The system, which has run continuously since it was set in motion last week, relies on single photons to transmit an untappable key over standard optical fibers, the company said. It is capable of delivering thousands of keys a second and can be effective over distances of more than 100 kilometers.

Toshiba said it is already in talks with a number of telecommunications companies and end users in preparation for the commercialization of the technology, which offers the possibility of significantly more secure networking.

"We're talking to a number of potential end users at the minute," said Andrew Shields, group leader of Toshiba's Cambridge, England-based Quantum Information Group. "We're planning to do some trials in the city of London next year and are targeting users in the financial sector. We've also had some interest from telcos, including MCI, with whom we've been running the installed fiber tests."

No price or launch date has been set yet, Toshiba said.

The system works by transmitting a long stream of photons modulated to represent 1s and 0s, most of which are lost along the way. These photons can be modulated in one of two ways, through two different kinds of polarization. According to Heisenberg's Uncertainty Principle, however, it is impossible to know both the kind of polarization and the data represented by the photon. The receiver has to assume one to get the other, which it will frequently get wrong.

The receiver picks up and attempts to decode a few out of those that make it, reporting back to the sender which ones it received and decoded, thus making up a key that both ends know. Any interceptor can't know what the value of those photons is, because by reading them in transit, it will destroy them. It can't replace them after reading them, because it can never know their exact details.

Toshiba has been developing special hardware to create and analyze single-photon transactions by quantum dots - effectively artificial atoms integrated with control circuitry. However, the current cryptographic equipment uses standard parts, including Peltier effect-cooled detectors operating at very low noise levels. The next generation of equipment is expected to use this new technology.

Toshiba is also looking at ways to increase the range of the systems beyond the limitations of a single fiber. Because a photon can't be intercepted and retransmitted, it's not possible for the technology to incorporate repeaters to overcome the losses in multiple segments. However, Shields said, there is a possibility that repeaters may be created using quantum teleportation - a new and still experimental effect where the quantum state of a particle can be transmitted across distances without it needing to be fully measured.

Toshiba Research Europe is part of the European SECOQC project, which is working toward the development of a global network for secure communication using quantum technology.