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Archives for November 2007

How Can Government Improve Cyber-Security?

November 9, 2007 by

Wednesday was the kickoff meeting of the Commission on Cyber Security for the 44th Presidency, of which I am a member. The commissionhas thirty-four members and has four co-chairs: Congressmen Jim Langevin and Michael McCaul, Admiral Bobby Inman, and Scott Charney. It was organized by the Center for Strategic and International Studies, a national security think tank in Washington. Our goal is to provide advice about cyber-security policy to the next presidential administration. Eventually we’ll produce a report with our findings and recommendations.

I won’t presume to speak for my fellow members, and it’s way too early to predict the contents of our final report. But the meeting got me thinking about what government can do to improve cyber-security. I’ll offer a few thoughts here.

One of the biggest challenges comes from the broad and porous border between government systems and private systems. Not only are government computers networked pervasively to privately-owner computers; but government relies heavily on off-the-shelf technologies whose characteristics are shaped by the market choices of private parties. While it’s important to better protect the more isolated, high-security government systems, real progress elsewhere will depend on ordinary technologies getting more secure.

Ordinary technologies are designed by the market, and the market is big and very hard to budge. I’ve written before about the market failures that cause security to be under-provided. The market, subject to these failures, controls what happens in private systems, and in practice also in ordinary government systems.

To put it another way, although our national cybersecurity strategy might be announced in Washington, our national cybersecurity practice will be defined in the average Silicon Valley cubicle. It’s hard to see what government can do to affect what happens in that cubicle. Indeed, I’d judge our policy as a success if we have any positive impact, no matter how small, in the cubicle.

I see three basic strategies for doing this. First, government can be a cheerleader, exhorting people to improve security, convening meetings to discuss and publicize best practices, and so on. This is cheap and easy, won’t do any harm, and might help a bit at the margin. Second, government can use its purchasing power. In practice this means deliberately overpaying for security, to boost demand for higher-security products. This might be expensive, and its effects will be limited because the majority of buyers will still be happy to pay less for less secure systems. Third, government can invest in human capital, trying to improve education in computer technology generally and computer security specifically, and supporting programs that train researchers and practitioners. This last strategy is slow but I’m convinced it can be effective.

I’m looking forward to working through these problems with my fellow commission members. And I’m eager to hear what you all think.

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Comcast Podcast

November 7, 2007 by

Recently I took part in a Technology Liberation Front podcast about the Comcast controversy, with Adam Thierer, Jerry Brito, Richard Bennett, and James L. Gattuso. There’s now a (slightly edited) transcript online.

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Economics of Eavesdropping For Pay

November 2, 2007 by

Following up on Andrew’s post about eavesdropping as a profit center for telecom companies, let’s take a quick look at the economics of eavesdropping for money. We’ll assume for the sake of argument that (1) telecom (i.e. transporting bits) is a commodity so competition forces providers to sell it essentially at cost, (2) the government wants to engage in certain eavesdropping and/or data mining that requires cooperation from telecom providers, (3) cooperation is optional for each provider, and (4) the government is willing to pay providers to cooperate.

A few caveats are in order. First, we’re not talking about situations, such as traditional law enforcement eavesdropping pursuant to a warrant, where the provider is compelled to cooperate. Providers will cooperate in those situations, as they should. We’re only talking about additional eavesdropping where the providers can choose whether to cooperate. Second, we don’t care whether the government pays for cooperation or threatens retaliation for non-cooperation – either way the provider ends up with more money if it cooperates. Finally, we’re assuming that the hypothetical surveillance or data mining program, and the providers’ participation in it, is lawful; otherwise the law will (eventually) stop it. With those caveats out of the way, let the analysis begin.

Suppose a provider charges each customer an amount P for telecom service. The provider makes minimal profit at price P, because by assumption telecom is a commodity. The government offers to pay the provider an amount E per customer if the provider allows surveillance. The provider has two choices: accept the payment and offer service with surveillance at a price of P-E, or refuse the payment and offer reduced-surveillance service at price P. A rational provider will do whatever it thinks its customers prefer: Would typical customers rather save E, or would they rather avoid surveillance?

In this scenario, surveillance isn’t actually a profit center for the provider – the payment, if accepted, gets passed on to customers as a price discount. The provider is just an intermediary; the customers are actually deciding.

But of course the government won’t allow each customer to make an individual decision whether to allow surveillance – then the bad guys could pay extra to avoid being watched. If enough customers prefer for whatever reason to avoid surveillance (at a cost of E), then some provider will emerge to serve them. So the government will have to set E large enough that the number of customers who would refuse the payment is not large enough to support even one provider. This implies a decent-sized value for E.

But there’s another possibility. Suppose a provider claims to be refusing the payment, but secretly accepts the payment and allows surveillance of its customers. If customers fall for the lie, then the provider can change P while pocketing the government payment E. Now surveillance is a profit center for the provider, as long as customers don’t catch on.

If customers know that producers might be lying, savvy customers will discount a producer’s claim to be refusing the payments. So the premium customers are willing to pay for (claims of) avoiding surveillance will be smaller, and government can buy more surveillance more cheaply.

The incentives here get pretty interesting. Government benefits by undermining providers’ credibility, as that lowers the price government has to pay for surveillance. Providers who are cooperating with the government want to undermine their fellow providers’ credibility, thereby making customers less likely to buy from surveillance-resisting providers. Providers who claim, truthfully or not, to be be refusing surveillance want to pick fights with the government, making it look less likely that they’re cooperating with the government on surveillance.

If government wants to use surveillance, why doesn’t it require providers to cooperate? That’s a political question that deserves a post of its own.

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