The cost of ecommerce could be pushed up if the government changes wire tapping legislation.
Internet service provider Demon Internet said plans to revise the 1985 Interception of Communications Act to include the Internet could increase the firm's annual running costs by 10 per cent to 15 per cent, or about £1 million.
"The government does not seem to have understood the technical issues," said Demon Internet in a submission to the Home Office, which closed consultation on the plans last week. Some of the proposals are "unreasonably expensive or just unrealistic", it added.
Tim Pearson, chairman of industry body the Internet Service Providers Association (ISPA), said Demon Internet's estimates were high, but not unrealistic. He said that his company, IT supplier RM, would suffer extra costs of only about five per cent because it is focused on the educational market.
"The revisions have been made in considerable ignorance of the practicalities of Internet interception," said Peter Sommer, computer security research fellow at the London School of Economics and a Parliamentary advisor.
The Home Office stressed that existing interceptions are paid for by the government and that any new costs would probably be treated in the same way.
However, Pearson said that the issue is unclear, despite discussions with the Home Office.
"It is not clear which costs government will pick up. There are substantial ongoing expenses, such as the provision of skilled staff, which we will incur," he said.
A bill to introduce the changes is expected to be included in November's Queen's Speech and could become law next year.
The proposals also cover any company running a computer network, which could have serious implications for all businesses.
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