Representative CANADY. On that point, I agree with the thrust of what you are saying. I think this is something that requires dialog, and that obviously is a two-way street. But given the complexity of the situation, given the multitude of entities that are involved, I am not at all certain that this is something that can be worked out by the FBI sitting down at the table with some people and coming to an agreement. I think that the complexity that you have described actually indicates that that type of solution may not be possible and that some type of legislation may be required to bring that dialog to a focus so that we can make policy decisions about how this is going to be addressed. It may not be the legislation that the FBI has submitted at this point, and I am certainly not wedded to that.

Mr. NEEL. Congressman, we would support giving teeth to the Quantico process that is in place right now. That could be one solution here. Also, let me point out that you are exactly right, there have been over 1,100 independent and small telephone companies for many decades, even when there was just Ma Bell, and they have been complying with wiretap requests as well. But the prospective problems that could exist in this network would be a little bit like saying, well, where is war going to break out next? You do not deploy enormous armies in 500 points across the world to prevent the potential of an outbreak somewhere. To a certain extent, this proposal says, well, we do not know exactly what the problem will be and we really cannot tell you exactly what specific technical standard we want you to comply to, we just want to make sure you will do it whenever we want it. And it is a little bit like using a hammer when a small wrench is really what is required.

Representative CANADY. I understand your concerns with that, and I think that is a legitimate concern. I believe our task is to try to focus on what the problem is and the ways that we can come up with defining standards that are workable, that you can be expected to meet, and that will still ensure that law enforcement gets the information that is needed.

I have taken longer than I should have.

Mr. BERMAN. Can I just amend

Representative CANADY. Yes.

Mr. BERMAN. That we make sure that when we are engaged in this process, that we look at, in this network of networks, we also have privacy, confidentiality, and security problems of major proportions which need to be addressed, and they need to be addressed in the same technical and dialog between industry, government, private sector, public interest, Congress, that has to go together, that it is not a one-sided effort, that we are trying to keep the balance that Congress struck when it passed the Electronic Communications Privacy Act in 1986, which recognized a new era of communications. If we have to add to that and in a process that keeps everyone up to date, both on the privacy threats and on law enforcement threats, let's add that process and address all those issues at the same time.

Representative CANADY. Well, I think it is important that we do that, and I will just conclude by thanking each of you for your testimony. It has been very helpful. This is something that is going to require a lot of work by all of those who have an interest in this,

and I certainly will look forward to working with you to come up with something that will protect all the things that we are seeking to protect privacy, the ability of law enforcement, and also the vitality of our free enterprise system in telecommunications because all of those are critical things that concern us.

Senator LEAHY. Senator Čohen?

Senator COHEN. Thank you, Mr. Chairman, and thank you for allowing me to sit in on this hearing. I am not a member of this subcommittee, but I do have an interest in the subject matter.

Senator LEAHY. We are delighted to have you here and delighted to have your expertise.

Senator COHEN. One of the real threats that we are worried about is big-brotherism. You can have Big Brother in the private sector as well as in the public sector. We are mesmerized by technology. We are climbing Jacob's ladder into a technological stratosphere, and we are simply overwhelmed and intrigued with the potential of what we are capable of achieving, without much concern about what it is doing to some old and cherished values. While listening to your testimony, I recalled that a manufacturer had devised an instrument you could put on your television set. The moment you walked into the room, the instrument started to view you. The purpose of it was to monitor the habits of individuals as they were watching television to determine human reaction to what is on the television.

Some advertising firms were then sponsoring the idea, and it struck me that we are inching closer and closer to "1984."

You can have a step toward big brotherism in the private sector where there are no rules, and you can have a step toward it, of course, in the public sector where hopefully we will always try to strike the balance between the need for privacy and what Senator Leahy said in his written statement about the need to protect our citizens against various threats.

My understanding is that it is not the purpose of the Bureau or the intelligence community to dictate the standards of technology, but to ensure that law enforcement walks in locked step with technology so that we maintain at least the status quo, that we do not find the FBI rushing from several hundred yards back trying to catch up constantly.

One of the great ironies of our society is that we always look back in retroactive nostalgia for what the Agency supposed to do at that time. I recall, for example, when a DC-10 dropped an engine over Chicago. The first cry was, where was the FAA? Then we had Love Canal, where was the EPA? On Three Mile Island, where was the Nuclear Regulatory Commission? We always tend to look back and ask, where were the agencies that we thought were protecting us?

Senator Leahy mentioned the Trade Center in his opening remarks. I recall during the Persian Gulf conflict that there was widespread fear in this country that we were going to be faced with an ignition of certain cells that were sleeping in this country, and that people would be dropping biological and chemical weapons into water supplies. What was the FBI capable of at that time?

We tend to place a higher premium on our rights of privacy until a tragedy strikes and then we say, where were our law enforce

ment officials? It is always a delicate balance. How do we strike the right kind of balance? We have tried to strike that balance with current technology. I am not aware that the FBI has made an intrusive, widespread violation into the realm of privacy that is not justifiable. There are certain procedures they have to follow. They have to go to the court. That is not an easy thing to do. They have to report that to an administrative council and so forth.

I don't want to seem to be ignoring the need for privacy. My own belief is we are going to find ourselves in a society in the future in which you will have an increase in the level of terrorism, not only abroad but here in the United States. That will call into question the tension that normally exists between the need for privacy and the need for protection, and it will shift from time to time depending upon the horrific nature of the latest attack upon our citi

zens.

The FBI needs to try to maintain at least a status quo position, where they are today, fearing where technology is going tomorrow. Frankly, I am not sure that just because something is possible it is necessarily desirable in terms of preserving our values. Technology can achieve untold things, but maybe they are inconsistent with cherished values that we have had.

That is a decision that we do not make at the governmental level. That is something that we have to try to continue to educate ourselves on. Just because we can achieve it, does it mean we should desire it?

One of the fears of the Agency would be that we now have an informal arrangement. Mr. Berman, you talked about an informal arrangement, that we have ongoing talks. But these, I assume, are voluntary by the companies who are involved. I am not sure how committees work in your business, but I suspect they work like the ones here. Sometimes people show up and sometimes they do not. It is periodic at best. There may be a few members who are very conscientious. There may be a few members who say they are not interested in helping our law enforcement agencies.

As the race for superiority in technology continues to escalate, there will be some firms that say, we do not want to be a part of this, we got a better deal than AT&T or whatever the firm might be, and we can get there faster and not comply with what these responsible firms are trying to do to accommodate law enforcement's needs. These firms will also say, we want to get there first, we want to get there fast, and we want to make the biggest amount of money; and if we can market this domestically and internationally, that is what we are going to do, and to hell with the FBI and law enforcement.

There may be a need for legislation in some form. I am not sure it is this specifically, but I would not dismiss it out of hand by saying we can operate informally. We may need to have an adjustment. The legislation must neither hamper technological breakthroughs nor intrude in a way that is undesirable in the view of most of the American public.

Mr. BERMAN. We have suggested the possibility of a more formal process with more diversity than simply the telephone industry, the computer industry, Internet, and that process could go on, and, in fact, it would be encouraging the FBI to catch up with the tech

nology. I am not saying that they are behind or are Luddites, but to really create a process that makes that an ongoing dialog that is less than informal.

That is different and I think far more acceptable than saying stop the world, you know, we have got to get off here because we could lose control.

Senator COHEN. Technology, like time, cannot be stuffed in a bottle. We must recognize that. The real issue is: Can a system be devised where the law enforcement agencies are running in tandem with technology to make sure that technology is not racing ahead so fast that law enforcement is put at such a severe disadvantage that it cannot fulfill its mission of protecting the American people? Further, can we devise such system in a way that does not unduly intrude into the value we place on privacy? Obviously, whenever we allow the FBI or any other agency to intrude, we knowingly give up some of our privacy. We are very conscious of this, and do not do this lightheartedly.

Mr. BERMAN. We are for that process, but we have to be on guard on privacy grounds. This legislation, as it was drafted, would do some very interesting things to communications. It would permit the FBI to move a communication to a remote location and pick it up and require networks design that. Now, that may be the future, but also it would have made Watergate really hard to uncover if you could have moved the communication from the Howard Johnson's Hotel to some remote site and no one was ever able to trace that interception.

Senator COHEN. I do not think that is how Watergate was broken. That is another matter altogether.

Senator LEAHY. Nor do I think that will determine which way this committee goes.

Mr. NEEL. Senator, I would respond to one thing. In terms of the willingness of the private companies participating in this forum, the entire local telephone industry is represented at those meetings, and my information is that participation in that work has been enthusiastic and that attendance is universal. I do not think our industry would have any problems with sterner mandates for participation in that process.

Senator COHEN. Mr. Chairman, thank you very much. I hope to be able to continue to participate.

Senator LEAHY. I appreciate your participation, and I appreciate the help not only because of our own personal friendship but because of your diligence on this committee and your experience in this area.

Nobody is suggesting we do away with our wiretap legislation; certainly I am not. But even if we can wiretap messages transmitted over telephone lines or the air waves if it is cellular, if that message is encrypted, law enforcement might still not have anything. I realize we are talking about an issue that is going to be before this subcommittee in another forum, but if person A is saying to person B something that is encrypted with an unbreakable code, even if you can pick it up, even if you can access it with a wiretap, you still have nothing except meaningless noises.

Mr. NEEL. That is correct, and clearly that represents a challenge to law enforcement and to the Government to determine the degrees to which encryption should be

Senator LEAHY. The reason I raise the point is that even if we make sure that whatever is being sent can be tapped, you still have a second problem if the person sending the message encrypts it. You still have nothing.

Mr. NEEL. That is correct.

Senator LEAHY. Now, I might say on the question of this cooperative endeavor-and I want to send this message out very clearlyI would encourage industry and law enforcement to continue this cooperative effort. But I am not prepared to support a government veto on telecommunication technology advances, for a couple of reasons. One, the Federal Government has historically stayed way behind the curve on telecommunications and, for that matter, computer technology. In a lot of areas, both military and civilian, where the Federal Government should be doing much better, an outrageous amount of time and effort and money has probably been wasted because we have stayed so far behind the curve.

Also, I am not going to hinder one of the areas where the United States has been such a great leader while government officials try to make up their mind how far we want them to be leaders. So I would urge everybody to work on the cooperation, but I would suggest that legislation allowing government vetoes on technological advances by the best innovative minds in America is not going to

occur.

Incidentally, the FBI Director estimated the cost to be about $500 million over the next 3 years to make existing equipment and systems wiretap-friendly. You say about $1.8 billion.

Mr. NEEL. I said we think it will cost $1.8 billion to solve only one part of the call forwarding issue alone, not to mention any other costs incurred through this. So we think it would be many multiples of the figure that the FBI cited.

Senator LEAHY. In the Quantico Committee, are the huge differences in cost estimates an issue that is being discussed?

Mr. NEEL. Yes, I believe it is. Surely cost is a main point of interest out there.

Senator LEAHY. Because if these costs get up high enough, you have probably got a moot point facing us to begin with.

Mr. NEEL. Well, as I mentioned earlier, no one wants to put a price tag on the fight against crime, and our industry isSenator LEAHY. We do it all the time. [Laughter.]

Mr. NEEL. Well, our industry would not want to do that in terms of deciding whether it is worth the Government's spending that kind of money. But we do think that it is important that you have realistic numbers to know what the taxpayer exposure will be if you were to implement a proposal such as this.

Senator LEAHY. Let me close with this on needs of law enforcement. I would say this to the industry to add to your incentive to work very closely on this. This is not just a question of finding out where the guy who held up the branch bank might be stashing the $50,000, but it could very, very well be a question of finding the person who is going to blow up an airplane as it is landing at Kennedy Airport, or the person who is going to blow up a convention