AT&T Bell Laboratories has developed a security system to protect information and transactions traveling over on-line information services.

Designed to provide encryption and access control for such services as home banking, home shopping, and video-on-demand, the Information Vending Encryption System can work on a variety of communications networks, including the Internet, cable television networks, and direct-satellite broadcasting.

AT&T is initially orienting the system as a way for cable operators to prevent the pirating of video services, but the technology can also be used to encrypt banking transactions.

"Bill payment, and credit card transactions are well suited to the type of protection (the system) offers," said David Arneke, a spokesman for AT&T.

The system, which uses computer chips, can be incorporated into any type of device that a customer would use to access a data network, he said, including set-top cable boxes, PCs, and personal digital assistants.

The growth of electronic banking and the financial industry's increasing interest in the Internet for banking transactions has heightened the need for the security of on-line networks.

A number of companies, such as Cybercash Inc. and Netscape Communications Corp., are working with banks to develop security mechanisms for on-line credit card and other financial transactions.

Microsoft Corp. is working with Visa International on similar endeavors, and MasterCard International has aligned itself with Netscape.

All of the security systems, including the one developed by AT&T, use cryptographic technology licensed from RSA Data Security Inc.

AT&T has not incorporated the security technology into its recently announced TV Information Center, an interactive television system through which Shawmut National Corp. plans deliver home banking and bill-payment services in the second quarter. But set-top boxes are the type of device with which the security technology works best, said Mr. Arneke.

The first application of the technology will be in set-top boxes being built by AT&T as part of an end-to-end, digital video system for Cablevision Systems Corp.

Cablevision, the nation's fifth-largest cable service provider, plans to offer enhanced pay-per-view and video-on-demand services to 20,000 homes on Long Island by the end of the year. The company may offer additional information services, such as home banking, in the future, said Norm Fein, a Cablevision spokesman.

The AT&T system is designed to protect against cloned set-top boxes used to steal services.

"There have been effective attacks on most, if not all, video encryption systems, despite the use of highly sophisticated countermeasures," said David Maher, chief scientist for AT&T Secure Communications Systems, the Andover, Mass.-based unit of AT&T Bell Laboratories dedicated to security.

The AT&T system uses computer chips jointly designed by AT&T Secure Communications Systems, and VLSI Technologies Inc., the world's largest producer of chip sets for PCs.

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