L‑1: The Technology Company in Your Pocket

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Market processes drive companies like Google, Facebook, telecomproviders, and ISPs to balance privacy with other consumerinterests. Whether their practices are satisfactory or not, equally powerful threats to privacy lurk inmore obscure corners of the technology world. One such corner isthe market for biometric technologies and identity cards. Thedominant player in that market these days is L-1 IdentitySolutions.

A leading biometric technology company, L-1 was formed from thecombination of Viisage Technology and Identix in 2006. It has grownthrough a series of acquisitions, including Integrated BiometricTechnology, SecuriMetrics, Iridian, SpecTal, ComnetiX, McClendon,and Advanced Concepts, Inc. L-1 is heavily leveraged into thegovernment identity business, with nearly $100 million in federal contracts lastyear.

L-1 is the number two manufacturer of state driver's licensesand identification cards in the United States. Among other things,its driver license Web page touts its role in"laying the foundation for the use of face recognition technology."It is interesting to learn that this foundation is being laid.

More evidence of L-1's thinking is on display in a brochure ithosts on its Web site entitled "Identity Solutions for the REAL ID Act." REALID is the moribund U.S. national ID law. The cover featuresan attractive woman's face with her driverlicense data superimposed over it. Joining her name, address,height, and eye color, are her place of birth, her politicalaffiliation, and her race.

The REAL ID Act regulations issued by the Department of HomelandSecurity allow states to put race in the "machine readable zone" oflicenses. Each time people were identified using these cards, theirracial background could join other data incollections of information about their movements, purchases, andinteractions. Political party is a new one - but stranger thingshave happened - and the inclusion of place of birth on a licensewould quickly destroy that obscure information's role as a"security question" when people call their bankers. But whatmatters is that L-1 appears not to have these privacy and securityissues in mind as it promotes its products to driver licensingofficials.

L-1 now plans a mergerwith Digimarc ID Systems, the nation's number one manufacturerof state identity cards and drivers' licenses. The combined companywill be a powerhouse in both advanced biometric technologies anddriver licensing.

For its part, Digimarc has been very aggressive in promoting theREAL ID Act. The Digimarc website has an entiresection dedicated to REAL ID, and the company spent $350,000 in the first half of 2007 onfederal lobbying for the national ID law. It has also hostedconferences where state DMV bureaucrats trained up to promote REAL ID. Regrettably forDigimarc, Congress hasn't funded REAL ID and not a single statecomplied with the May 11, 2008, deadline for implementation.Digimarc lost money in 2007.

Will the combined enterprise continue pushing REAL ID? It's alegitimate concern. L-1's board of directors features a number ofpeople known for their law enforcement and national securityexperience much more than their technology or business acumen. Theformer Coast Guard commandant who originally stood up theTransportation Security Administration is on the board, forexample. Admiral James M. Loy joined the Viisage board in 2006 andcontinued on after the merger that formed L-1.

Board member B. Boykin Rose adds insider knowledge ofgovernment-issued identification and licensing. He served asdirector of the South Carolina Department of Public Safety (whichincludes the Division of Motor Vehicles and the Driver LicensingDivision) from 1993 to 2004. George Tenet became a director ofViisage (and subsequently L-1) after concluding his seven-year termas director of central intelligence for the United States. And theformer head of the FBI, Louis Freeh, was a board member of L-1until August 2007.

Digimarc will be the crown jewel in L-1'sgovernment-identification-system empire. Given L-1's substantialfederal business and friendly federal government relationships, itis hard to envision the company not spending millions to promotethe REAL ID Act through state and federal lobbying, funding ofadvocacy groups, and support for national-ID cheerleaders like theAmerican Association of Motor VehicleAdministrators.

But this would all be good money thrown after bad. Adozen-and-a-half states have passedlegislation either objecting to REAL ID or barring themselvesoutright from complying. As noted previously, not a single stateimplemented REAL ID by the May 11, 2008 deadline. Deeply complexissues - even issues highlighted by the DHS's privacy advisorycommittee - weren't satisfactorily addressed in thedepartment's final regulation. And even if REAL ID does eventuallysee compliance, it will take years. Nearly a decade will pass underthe current plan before all licenses are REAL ID compliant.

Over this time, as the biometrics experts at L-1 surely know,identification and credentialing technology are likely to changeimmensely. People will identify themselves, pay for things, andprove credentials like age and security status with all kinds ofdifferent devices: cell phones, smart cards, dumb cards, key fobs,and many other form factors. These devices will use many differentbiometric systems, security designs, and communications protocols.The better ones will convey the precise information needed in eachparticular transaction rather than a full dossier of every personfor each transaction as a REAL ID card would do. Security withoutsurveillance is the goal.

If L-1 has foresight, it recognizes that REAL ID is a slow tripdown a bumpy, dead-end road. Better it should invest its time indeveloping products for the decentralized, competitive identity andcredentialing marketplace of the future.

In the meantime, people are right to be concerned that L-1 willbe a prime mover behind any continuing REAL ID promotion. Acorporate lobbying operation can do as much harm to liberty as anygovernment agency or official.