The European Union is to invest €11m over the next four years to develop a secure communication system based on quantum cryptography, using physical laws governing the universe on the smallest scale to create and distribute unbreakable encryption keys.
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If successful, the project will produce unbreakable code, and thwart the eavesdropping efforts of espionage systems such as Echelon, which intercepts electronic messages on behalf of the intelligence services of the US, the UK, Canada, New Zealand and Australia.
"The aim is to produce a communication system that cannot be intercepted by anyone, and that includes Echelon," said Sergio Cova, a professor from the electronics department of Milan Polytechnic and one of the project's co-ordinators.
"We are talking about a system that requires significant technological innovations. We have to prove that it is workable, which is not the case at the moment."
Major improvements in geographic range and speed of data transmission will be required before the system becomes a commercial reality, Cova said.
"The report of the European parliament on Echelon recommends using quantum cryptography as a solution to electronic eavesdropping. This is an effort to cope with Echelon," said Christian Monyk, the director of quantum technologies at the Austrian company ARC Seibersdorf Research, and the overall coordinator of the project.
Economic espionage has harmed European companies in the past, Monyk said. "With this project we will be making an essential contribution to the economic independence of Europe."
The new system, known as Secure Communication based on Quantum Cryptography (SECOQC), is intended for use by the secure generation and exchange of encryption keys, rather than for the actual exchange of data.
"The encrypted data would then be transmitted by normal methods," he said. Messages encrypted using quantum mechanics can transmitted over optical fibres for tens of kilometers.
The European project intends to extend that range by combining quantum physics with other technologies, Monyk said. "The important thing about this project is that it is not based solely on quantum cryptography but on a combination with all the other components that are necessary to achieve an economic application," he said. "We are taking a really broad approach to quantum cryptography, which other countries haven't done."
Monyk believed there would be a global market of several million users once a workable solution has been developed. A political decision will have to be taken as to who those users will be to prevent terrorists and criminals from taking advantage of the completely secure communication network, he said.
"In my view it should not be limited to senior government officials and the military, but made available to all users who need really secure communications," Monyk said.
Banks, insurance companies and law firms could be potential clients, and a decision will have to be made as to whether and how a key could be made available to law enforcement authorities under exceptional circumstances.
"It won't be up to us to decide who uses our results," said Milan Polytechnic's Cova.
Philip Willan writes for IDG News Service