The logical end point, if you think it through, is scary for technology. There will be a battle for a time where legislators play cat and mouse with technology and privacy companies. But as each new hole appears, they'll invent new laws to close them off. This wouldn't be so bad except for the problem that encryption is math and short of making math illegal there will always be a hole. Factor in steganography and it…
Do you think that browser makers could come under attack? Will Chrome and Firefox be required to add back doors to their "service".
Edit: this is probably a good opportunity to remind people to donate to the Open Rights Group, who are the UK counterpart to the EFF and already actively opposing this and other bad laws.