From: Ernest Hua <hua@chromatic.com>
Date: Tue, 29 Oct 1996 23:49:38 -0800 (PST)
To: chromatic@chromatic.com
Subject: News: Sony/Philips has trouble exporting TV's
Message-ID: <199610300748.XAA29976@krypton.chromatic.com>
MIME-Version: 1.0
Content-Type: text/plain


They're just TV's, for crying out loud!!

C-Cube patrons may remember Tom Lookabaugh (Christie Cadwell's
husband) who is quoted below.  I don't recall his title being "sales
manager", though, unless he got a recent "promotion" (frequently a
C-Cube management speak for "pushed aside").

Ern

--------

    From Electronic Buyers' News:

    October 28, 1996
    Issue: 1030
    Section: News

    CODE LIMIT EXCEEDED

    By Jack Robertson

    Washington - New Internet-television systems from Sony Corp. and
    Philips Electronics Co. are technically munitions under U.S. export
    controls and cannot be shipped to the companies' worldwide sales
    networks, it was disclosed last week.

    Sony officials said the company's TV set-top box designed by WebTV of
    Palo Alto, Calif., includes a state-of-the-art 128-bit code encryption
    system for electronic commerce. This far exceeds the 40-bit encryption
    code permissible for export under the U.S. Munitions Control List.

    Philips also makes a WebTV set-top Internet box at its Magnavox TV
    plant in Knoxville, Tenn., and is similarly barred from shipping the
    unit to sales channels around the world.

    Both global electronic giants face immediate competition in the
    emerging TV-Internet surfing market from other Japanese, South Korean,
    and European set-makers that don't face the U.S. encryption
    controls. They now join the U.S. computer industry, which has long
    protested that the outmoded encryption export curbs are causing them
    to forfeit overseas sales of PCs and workstations to foreign rivals.

    President Clinton last month proposed lifting the level of encryption
    export controls from the present 40-bit code word to 56 bits, but only
    if a trap door is embedded in the cipher to allow law enforcement
    agencies to decode wiretapped messages. Clinton is expected shortly to
    sign an executive order putting the new control limits into effect.

    The pending 56-bit-code threshold doesn't help the Sony or Philips
    Web-surfing TV systems - nor most U.S. computer companies that build
    systems with encryption exceeding even the new control limit. Both
    Netscape and Microsoft Web-browsing software includes 128-bit code
    encryption, surpassing export curbs.

    Zenith Electronics Co., maker of a Web-surfing TV set, isn't concerned
    about the encryption controls, since it sells only in the U.S. market
    where the curbs don't apply.

    Divicom Inc., based in Milpitas, Calif., must get an export license
    from the U.S. State Department for every exported cable TV front-end
    encoder, which includes 128-bit code word, according to Tom
    Lookabough, the company's sales manager. He said the license review
    process can take eight weeks or more, a troublesome delay that foreign
    competitors don't face.

    Divicom and Scientific Atlanta both said their new digital TV set-top
    boxes include encryption that exceeds allowable export limits - but
    virtually all sales so far are in the U.S. market. As digital-box
    production ramps up, the companies would like to sell overseas, but
    run into the export control ban that puts them at a severe
    disadvantage against the foreign competitors aggressively entering the
    set-top market.

    President Clinton's encryption export control changes include an
    industry-favored provision to take the category off the State
    Department's Munitions Control List and shift responsibility to the
    Commerce Department.