Starium (was Re: article: german secure phone)

Ryan Lackey ryan at
Tue Jun 5 10:52:51 EDT 2001

Quoting Bram Cohen <bram at>:

> I heard from an investor that they decided the first box was 'not secure
> enough' and spent a bunch more time and money building the second mox,
> which makes it harder to do physical snooping at either end, as a result
> of which they haven't shipped a product and are now imploding.

I was told that the primary concern was lowering unit costs.  The original
COMSEC 3-DES phone had a unit cost of approximately USD 1000.  Build cost was
probably something like USD 300.

The Privatel, etc. equipment seems to be USD 400-500, with a build cost of
about USD 50-100.

Eric's goal was a chipset suitable for mobile telephony (the primary market
for secure telephones which are not inside the STE regime) and unit cost
of +USD 50, with USD 20 or so chip cost.  I'm sure there were a lot of
problems with that -- FCC licensing, the difficulties of designing chips
in general, any possible resistance from equipment/handset manufacturers,

It is highly unclear if there is enough of a market for USD 500 terminals
which are not mobile and do not interoperate with STE.  They are clearly
not going to be sold into the STE marketplace.  "Privacy fetishists"
are not a viable market for any product except maybe t-shirts with cool
slogans.  Corporate users need more sophisticated key management
than the current offerings.  The real value users want mobile (GSM)
functionality.  The Sectra Tiger provides decent key
management and mobile use, but it's a USD 2 500 platform.  I think they will
sell more USD 2 500 DECT+GSM secure units than $500 privatels, though.

Outside the US, outside PBXes, landlines are 100% dead in the market that
can pay $500-2500 for security.  Inside the US, they may be dead too.  The
only reason I can think of to use landline is to gain some measure of
anonymity by using a random payphone or otherwise unlinkable phone; of 
course, anonymity is even less a viable market than privacy by about
100x, and if you really care, you can swap SIMs and optionally scramble
IMEI in flash, or just replace phones between use.

These secure phones, if they don't interoperate with STE and define their own
standards, have serious "network effects" problems.  I think the only way
around it would be to have a free or low cost 
software/VoIP/VoIP-PSTN/voicemodem solution.  If you gave away or sold cheaply
a software version, and sold a hardware mobile terminal at USD 5 000, you
would make more profit than if you sold only desktop terminals at USD 500-1000.

That being said, phones suck.
ryan at     		+41 1 27 42 491 (corporate, fax)
Chief Technical Officer 	+44 (0)7970 633 277 (mobile)
HavenCo, Ltd. ||| Secure Offshore Colocation |||
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