail list cryptography@c2.net
Source McCullagh: Mail list cypherpunks@toad.com

To: cryptography@c2.net
Subject: CBO estimates
Date: Mon, 22 Sep 1997 16:35:31 -0400
From: Steven Bellovin <smb@research.att.com>

See http://www.cbo.gov/showdoc.cfm?index=54&from=2&sequence=0, or go to
http://www.cbo.gov, then "Cost Estimates", followed by "H.R. 695".
It's actually a fairly strong argument against this whole concept...

Their estimate of the cost of compliance ranges from $200,000,000 to
$2,000,000,000 -- an order of magnitude difference.  The total size of
the (U.S.) encryption market in 1996 was $500,000,000-1,000,000,000.
Taking the geometric mean of both estimates, we find that the cost of
GAK is only slightly smaller ($632,000,000) than the total market size
($707,000,000).  A simple application of the laws of economics shows
what that kind of cost increment will do to the market -- current
growth is described as "explosive".  I especially liked this

	CBO concludes that Internet service providers and others who
	are basing their business strategies on the expectation of
	substantial growth in markets dependent on encryption, such as
	electronic commerce, may find their opportunities limited, but
	they may very well be able to maintain their current customer
	base by offering services that exclude or modify encryption

They also note that this cost is considerably in excess of the
$100,000,000 limit established by the Unfunded Mandates Reform Act.
Exactly what that means isn't clear to me.

[End Bellovin]

Date: Mon, 22 Sep 1997 11:53:47 -0400 To: fight-censorship@vorlon.mit.edu, cypherpunks@toad.com From: Declan McCullagh <Declan_McCullagh@timemagazine.com> Subject: What will it cost to let Big Brother watch? [This story was scheduled for page 18 of this week's Time magazine, but got cut at the last minute and replaced with a Diana investigation update. Background: Previous CBO cost estimates released in May and July focused on versions of SAFE that dealt only with exports. This estimate not only covers the costs of operating snooperware systems; it predicts that some products may drop crypto and users may abandon its use if such a requirement exists. Enjoy. --Declan] ****** ENCRYPTION What Will It Cost To Let Big Brother Watch? By Declan McCullagh High tech firms battling what they call an Orwellian anti-privacy bill in Congress are challenging a new government study. Last Friday the Congressional Budget Office stuck a price tag on a bill that would ban the manufacture of telephones, computers, and software that the FBI can't easily monitor. The amount consumers would pay: an estimated $200 million to $2 billion a year. But technology groups say the true cost would be astronomical. "It would be the greatest technological challenge the U.S. software industry is facing today, larger than the year 2000 problem. We don't know how to do this," says Jon Englund of the Information Technology Association of America. He says that since the CBO study focuses on computer programs and not the Internet, the true cost would be hundreds of billions higher. A huge chunk of existing technology would have to be redesigned, and plans to protect cyberspace from eavesdroppers would be derailed. That's an acceptable tradeoff, say the plan's backers. "Organized crime, drug organizations, and terrorist organizations have the ability to use encryption and render law enforcement folks unable to have access," says Rep. Michael Oxley (R-Ohio), a backer of the FBI's plan. The House Commerce committee is scheduled to vote on Oxley's proposal on Thursday. ------------------------- Declan McCullagh Time Inc. The Netly News Network Washington Correspondent http://netlynews.com/