Mobile phone operators may be forced to upgrade their networks to improve security after hackers claimed to have cracked the code protecting the global system for mobile communications (GSM).
More than three billion mobile phone users in 212 countries that use GSM could be vulnerable to eavesdropping by hackers using relatively inexpensive equipment, according to the Financial Times.
But users of newer 3G phones are unaffected as these devices use a stronger encryption code.
The code was cracked by a team led by German cryptographer Karsten Nohl with the aim of forcing operators to upgrade security.
Nohl said the A5/1 encryption code for the GSM system was developed in 1988 and should have been replaced 15 years ago.
If the GSM Association decides the threat is serious, mobile phone operators will have to upgrade their networks to use a more secure code.
The cost will vary, depending on whether the process requires only a software upgrade or replacement of hardware components at every base station in the network.
The GSM Association could make a decision as early as February at a meeting of its security group, but the group claims that the immediate risk is minimal.
Security experts warned that tools could be developed and circulated on the internet, making it easy to carry out an attack within a year.