> Whole premise of making inroads in service providers servers is that information stored there is human readable. Store it encrypted.

Nobody is inroading, government has access to the data by law or by policy. Service providers, that operate under the jurisdiction of a state, cannot perform actions that do not adhere to the laws and policies of that state. It's as simple as that.

> Come up with stronger algorithms and security schemes and this problem is affectively solved.

Algorithms and schemes are already there, but there's no legal and/or policy framework to force their use. In fact, the current framework is designed to force the opposite.