The government may require internet service providers (ISPs) to retain all communications data that runs across their networks, including that of third party overseas providers.
Home secretary Jacqui Smith has ruled out the possibility of a central database holding records of all communications in the UK, but is proposing that service providers keep the data instead.
Smith says legislative changes are needed to ensure the police continue to have access to the data they need. She said increasingly "fragmented" communications need someone to collate the data.
The work is likely to cost £2bn over 10 years. Smith says there will be some recompense for the ISPs involved.
She has launched a consultation into whether data on the use of mobile phones, e-mails and instant messaging should be retained by service providers. Included in this could be extra requirements for saving and processing data from third-party providers, matching it where appropriate with their own business data to make it easier for police to investigate.
Third-party data will involve communication data generated by overseas service providers, which may be providing services without any physical networks of their own.
The government has a number of reasons for changing the rules around data retention. It says the UK's transition from telephone networks to internet protocol networks means there are more ways for people to communicate. It also says that many ISPs no longer have a business reason for keeping much of the data generated by their customers, where previously they might have kept records for marketing and sales purposes. And as more services provided by ISPs become very cheap or free, users can increasingly sign up anonymously.
More service providers will be based abroad, the government says, providing services to UK consumers using another company's network. There is no business reason for UK-based service providers to collect this data. As a result, the government worries about the increasing fragmentation of communications services.
It says the answer could be to require ISPs to collect and process the data. The data is needed, the government says, because of the importance of communications data in finding and prosecuting criminals. The Serious Organised Crime Agency (SOCA) says it uses this kind of data in 95% of its investigations.
Jacqui Smith said the Home Office is not seeking to extend the amount of communications data collected, but to maintain its ability to access data in the face of changing technology.