Data, including people's emails and calls within the country's borders, can be directly downloaded by the police once the system has been fully tested, Swedish Radio reports.
A fully automated system would allow SÄPO, the police and other law enforcement authorities, to collect traffic data on their own from companies storing web, email and call data.
But the Swedish Urban Network Association instructed its subcontractor, Maintrac, to stop further development of its new system, which would allow police inquiries to be handled automatically.
The association is a trade and lobbying organization representing municipal networks in 180 municipalities and 130 suppliers of services and equipment in the broadband area.
SÄPO is currently negotiating with companies and operators, but did not tell Swedish Radio how far talks had progressed.
Kurt Alavaara a criminal commissioner at the intelligence agency said that, as before, it requires a decision from the court or authority before investigators can enter and retrieve information.