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“Give me Duquesne minus 7, for a nickel.”

It was February 1965 on a lonely section of Los Angeles’s Sunset Boulevard, and Charles Katz, one of life’s little losers, was placing an illegal sports bet over a public telephone. Unbeknownst to Katz, however, the FBI had placed a microphone atop the telephone booth to record this small-time gambler’s conversations.

Engineers often mock the law for lagging behind technology. In fact, the law is often far ahead of it. This time it was ahead by nearly 200 years, for after Katz’s arrest his lawyers argued that although the framers of the Constitution could not possibly have encountered tape recorders and telephone booths, the Fourth Amendment’s ban on “unreasonable” searches nonetheless covered them. Because the FBI had no search warrant, Katz’s lawyers said, bugging the phone booth was illegal. In a landmark decision, the Supreme Court agreed, affirming for the first time that electronic surveillance was-constitutionally speaking-a search. “No less than an individual in a business office, in a friend’s apartment, or in a taxicab,” the majority declared, “a person in a telephone booth may rely upon the protection of the Fourth Amendment.”

Equally important was Justice John Harlan’s concurring opinion. The government, he argued, could not freely eavesdrop in any place where people have a “reasonable expectation of privacy”-a phrase that even now, four decades later, resonates in the laboratory of Wayne Wolf. An electrical engineer at Princeton University, Wolf leads a research team that is creating a tiny, inexpensive video camera one might glibly describe as a lens glued to a chip. In theory, the camera could be the size of a postage stamp and cost as little as $10, “small and cheap enough to scatter by the dozen,” as Wolf puts it. The laws of optics dictate that tiny lenses make low-resolution images, so the researchers are developing software that melds video from multiple cameras located in a single area, producing sharp, real-time images of the entire space. “You could stick them up all over a building and know exactly what was going on inside,” Wolf says. “A lot of people would find a use for that.”

These networks of tiny cameras-and the host of other surveillance technologies that are now being unveiled-are both tributes to innovation and, as Wolf acknowledges, potential menaces to personal privacy. Indeed, the new marriage of ever smaller lenses and sensors, ever larger databases, and ever faster computers is making surveillance so cheap and commonplace that it is on the way to creating a state of nearly universal surveillance (see ” Surveillance Nation-Part One ,” TR April 2003).

In the past, government agencies and businesses have been blamed for the deployment of surveillance technology-and not without reason. In a single three-week period earlier this year, the Bush administration announced that it was building a system that pools real-time traffic data from Internet service providers and monitors threats to the global information network; inaugurated the Terrorist Threat Integration Center, a vast data bank that will combine domestic and foreign intelligence on U.S. citizens and foreign visitors; and opened up the State Department’s database of 50 million visa applications to U.S. police departments. Meanwhile the mayor of London, England, launched a traffic control program that records the license plates of every vehicle entering the city center-and furnishes the information to intelligence agencies.

Such plans have met with scant citizen resistance-understandable, perhaps, given that these same citizens are installing nanny- and pet-watching cameras, flocking to automated highway-toll collection systems (which reduce lines as they record every car that passes through their gates), and scoping out prospective dates, friends, and employees using such Internet search engines as Google. Between 2000 and 2005, according to market research firm Frost and Sullivan, sales of digital video surveillance cameras will increase by a factor of 10. More and more of these cameras are being purchased by private associations, small businesses, and-most startling-consumers. CCS International, a surveillance products company in New Rochelle, NY, estimates that ordinary Americans are buying surveillance devices, many of dubious legality, at a clip of $6 million a day . We have met the enemy of our privacy, and it is us.

Although this technology is growing much faster than is generally recognized, its advance is neither inexorable nor uncontrollable. It will be constrained by the structure of the huge databases necessary to store and manipulate surveillance data-and by the cultural and legal environment in which those databases arise. In fact, the way databases are configured may help foster accountability and usage policies that could regulate the deployment of surveillance. Whether these tools are actually used, though, will depend on what citizens want and believe. In the United States, the rise of ubiquitous surveillance will be governed largely by the answer to the question first raised in the long-ago case of Charles Katz: What is a “reasonable expectation of privacy,” anyway?

A Smart Way to Protect Privacy

As this conceptual illustration shows, personal data on Malaysia’s smart card chips-designed to replace driver’s licenses-are stored in isolated files, each accessible only to authorized readers.

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