To make it easier for agents to single out the proper conversation in a stream of signals, every Clipper Chip has its own electronic identity and broadcasts it in every message it scrambles.
Federal agents conducting a court-authorized wiretap can identify the code electronically and then formally request the special keys that allow an outsider to decipher what the chip has scrambled.
Federal officials say they expect companies to incorporate the chip into consumer phone scramblers, cellular phones and "secure" computer modems. Within a few years, FBI officials say, they expect the Skipjack code to be part of almost every encryption device available to the average consumer.
Many companies say they are leery of adopting the sophisticated electronic code, even though it could protect them from foreign intelligence agencies and competitors seeking their trade secrets. But AT&T, which has a long history of cooperating with the government on communications surveillance, has already agreed to recall the company's consumer scramblers and refit them this fall with the new chip.
Even without Skipjack and the Clipper Chip, advanced computers and electronic databases already have expanded government's ability to track and monitor citizens.
Searches of phone records, computer credit files and other databases are at an all-time high, and court-authorized wiretaps--which listened in on 1.7 million phone conversations last year--monitor twice as many conversations as a decade ago, federal records show.
The General Accounting Office says that federal agencies maintain more than 900 databanks containing billions of personal records about U.S. citizens.
This type of easy access to electronic information is addictive, critics contend.
Since the FBI set up its computerized National Criminal Information Center in 1967, for example, information requests have grown from 2 million a year to about 438 million last year, and the criminal justice database itself now encompasses 24 million files.
The FBI records system, like computer files at the Internal Revenue Service, is "routinely" used for unauthorized purposes by some federal, state and local law enforcement agencies, the General Accounting Office said.
GAO auditors found that some police agencies have used the FBI system to investigate political opponents. Others have sold FBI information to companies and private investigators. In Arizona, a former law enforcement official used it to track down his estranged girlfriend and kill her, the auditors reported.
What the government can't find in its own files, it can obtain from any one of hundreds of marketing firms that specialize in compiling electronic dossiers on citizens. The FBI is seeking authority from Congress to obtain those records without consulting a judge or notifying the individual involved, which is required now.
Information America, for example, offers data on the location and profiles of more than 111 million Americans, 80 million households and 61 million telephone numbers. Another firm specializes in gay men and lesbians.
A third, a service for doctors called Patient Select, singles out millions of people with nervous stomachs.
Computer experts say encryption can draw a curtain across such electronic windows into private life.
In fact, the FBI is planning to encrypt its criminal justice computer files.
"Recent years have seen technological developments that diminish the privacy available to the individual," said Whitfield Diffie, a pioneering computer scientist who helped invent modern cryptography. "Cameras watch us in the stores, X-ray machines search us at the airport, magnetometers look to see that we are not stealing from the merchants, and databases record our actions and transactions.
"Cryptography," he said, "is perhaps alone in its promise to give us more privacy rather than less."
NEXT: Inside the company that makes the secret chip.
Scrambling for Privacy
As more people and companies adopt codes to protect their telephone calls, faxes and computer files, the federal government has proposed a national encryption standard that will allow people to protect their privacy while ensuring that law enforcement agents can still wiretap telecommunications. Here is how it would work:
1. When someone using a Skipjack-equipped secure phone calls another secure phone, chips inside the phone generate a unique electronic code to scramble the conservation.
2. The chip also broadcasts a unique identifying serial number.
3. If a law enforcement agent wants to listen in, he first must obtain a court order and the get the chip's serial number from the signal.
4. The agent obtains takes that number to the Treasury Department and the National Institute of Standards and Technology, which keep the government's digital keys to the chip.
5. The keys are combined to unscramble the conversation. When legal authorization for the wiretap expires, the keys are destroyed.
The Skipjack Code
Designer: The National Security Agency.