A CRYPTOGRAPHER whose name appears in Dan Brown’s best-selling novel The Da Vinci Code joined the BT payroll yesterday when the former telecoms monopoly snapped up his IT security company.

Bruce Schneier, the founder of Counterpane Internet Security, and author of works including Applied Cryptography is to stay on at BT where, he said, he hoped to meet “lots of new challenges”.

The acquisition of the California-based group for about $40 million (£21 million) is the latest move by BT to beef up its global services division, through which it provides telecoms and IT services to large and small businesses and the public sector.

The company hopes that by offering additional services such as security, instead of just managing companies’ telecoms and IT networks, it can better attract customers.

Counterpane enables companies to maintain a 24-hour check on the security of their internet and telecoms network by providing people who constantly watch and react to problems with firewalls and other security tools.

It will also provide BT with some high-profile customers in the US — where it is working to build up its presence — to add to its global client-base of more than 10,000 companies.

Mr Schneier, who set up Counterpane in 1999, said cryptography played a large part in all IT transactions. “It is not just about cracking codes, it is about creating them and [using them] for authentification,” he said.

As hackers and other cyber criminals proliferate, the market for such services is growing fast and is now worth around $20 billion, according to the IT Compliance Institute.

Separate figures from Gartner show that in 2005 worldwide revenues from security software totalled $7.4 billion — a 14.8 per cent increase on 2004.

The market is undergoing consolidation with recent deals including IBM’s $1.3 billion takeover of ISS, a security specialist.

Gary Bullard, BT’s president of global businesses and services, said security was “increasingly important” for BT’s business clients. He is already looking for similar companies to buy.

BT’s global services division is growing fast, now providing services to companies in 170 countries. Last year it accounted for more than 40 per cent of group revenues.

But the division has had problems over some of its most high profile work — with the NHS. The group was recently forced to switch a key software supplier on its contract to upgrade the NHS’s IT system in an attempt to speed up the project. It ditched GE Healthcare and replaced it with Cerner.

PATH TO POSITION OF STRENGTH

October 2006: acquires Counterpane, IT security specialist, for $40 million. Aim: To woo and retain business customers by offering “extras” alongside network management

The enigma of computer codes

UNTIL the 1970s all cryptography had a fatal flaw. No matter how sophisticated the encrypted message — from simple number substitutions to the German Enigma code — if you captured the person or equipment used to send it, you had the means of decoding it.

The problem is not only about foreign governments pushing matchsticks under the fingernails of British spies. How can a company take credit card details electronically if, by telling you how to encode yours, it gives you the means of decoding everyone else’s?

Then 30 years ago, at a top-secret military facility in Gloucester and at the Massachusetts Institute of Technology in America, two teams of mathematicians independently came to the same startling conclusion. Using an esoteric branch of number theory, they discovered that messages could be sent without the person encrypting them having any idea how to decrypt them.

The technology meant that e-mails would only go to the intended recipient – embarrassing clicks of the “reply-all” button excepted — and stocks could be traded through wires. Banks could now tell customers how to transfer money electronically, safe in the knowledge that it wouldn’t get redirected to the teenage hacker next door in the process.

The person or computer sending the information encrypts it using two numbers, themselves derived from two extremely large — and extremely secret — prime numbers. The intended recipient can decode it because they know the primes. Anyone else must derive the prime numbers; a process which, for the most basic security level, currently requires a home computer to plug away continuously for decades.

TOM WHIPPLE

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive