Post-9-11 security fears fuel boom in high-tech ID business
Posted on Fri, Mar. 30, 2007email thisprint this
SECURITY
Post-9-11 security fears fuel boom in high-tech ID business
By Dave Montgomery
McClatchy Newspapers
WASHINGTON - The U.S. government's growing appetite for biometrics-based ID systems to bolster security, detect terrorists, fight crime and control illegal immigration is generating billions of dollars in opportunities for an evolving industry that's coming of age in the post-Sept. 11 era.
The growth of the identification industry also has spawned an aggressive push-back from privacy advocates against what they call an emerging "industrial surveillance complex."
Regardless of the perspective, few would deny that the expanding government market for more secure identification programs is laden with business potential.
Players range from big-name defense contractors to specialty firms largely unknown to the public. And the product line includes now-commonplace offerings that might have seemed possible only on an episode of "Star Trek" just a decade or so ago,
Video or audio scanners can identify individuals by facial features, voice or even the blood vessels in their eyes, matching the information against data stored in a secure computerized clearinghouse. Fingerprints are widely used for everything from firing up the computer to opening the office door.
The terrorist attacks of Sept. 11, 2001, accelerated the identification boom as high-tech companies stepped forward to supply a vast range of new security networks for transportation, government buildings, law enforcement and other venues.
After a shake-down period in which some hastily formed enterprises crashed and burned, the industry is beginning to mature and may be poised for years of steady growth, said Jeremy Grant of Stanford Washington Equity Research, a stock analyst who's conducted an extensive study of the industry.
At least 10 major U.S. government initiatives will generate more than $8 billion in business over the next five years, with overseas projects generating another $14 billion, Grant said.
The U.S. projects include issuing biometric cards to all 2 million federal workers as well as to federal contractors, and giving travelers preregistered "smart cards" to speed through airport security.
Perhaps the biggest customer is the Department of Homeland Security, the multi-agency bureaucracy that guards the borders and protects the home front from terrorism. Other big government markets include the Defense Department, the State Department and the FBI.
President Bush's call for overhauling the nation's immigration system also could generate more business for the industry if Congress reaches accord on the volatile issue. Most legislative proposals call for biometric cards and employee-verification databases to determine whether immigrants are legally entitled to be in the United States.
"That's a significant business opportunity for these companies," Grant said.
The American Civil Liberties Union and other privacy advocates are fighting to curtail the industry, saying biometric cards and centralized databases open the door to government snooping and do not offer foolproof protection from terrorists and criminals, even with recent technological advances.
"Decisions being made now are going to dramatically affect what our lives look like in the future," said Jim Harper, the director of information-policy studies at the Cato Institute, a Washington research center that urges limited government.
Industry executives say the privacy dangers are exaggerated and that companies follow rigid procedures to prevent the distribution of confidential information.
One privacy vs. security showdown centers on the REAL ID Act, which Congress enacted in 2005 to require tamperproof driver's licenses that would be available only to legal U.S. residents. More than two dozen states are considering legislation opposing the law, saying it would cost $11 billion to implement.
Industry executives say they're part of an industry with a bright future, made up of companies that offer differing sets of specialties. Some niche firms have been in business for less than five years, while others, such as defense giants Lockheed Martin and Raytheon, are expanding into the identification realm.
One of the bigger companies, Grant said, is L-1 Identity Systems of Stamford, Conn., which was formed by the merger of two other companies and is headed by Robert LaPenta, one of the founders of L-3 Communications.
Another established company is Digimarc, headquartered in Beaverton, Ore., whose systems have produced more than two-thirds of U.S. driver's licenses. Other players include Austin, Texas-based IndentiPHI, which is teamed with Dell Computers, and Cross Match Technologies of Palm Beach Gardens, Fla., headed by James W. Ziglar, former commissioner of the now-defunct Immigration and Naturalization Service.
"There's definitely a big space, a lot of growth going on," Grant said. "This is a classic growth industry right now. But not everybody's going to win."
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