Suspicious phone conversations on Skype could be targeted for tapping as part of a pan-European crackdown on what law authorities believe is a massive technical loophole in current wiretapping laws, allowing criminals to communicate without fear of being overheard by the police.
The European investigation could also help U.S. law enforcement authorities gain access to Internet calls. The National Security Agency (NSA) is understood to believe that suspected terrorists use Skype to circumvent detection.
While the police can get a court order to tap a suspect's land line and mobile phone, it is currently impossible to get a similar order for Internet calls on both sides of the Atlantic.
Skype insisted that it does cooperate with law enforcement authorities, "where legally and technically possible," the company said in a statement.
"Skype has extensively debriefed Eurojust on our law enforcement program and capabilities," Skype said.
Eurojust, a European Union agency responsible for coordinating judicial investigations across different jurisdictions announced Friday the opening of an investigation involving all 27 countries of the European Union.
"We will bring investigators from all 27 member states together to find a common approach to this problem," said Joannes Thuy, a spokesman for Eurojust based in The Hague in the Netherlands.
The purpose of Eurojust's coordination role is to overcome "the technical and judicial obstacles to the interception of Internet telephony systems", Eurojust said.
The main judicial obstacles are the differing approaches to data protection in the various E.U. member states, Thuy said.
The investigation is being headed by Eurojust's Italian representative, Carmen Manfredda.
Criminals in Italy are increasingly making phone calls over the Internet in order to avoid getting caught through mobile phone intercepts, according to Direzione Nazionale Antimafia, the anti-Mafia office in Rome.
Police officers in Milan say organized crime, arms and drugs traffickers, and prostitution rings are turning to Skype and other systems of VOIP (voice over Internet Protocol) telephony in order to frustrate investigators.
While telecommunications companies are obliged to comply with court orders to monitor calls on land lines and mobile phones, "Skype' refuses to cooperate with the authorities," Thuy said.
In addition to the issue of cooperation, there are technical obstacles to tapping Skype calls. The way calls are set up and carried between computers is proprietary, and the encryption system used is strong. It could be possible to monitor the call on the originating or receiving computer using a specially written program, or perhaps to divert the traffic through a proxy server, but these are all far more difficult than tapping a normal phone. Calls between a PC and a regular telephone via the SkypeIn or SkypeOut service, however, could fall under existing wiretapping regulations and capabilities at the point where they meet the public telephone network.
The pan-European response to the problem may open the door for the U.S. to take similar action, Thuy said.
"We have very good cooperation with the U.S.," he said, pointing out that a U.S. prosecutor, Marylee Warren, is based in The Hague in order to liaise between U.S. and European judicial authorities.
The NSA (National Security Agency) is so concerned by Skype that it is offering hackers large sums of money to break its encryption, according to unsourced reports in the U.S.
Italian investigators have become increasingly reliant on wiretaps, Eurojust said, giving a recent example of customs and tax police in Milan, who overheard a suspected cocaine trafficker telling an accomplice to switch to Skype in order to get details of a 2kg drug consignment.
"Investigators are convinced that the interception of telephone calls have become an essential tool of the police, who spend millions of euros each year tracking down crime through wiretaps of land lines and mobile phones," Eurojust said.
The first meeting of Eurojust's 27 national representatives is planned in the coming weeks but precise details of its timing and the location of the meeting remain secret, Thuy said.
"They will exchange information and then we will give advice on how to proceed," he said. Bringing Internet telephony into line with calls on land lines and mobile phones "could be the price we have to pay for our security," he said.