There are no performance implications of using a proper 128 key because they are doing AES anyway. If they were resource constrained and choose a variant of TEA encryption due to constraints, it would be understandable, but no, the encryption is implemented in hardware.
There also seems there is no message authentication, a rookie mistake.
The attack vector is: an adversary can get close to your water meter and after brute forcing the key, wirelessly read the numbers they could have just physically looked at the water meter to read anyway.
Meanwhile the device owner can decrypt the signal and locally get access to their own data without being tied to the cloud or a proprietary vendor app. I think that's a win.
Local data access is a win, I agree
Hey, that's 4 bits stronger encryption than DVDs, and it's only like 30 years later to get those additional 4 bits
I feel like there was some sort of Heated Discussion over whether or not the OTA traffic should be encrypted to enhance shareholder value or not, and someone took the chaotic good route.
It was summertime and the gas meters were boring, but the water meters were pretty chatty.
44 bits is a lot more than 0.