Web surfers to pay for anti-terror plans

The price of surfing the web may have rise to cover the costs of new anti-terrorism laws, internet providers have warned.

The Home Secretary, Charles Clarke, persuaded European leaders last week to agree to rules requiring internet and telecoms companies to retain data for around a year.

The 25 member states also promised increase intelligence sharing in an attempt to close down terrorists' finances.

The data held would be used to help agencies track down suspected terrorists and Mr Clarke claimed that this was a "material factor" in the investigation into the London bombings 10 days ago.

But the industry is concerned that complying with the new rules could cost millions.

A spokesman for AOL said: "Someone will have to pay for this - either the taxpayer or the consumer though higher prices."

AOL currently retains internet data for three months; this would rise to 12 months under the new rules that could come into force in the autumn.

AOL believes that this would cost it at least £23m to implement and £8m-a-year to maintain. The company said it was too early to estimate how this would affect customers' bills.

A Home Office spokesman said that the Government would make an "appropriate" contribution towards the new costs placed on industry.

But he refused to say how much money was available and insisted that the burden on internet companies would be minimal as many companies had already signed up to a voluntary code on retaining data.

One industry source said that the Home Office had earmarked just £20m.

The industry is also concerned that the European agreement on data storage may prove unworkable if the new laws are pushed though by EU ministers instead of the European Parliament.

The plans were originally proposed by the UK, France, Sweden, and Ireland, after the Madrid bombings.