PHOTO: harry campbell

It’s a strange business, turning the ­esoteric quantum properties of light into money. But there are a few brave companies that have been trying to do just that for the last five years, and they may have hit on the right way to do it. What these firms, ID Quantique, MagiQ, and SmartQuantum, are trying to sell is a way of distributing a cryptographic key that is theoretically theft-proof, because it relies on the quirky quantum ­physics of photons. Such a “quantum key” distribution system could allow entities with secrets—banks, large ­technology firms, governments, and ­militaries—to encode and decode their data for transmission over optical fiber.

In the hopes of finally gaining customers, the companies involved have retooled their wares. Some are tying their quantum key distribution technology to high-bandwidth commercial devices that can use the keys to encrypt data. And some are looking to redesign their systems so that they can be integrated into telecom networks to make it more attractive for big carriers to offer quantum encrypted lines to their customers.

Quantum key distribution lets two computers generate a key between them by taking advantage of a quantum property of photons—the fact that a characteristic such as phase or polarization cannot be measured without changing it. A quantum key can be generated by transmitting a series of bits encoded using one or a few photons per bit and two types of polarization filters.

The bit the photon represents can be accurately read only by using the right filter. Use the wrong filter, and you change the bit. An interloper won’t know which filter the encoder used even though the sender and receiver can share that information. So the would-be thief can’t just insert himself between the sender and the receiver to read the bits, and any attempt he makes to do so will be easily noticed. Making it even more difficult for such data thieves, the systems these companies have developed commonly generate a new key about once a second.

ID Quantique, a spin-off of the University of Geneva, debuted the first commercial key distributor in 2002, ­followed quickly by MagiQ Technologies of New York City. By 2004 those two were joined by a French start-up, SmartQuantum, in Lannion. Big firms such as Mitsubishi, NEC, NTT, and Toshiba have been researching such ­systems as well.

What customers really wanted, says ID Quantique CEO Grégoire Ribordy, was not just a key distributor but an integrated system that could both distribute the keys and do the data encryption at gigabit-per-second rates—a hybrid of quantum and classical encryption machines. All three firms initially focused on developing such devices in-house.

ID Quantique built a 100-megabit-per-second device that distributed keys on one fiber and transmitted encrypted data on a second, and MagiQ produced one that operates at 2 gigabits per second. Meanwhile, SmartQuantum built a 2-Gb/s device that did both the key distribution and the encrypted data transfer on the same fiber.

But it has proved too difficult for small start-ups to get such a system on the market quickly enough to compete with more established firms selling standard high-bandwidth encryptors. Before customers will accept a new encryptor, it must pass a certification process that can take two or three years, says SmartQuantum’s commercialization and marketing director, François Guignot. “In the short term, we do not have the knowledge to develop a fully certified classical encryption system,” he says.

So ID Quantique and SmartQuantum have shifted gears. Instead of ­focusing on building their own encryption ­systems, they are partnering with classical encryption providers to ­integrate quantum key distribution into established products. In January, ID Quantique announced an arrangement with Melbourne, Australia–based data security firm Senetas Corp. that gave birth to a 1-Gb/s hybrid. In a hybrid, a single key distributor can serve multiple encryptors. “When your bandwidth requirements grow, you can add 1-gigabit-per-second encryptors,” says Ribordy. SmartQuantum is getting a similar integration project under way, using classical encryptors from two companies, which Guignot would not name.

For ID Quantique, integrating classical and quantum cryptography involved two steps. One was to develop a secure way of transferring the key from the quantum device to the classical one. The other was to come up with protocols for handling errors in the transmission and for synchronizing the two types of devices.

MagiQ, on the other hand, took a different path. It built its own integrated device through a partnership with Cavium Networks, in Mountain View, Calif., a maker of encryption/­decryption microprocessors. Its 2-Gb/s product is scheduled for certification by the U.S. National Institute of Standards and Technology in 2007. And the company is pressing ahead on the bandwidth front, with an 8-Gb/s device due for production this month.

Even if their products are ready for the market, the market may not be ready for them. Banks, prime targets of ID Quantique, have only recently warmed to the idea of encrypting their data while it’s in transit, let alone using a new technology to do so.

Still, SmartQuantum’s Guignot believes that there could be a ¤300 million market by 2009 for quantum cryptography companies, but only if they convince telecom providers to make sales for them. Say a bank wants to securely link its London and Paris offices. A telecom company would install hybrid encryptors within the telecom network. Then the provider could lease the bank a hybrid encryptor and an optical-fiber connection to the network, giving the bank essentially impenetrable encryption along the entire path. “This would be a premium product,” says MagiQ CEO Robert Gelfond. He thinks providers could charge up to 30 percent more for a line like that.

The one hitch is that because commercial quantum key distribution works only over a maximum distance of 100 to 140 kilometers of fiber, the telecom provider might have to link several key distributors end to end within its network and guarantee that no one can gain access to the connection points. MagiQ has already taken the first step along this path. A year ago, it collaborated with U.S. carrier Verizon to demonstrate key distribution and data encryption over two linked 80-kilometer spans.