The Treasury is considering providing its own digital certificates in the wake of credit checking and financial services company Baycorp Advantage’s exit from the certificate market.
Treasury’s corporate branch deputy secretary, Angela Hauk-Willis, says the government department would prefer to continue to get its digital certificates from a commercial supplier but may have to look at providing its own.
Digital certificates provide proof of the content and delivery of an electronic communication to ensure that one party can’t later repudiate it. They can also guarantee that the exact message received was the message sent, and authenticate the identities of both the sender and recipient.
Baycorp Advantage Security Solutions, formerly the ID Services arm of the debt collecting company, will stop selling digital certificates from December 13. However, it will continue to provide support for customers until December 2003, says John Hight, former general manager of Baycorp Advantage Security Solutions. Hight, who was made redundant last week, says the New Zealand market was too small to sustain the business and Baycorp could not operate as a certification authority outside New Zealand without investing millions of dollars.
“In many places around the world the certification authority marketplace has been difficult. A lot of organisations have got into being public certification authorities and got out again. You need to run some pretty reasonable economies of scale. In New Zealand you need to sell thousands of certificates to become viable.”
Treasury uses 200 Baycorp digital certificates to authenticate users of the Crown Financial Information System network, which handles accounts for all government departments. It will investigate new suppliers over the next 12 months but says if it needs new certificates in the meantime it may have to produce them itself.
Other users of Baycorp digital certificates include the State Services Commission, New Zealand Health Information Service and about 18 other government departments. Hight says in New Zealand it is largely central government and related organisations such as health providers that use digital certificates. Only a few commercial organisations use them.
Brendan Kelly of the State Services Commission’s e-government unit says Baycorp Advantage liaised extensively with the government about its departure from the market. The State Services Commission uses a Baycorp digital certificate for its secure email server but doesn’t have individual user certificates.
Kelly says he isn’t concerned by the exit.
“By providing support for a year Baycorp is giving us time to look at alternative sources of supply. There are well established suppliers in Australia and elsewhere. I don’t see this exit as creating any risk.”
Hight, who joined Baycorp Advantage Security Solutions in September of last year, says it hasn’t been decided whether the security subsidiary will be folded back into the main company. The primary focus of the subsidiary is providing authentication systems that ensure parties to e-business transactions know who they are dealing with. Products and services include digital certificates, USB tokens for authentication and smartcards. Other offerings include intrusion protection and content monitoring systems.
Hight says staff are being deployed elsewhere but couldn’t say how many staff there were because many actually work for other parts of Baycorp Advantage. He wouldn’t say whether the subsidiary was profitable.
He says the recently introduced Electronic Transactions Act may have fuelled some additional business, but not much.
“Personally I think the act is very weak to the extent to which it mandates deployment of technology for security. So I don’t think it will make a large difference to the total volume of certificates being deployed in New Zealand.”
Baycorp Advantage was formed last December with the merger of Auckland-based debt collector Baycorp and Sydney-based Data Advantage.
Baycorp entered the certificate market when it bought public certification authority 128i in April 2000. It paid $2 million for a 67% shareholding in Wellington-based 128i, with an option to acquire remaining shares in the company.
In November 2000 it faced competition when PricewaterhouseCoopers started selling its global BeTRUSTed service in New Zealand. BeTRUSTed has only one customer here — Land Information New Zealand.
Former Microsoft/Telecom/EDS e-commerce joint venture esolutions had also planned to sell digital certificates before it was folded into Telecom Advanced Solutions in May this year.