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They're probably using something like Amazons archive service, where the long term storage costs are dead dead cheap. The cost comes when you want to restore more than a certain percentage of data in a given time period. If they are using that, perhaps they've weighed up how often most of their customers will want to restore more than a small % of data at once?
However, by the sounds of it they offer no encryption beyond the in-transit ssl. Crashplan may be a better off-site alternative for backup imo, albeit a little more expensive for individual users (unless you backup to a friend). Built in encryption, set it up and forget about it operation.
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