Researchers at the Ruhr-University Bochum have managed to extract the secret encryption algorithmns used by satellite phones, and discovered that it's a lot less secure than one might hope.
Benedikt Driessen and Ralf Hund analysed firmware updates for popular satellite handsets to extract the ciphers used by the Thuraya and Inmarsat networks, which are known as GMR-1 and GMR-2 respectively. The first cipher turned out to be a variant of the already-exploited A5/2 cipher on which GSM used to depend; GMR-2 hasn't yet been attacked but the researchers reckon it wouldn't be particularly difficult to break.
Modern security systems, including SSL and modern GSM networks, use published ciphers which are open to general scrutiny, but there was a time when it was considered better to keep the method by which data is encrypted secret as an additional barrier to the attacker.
That time is now well past - it's become obvious that attackers can identify secret ciphers, and the lack of public analysis made for much weaker ciphers which were subsequently broken. GSM, for example, used secret ciphers which turned out to have exploitable weaknesses, so has now (in most places) shifted to the A5/3 cipher, which is widely published, tested and has proved resistant to assault.
But satellite systems haven't moved on as quickly, and the researchers' job was made easier by the short production run of satellite handsets. GSM cryptography is almost all done in hardware, the quantity of GSM phones makes it economical to fabricate specialist silicon for the job, but satellite phones do the same work in software so the ciphers can be found within firmware updates.
The Cryptanalysis blog has a detailed writeup of the attack - but, in summary, phones on the Thuraya and Inmarsat networks aren't as secure as they appeared to be yesterday, and anyone hoping for secure communications should be using end-to-end cryptography from Cryptophone, Cellcrypt or similar. ®