"This is the world's fastest key generation technology at 40 kilometers," he said.
The system was developed in cooperation with the Japan Science and Technology Agency's Exploratory Research for Advanced Technology and Japan's National Institute of Information and Communications Technology.
It will take until next year before the company can develop software and related systems to turn the technology into a commercial product, said Toshiyuki Kanoh, chief manager of the company's System Platforms Research Laboratories.
NEC will begin demonstrating the system at exhibitions and seminars, and move to marketing the system during 2005, he said.
"There is no commercial market for quantum cryptography right now, so we want to create one," said Kanoh.
"We'll start by promoting this system, and we would like to offer it to police authorities, banks and financial institutions, maybe in late 2005," he said.
The system was presented in a paper at the European Conference on Optical Communication, held Sept. 5-9 in Stockholm.