Simon Singh: E-mail and Espionage

Corrections or additions?

These articles by Melinda Sherwood and Barbara Fox were published

in U.S. 1 on September 22, 1999. All rights reserved.

One Currency, Many Opportunities

Some feared the introduction of the Euro on January

1 would pose a serious challenge to the almighty dollar and create

an upset on the scale of Y2K. But other American companies are finding

new opportunities made possible by the unified currency, which until

2002 is only visible on bank statements and in check form. "It

might have been to get your parts from Italy, but tomorrow it may

be a good deal to get parts from Spain," says Bob Orr, a

partner in the information industries practice at PA Consulting Group,

the management systems and technology consultancy based at 315

Enterprise

Drive. "The key is how to take advantage of price transparency

and new markets."

Learn about opportunities for American companies from Euro experts,

Orr included, at the Princeton Chamber’s panel on Thursday, September

30, at 8 a.m. at the Sarnoff Corporation at 201 Washington Road.

James

Clingham of Galaxis USA LTD; David Round of First Union Bank,

a market and sales consultant for Europe, the Middle East, Africa

and the Indian Subcontinent; Stephen Stambaugh, senior vice

president and director of First Union’s International Corporate Group;

Ann Carthy, also with PA Consulting Group; and Steven

Richman,

partner, Gallagher Briody & Butler, each give their perspectives.

Cost: $40. Call 609-520-1776.

Orr, who specializes in matters of finance in multinational companies,

reports that the Euro has had an almost Y2K-like impact on clients’

information systems, accounting, and reporting. One client, he says,

had more than 1,000 different information systems and interfaces that

needed to be modified for currency denomination units. "Just about

every fundamental business process," says Orr, "from managing

customer revenue, to supply chain, to sales and marketing, had to

be fairly fundamentally reengineered."

Orr graduated from Rice University, with a BA in economics and

management

science, Class of 1971, and lives with his wife and four children

in South Orange. Prior to joining PA Consulting Group, a 2,700 person

organization with over 50 offices in 20 countries, Orr worked for

Andersen Consulting, KPMG, and Morgan Stanley.

The good news about the Euro, says Orr, is that cheaper goods and

new markets will be visible to the naked eye when businesses don’t

have to translate currency values. "The Euro has changed the

landscape

in terms of where you manufacture things, where you add value in its

development, and where you might locate offices," he says.

"Many

companies were very good at taking advantage of differences in pricing

across borders, so a product in Spain might be relatively cheaper

than a product in France, and someone in procurement could cut costs

out of the project." That could mean more American companies in

the mix. "You’re going to see a lot of increased competition

because

there’s always been a barrier to entrance," says Orr.

Some of the opportunities for new and existing business to jump on

between now and January 1, 2002, when the Euro will be issued in paper

notes and coins:

Lower costs of capital.

New market opportunities. If you can take advantage of

price transparency, says Orr, to significantly reduce the cost of

your product, there may be markets there that weren’t available before

because of your price structure. New markets may also open up around

your new production location.

Longer-term purchase contracts. Many of the current

purchasing

agreements are tied to currency rates, so companies may be sourcing

from many different companies. The stability of the Euro will give

a company more confidence to streamline purchasing arrangements and

set up longer contracts.

New sources of materials. The standard currency will make

it easier to look for new sources of raw materials across borders.

Could American consumers and businesses end up paying more,

rather than less, for imported goods? Right now the jury is still

out, says Orr. "Companies are really starting to pay attention

to this right now," he says. "We won’t have the real war

stories

for a while. But things don’t have to be complete until 2002. I don’t

know if there’s a bible on it yet."

— Melinda Sherwood

Top Of Page
Simon Singh: E-mail and Espionage

Last week the White House decreed that United States

firms could export its most powerful encryption techniques, and in

so doing it nosed ahead of Congress in the race to curry favor with

technology companies. This controversy over how strong encryption

should be — and whether United States-based companies could sell

strong encryption codes overseas — has created some strange

bedfellows,

explains Simon Singh, in his new volume "The Code Book:

The Evolution of Secrecy from Mary, Queen of Scots, to Quantum

Cryptography,"

new from Doubleday ($34.95)

In this volume Singh illuminates the timely subject of encryption,

revealing its contributions to linguistics and computation as well

as its dramatic effects on the outcome of wars, monarchies, and

individual

lives. His earlier book, "Fermat’s Last Theorem," was

universally

praised for its lively presentation of what could be a dull (for most)

mathematical subject, and he attracted a standing room only crowd

at a reading in Princeton then. Singh speaks and signs his book at

the Princeton University Store at 36 University Place on Thursday,

September 23, at 6:30 p.m. Call 609-921-8500.

Singh is the particle physicist from the University of Cambridge who

co-produced and directed the BBC documentary on Fermat’s theorem.

In the story about Fermat’s Theorem he offered mathematical history

from Pythagoras through Turing, but always focused on the drama,

bringing

it to a climax when Princeton University mathematics professor

Andrew

Wiles announced in 1993 that he had a long-awaited proof for the

theorem.

Turning his attention to cryptographic freedom, he writes that it

would allow everyone, even criminals, to be assured that their

E-mails are secure. "On the other hand, restricting the use of

cryptography would allow the police to spy on criminals, but it would

also allow the police and everybody else to spy on the average

citizen."

Those against the exportation of encryption devices include the

National

Security Agency, which operates a worldwide network of listening

stations,

including Echelon, which indiscriminately harvests information by

using receivers that detect the telecommunications that bounce off

satellites.

Those in favor of encryption are the Center for Democracy and

Technology,

the Electronic Frontier Foundation, civil libertarians, and

corporations

that want to enhance E-commerce and store information on databases.

"Probably the greatest infringement of everybody’s privacy is

the international Echelon program," writes Singh. "Whereas

law enforcers argue that encryption should be banned because it would

make Echelon ineffective, the civil libertarians argues that

encryption

is necessary exactly because it would make Echelon ineffective."

Singh suggests a middle way between cryptographic freedom and

restrictions:

key escrow, comparable to having two keys to open a safe deposit box.

For instance, the government could store two halves of a computer

chip in separate facilities for use only in emergencies. Another way

is for a certification authority, such as a company called Verisign,

to verify that a public key does correspond to a particular person.

Certification authorities can also guarantee the validity of digital

signatures, as when President Bill Clinton and Prime Minister Bertie

Ahern digitally signed a communique in Dublin.

A more controversial service, known as key recovery, can be provided

by a Trusted Third Party (TTP). "Imagine a legal firm that

protects

all its vital documents by encrypting them with its own public key,

so that only it can decrypt them with its own private key. Such a

system is an effective measure against hackers and anybody else who

might attempt to steal information. However, what happens if the

employee

who stores the private key forgets it, absconds with it, or is knocked

over by a bus? Governments are encouraging the formation of TTPs to

keep copies of all keys. A company that loses its private key would

then be able to recover it by approaching its TTP.

"Some argue that TTPs are effectively a reincarnation of key

escrow,

and that law enforcers would be tempted to bully TTPs into giving

up a client’s keys during a police investigation. Others maintain

that TTPs are a necessary part of a sensible public key

infrastructure,"

writes Singh.

He predicts that "in the near future the pro-encryption lobby

will initially win the argument, mainly because no country will want

to have encryption laws that prohibit E-commerce. However, if this

policy does turn out to be a mistake, then it will always be possible

to reverse the laws. The deciding factor will be whom the public fears

the most — criminals or the government."

Broken codes have won wars and lost lives, and Singh is fully up to

the task of investing each of these tales with all the drama due.

Mary Queen of Scots, says Singh, wrote to her conspirator freely

because

she believed the code could not be broken. She was wrong.

He tells of 420 Navajo "code talkers" who passed messages

that the Japanese never were able to decode. They passed 800 messages,

all without error, during the first days of attack on Iwo Jima, and

military experts say that the Marines would never have taken Iwo Jima

without the Navajos’ help.

Singh’s ultimate drama will be his announcement about who broke the

15-page code puzzle included in "The Code Book," The winner

will receive $15,000, and if the prize has not been claimed in one

year, it will be awarded to the person who has made the most progress

soonest. Progress will be tracked at

http://www.4thestate.co.uk/cipherchallenge.

Perhaps Singh will drop a few tips at his book signing.

— Barbara Fox


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