Most mobile phones in the world (also called cell phones, or hand phones) use the GSM network, and GSM generally uses an encryption protocol called A5.
A5 encryption was always a weak design but the equipment to decode it used to cost between US$70,000 and US$500,000 so it wasn’t very common.
Now some new research shows it can be cracked with around US$1000 of equipment. This makes it accessible to most businesses and individuals. It’s still theoretical though it won’t be long until anyone can download the software required to do it.
What does this mean to phone users?
Conversations carried out over mobile phones should not be considered secure. If the technology exists for competitors to sit outside an office and listen in on calls then you should change how you carry out business.
Apart from this new research on cracking the encryption there’s another method that has existed since phone networks began operation. All mobile phone carriers have the ability to record conversations for law enforcement purposes. They just have to press some buttons on their computer and your conversations get recorded. So you shouldn’t be sharing trade secrets on the phone anyway.
And now’s a good time to mention that SMS messages have never been secure. Most GSM networks keep a log of all SMS messages and this information is available to law enforcement agencies (or to anyone corrupt at the phone companies or to anyone that hacks into a phone company’s network).