Eisfor marketing research

The Market

The Problem

• The need for voice encryption is well known in the Government and Military

• There is a latent demand in the Corporate and private sector to protect calls over the public network against interception

• This latent demand is being encouraged by reports in the Press of industrial espionage and reports of prominent figures being embarrassed by interception of their mobile calls

• Eisfor products encrypt telephone calls over public networks end-to-end so that any intercepted call cannot be understood

Press ReportsVodafone fined £53m over Greek phone tapping affairVodafone was last night ordered to pay an unprecedented €76m (£53m) in fines for its role in an espionage scandal that saw the mobile phones of Greece's political, business and military elite being tapped in the run-up to and after the 2004 Olympic Games in Athens.Observer (London) December 15 2006

Role of Telecom Firms in Wiretaps Is Confirmed WASHINGTON, Aug. 23 — The Bush administration has confirmed for the first time that American telecommunications companies played a crucial role in the National Security Agency’s domestic eavesdropping program after asserting for more than a year that any role played by them was a “state secret.”New York Times August 24 2007

Italy arrests 12 more in T.Italia wiretap caseMILAN, March 22 (Reuters) - Italian authorities have arrested 12 more people in connection with an investigation into illegal wiretapping by Telecom Italia staff and others, judicial sources told Reuters on Thursday. The investigation began last year, and in September magistrates arrested several people including Telecom Italia's former head of security, Giuliano Tavaroli. Reuters March 22 2007

Three quizzed over royal phone tap claimsFormer royal aide Dickie Arbiter said there was considerable sensitivity within the royal family over phone interceptions following the infamous “squidgy-gate” episode in the 1990s.He told Sky News: “If you cast your mind back there were several phone tappings, mainly of mobiles.“This goes a stage further and if this is phone tapping landlines then this is a very serious offence.“There is a lot of sensitivity after these incidents with mobile telephones.Observer (London) Ausust 8 2006

Enhanced GSM SecurityThe GSM network introduced a significantly higher level of security than previously existed in the older analogue cellular systems. The GSM network can provide a secure encryption facility only on the air interface between the mobile handset (ME) and the base-station (BTS). This encryption is switched on at the network operator’s discretion.

However, the high level of privacy in the GSM network does not extend in the other public telecommunication networks that may be used to carry a call. User data (voice, data or fax), passes completely unencrypted through the non-GSM network portion of a call.

BTS

BTS

BSC

BSC MSC P

Um Abis A

Base Station Subsystem Network SubsystemBTS Base Transceiver StationBSC Base Station ControllerMSC Mobile Switching Centre

Encrypted communications

PSTN,ISDN, PSPDNCSPDN

Even if the GSM encryption is switched on…….

GSM phone encryption "can be cracked“The encryption system that protects the almost 900 million users of GSM cell phones from instant eavesdropping or fraud is no longer impregnable, cryptologists claim.Researchers at the Technion-Israel Institute of Technology in Haifa say they have found a way to defeat the security system, exploiting a flaw in the way the encryption is applied.With GSM, the voice is encoded digitally. But, before this data is encrypted, it is corrected to help compensate for any interference or noise, says Eli Biham, who led the Technion team. This gives an opportunity for a "man in the middle" attack, in which the call is intercepted between the handset and the network base station.New Scientist September 4 2003

Interception equipment is readily available for all algorithms used within GSM,Thuraya and VOIP.

The solution

Our products provide customers who are looking for the highest level of privacy with the additional protection of safeguarding their conversations over the entire network including the non-GSM portion. User conversationwill be encrypted on a peer-to-peer level, that is, encryption will occur in the calling party handset, and decryption will occur only at the called party’s handset.

BTS

BTS

BTS

BTS

BSC BSC

BSC BSCMSC

PSTN VoIP Encrypted communications

What do we know about the corporate market for secure voice products

• Do not know where to buy these products

• Did not know that they existed• Not advertised to my knowledge• Lack of availability• Where to buy, I do not want to go to

a “spy” shop• Is it legal to use• Gives me bad “vibrations” , like FBI

and CIA• Telenor did not buy us one, so they

probably do not think to much about these issues

• Until clients ask for usage of this, we will not buy it. (E&Y lawyer)

• Encrypted GSM:• Daily: 85%• Weekly: 12.5%• Monthly: 2.5%

• Encrypted Desktop:• Daily: 77.5%• Weekly: 22.5%• Monthly: 0%

• Encrypted Fax:• Daily: 10%• Weekly: 50%• Monthly: 25%- Not use at all: 15%

Strong acceptance of the need Don’t know how to fulfilBUT

Source: Eisfor Market Research

Expressed need for secure voice Why haven’t Corporates already bought?

Corporate Market Requirements

Availa

bilit

y

After-s

ales

ser

vice

Func

tiona

lity

Encr

yptio

n

Easy

to U

seSi

zePr

ice

Wei

ght

Appea

ranc

e0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5 4.6 4.4 4.4 4.3 4 3.9 3.7 3.7 3.2

High Performance

+40

060

080

010

0012

0014

0016

0018

0020

0022

000%

10%20%30%40%50%60%70%80%90%

100%

Price (€)

Perc

enta

ge o

f R

espondents

OptimumPricing Zone

Moderate Prices

Source: Eisfor Market Research

Market Positioning

Price

Performance

High

High

Moderate

Moderate

Low

Low

TraditionalSuppliers

NewGenerationSuppliers

Govt/MilitarySegment

CorporateSegment Eisfor

Initial primary marketing research

Eisfor Ltd

Purpose

To gain better knowledge of corporate market for voice encryption products, in terms of:

- current awareness in the corporate sector about voice encryption products

- probable usage of the products- expressed need for encryption- pricing preferences

Methodology

Methodology

Telephone survey: Called 40 senior managers in

different industries living in 12 EFTA countries

Duration: approx. 30 min

Structured questions: Asked all persons the same 15 questions

Methodology (continued)

Management of responses: Some of the question were unprompted, but most of

them were prompted.

Description of respondents: All the persons interviewed are employed in middle/senior management positions

Conclusion

• Corporate market largely unaware of voice encryption products

• There is a sizeable demand for voice encryption

• Greatest demand is to encrypt Voice and data

RESEARCH QUESTIONS AND INDICATIVE RESPONSES

When you think about confidential call, what are your concerns?

• Who are listening to us and what will they use the information for

• I need secure communication• Is it safe to use GSM or fixed phone for confidential

conversation• Need to be very careful• Difficult to do business when you are never sure if someone

is listening to you• What to say and not to say• Is it to day possible to make a secure conversation over

GSM/Fixed line• Is anybody listening to us?• People have eavesdropping as a profession. It is big

business• How can I make my call secure?

I’d like you to think about a confidential phone call that you have made recently. Describe your thoughts and emotions.

Before:• Do not think to much about it.• Who needs this information that I am in a process of

communicating?• Concerned that the message goes through in the manner

that I want• Less concerned now than before• No secure phone today, so what can I do?• I always plan my phone calls in advance, what to say and

not to say• It is a part of my daily business• I need to be very careful, not mention names and numbers• I stand in places where nobody can hear what I am saying

I’d like you to think about a confidential phone call that you have made recently. Describe your thoughts and emotions.

During:• Who is listening now?• Need to stick to the agreed agenda and plan• Very concerned about the tapping possibilities

After:• Who did tap into our conversation?• How can we improve talking securely?• No thoughts at all• Did I get the message through to the other side?• Did I say too much?• Was there others on the line?

I will read you a list of words, please tell me the first thing that comes into your mind.

Emotion:• Human• Concerned about people• In sales-weakness• Angry• Feelings• Thinking• My wife• Cry and laughter• Good• Personal relations

Encryption:• Security• Talk freely• FBI and CIA• Safety• Coded• Intelligence• Strange letters and numbers• Data security• Secure communication• Be careful


Talk:• Meeting• Too much talk• My wife• Waist of time-action is productivity• A lot of words• Females• Conversation• Information• Speech

Security:• Safety• Positive• Guards• Encryption• Warm blanket• Privacy• Data security• Good feeling• Safe talking• Good to have when talking


Privacy:• Home• Secure• Family• Comfort• Be by yourself• Not to be disturbed• Nice to have• Encryption

Trust:• Friends• Family• Honesty• Scarce commodity• Commitment• Must be earned• Need to have for living• Confidence in a person


Innovate:• Creativity• Future• New• Winners• Entrepreneurs• Bright people• To succeed• New thoughts• New products

Safe:• Home• Security• Bank• Where to put the money• To be careful• Trust• To talk secure• Good feeling• Helmet and safety belt


Service:• Sales• Very important-missing it in our society• Hotel & Restaurants• Friendly• Added value• Customer care• Hand shake• Satisfaction• When you buy something• Commerce

In what way would you use encrypted GSM?

- Out traveling- Use only GSM in and outside the office- Convenient- Always with you- Most secure communication today- At home for business- Conversation for business- Use all of them to be sure that the person gets the

information

In what way would you use….

• … encrypted Desktop?- Office- Cheaper to use than GSM- Uses e-mail to everything- Use all of them to be sure that the person gets the

information

• … encrypted Fax?- Use all of them to be sure that the person gets the

information- Do not use fax at all- In the office- Use after agreeing on a contract for signing, but all

negotiation goes through e-mail

What factors would influence your purchase of one of these products?

• If the client/customer demands it, we will buy• Availability• Business needs• Functionality• How often do I need this products?• The need between me and my associates• Price• Design• Security

• Is it legal to use?• User friendliness• Size• Can I be sure that it is 100% secure?• Quality• Support• That the GSM phone is tri-band

If secure/safe communication is very important for you, why haven’t you done it before?

• Do not know where to buy these products• Did not know that they existed• Not advertised to my knowledge• Lack of availability• Where to buy, I do not want to go to a “spy” shop• Is it legal to use?• Gives me bad “vibrations” , like FBI and CIA• Our (telecoms) company did not buy us one, so they

probably do not think to much about these issues• Until clients ask for usage of this, we will not buy it

COMPUTED RESULTS

Please use a scale from 1-5, where 1 is least important and 5 is most important to you and answer following questions.

Knowing that you can make confidential phone call,

without eavesdropping: • In the office: average score 4.9

• At home: average score 3.5

• Out traveling: average score 4.8

• Keep business calls confidential: average score 4.9

• Keeping personal calls confidential: average score 3.2

How often would you use the following (1 is always and 3 is seldom)?

• Secure GSM : average score 1.1

• Secure desktop phone: average score 1.4

• Secure fax: average score 2.5

How often would you use encrypted GSM?

Always Often Seldom0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

95%

3% 2%

How often would you use the encrypted Desktop?


10%

20%

30%

40%

50%

60%

70%

80%

73%

20%

8%

How often would you use encrypted Fax?


10%

20%

30%

40%

50%

60%

70%

80%

20%5%

75%

How often would you “use” these products? Daily, weekly or monthly

• Encrypted GSM:- Daily: 85%- Weekly: 12.5%- Monthly: 2.5%

• Encrypted Desktop:- Daily: 77.5%- Weekly: 22.5%- Monthly: 0%

• Encrypted Fax:- Daily: 10%- Weekly: 50%- Monthly: 25%- Not use at all: 15%

• Comments:- Most of correspondent goes via e-mail, just final contracts that goes over

fax for signing.- Depends on my job, if banking and M&A, daily, otherwise less frequent.- Never use fax, out of date

On a scale from 1 to 5 (most important), how would you rate the following features of a secure product?

Availa

bilit

y

After-s

ales

ser

vice

Func

tiona

lity

Encr

yptio

n

Easy

to U

seSi

zePr

ice

Wei

ght

Appea

ranc

e0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5 4.64.4 4.4 4.3

4 3.93.7 3.7

3.2

What is the most important to encrypt; (1 is most important and 3 is least important)?

• Voice: average 1.4• Fax: average 2.8

Comments:- What is important is that I have security all the way- Most contracts are done through e-mails, just the final

contract which is to be signed goes with fax.- We do not use fax

