van het Britse krant "the Guardian"
Nog meer info, inkl. ook het verhaal over de secarom en DR7.COM
2old
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Murdoch company in $1bn television piracy row
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Paul Murphy, John Cassy and David Leigh
Wednesday March 13, 2002
The Guardian
http://media.guardian.co.uk/news/story/0,7541,666448,00.html
A company controlled by Rupert Murdoch's News Corporation has been accused of trying to destroy rivals, such as ITV Digital in Britain, by assisting hackers to crack the secret viewer-access codes used by rival pay TV operators and then distributing the information to counterfeiters across the world.
An explosive legal attack in the US, launched late on Monday by Canal Plus, the French company which supplies ITV Digital's "smart card" technology, demands $1bn (£700m) damages. ITV Digital claims to have lost at least £100m as a result.
The operation was alleged to have been carried out by a company called NDS, which is controlled by News Corporation, based in Middlesex and has sites in California and Israel.
In a further twist last night, NDS's British arm admitted having a financial connection with a website which distributed pirated codes used by counterfeiters to produce cards giving free access to ITV Digital.
Officials at ITV Digital, together with the pay TV service's owners, Granada and Carlton Communications, are looking into allegations that the site was financially assisted and advised by senior management at NDS.
The site, called House of Ill Compute, helped disseminate information on how to forge the ITV Digital smart cards and how to crack cable TV services.
The internet operation was closed down last year and its founder, Lee Gibling, has disappeared.
Stuart Prebble, chief executive of ITV Digital said last night: "It is absolutely extraordinary for NDS to be fund ing this website at a time when it was deliberately publishing codes which were specifically designed to undermine our system and to encourage piracy".
He added: "No amateur could have acquired these codes. It was a very costly exercise which could only have been carried out by a very small number of world experts".
His company had been "very seriously damaged" by the website's activities. Pirated smart cards had been sold for £20-£30, sometimes on market stalls, that enabled viewing of TV programmes that should have cost £30 a month. "Piracy of our smart cards has been a seriously large industry that has cost us upwards of £100m," Mr Prebble said.
It was thought likely last night that ITV Digital would embark on legal action of its own, either directly against NDS, or indirectly, via a damages claim against Canal Plus for the insecurity of their cards.
NDS is alleged to have ordered scientists at its laboratories in Haifa, northern Israel, to use the sophisticated processes to unravel the complex codes underpinning the smart cards which pay TV viewers insert into their set-top boxes in order to access premium channels.
Once the codes had been cracked, the information was placed in a downloadable file format and sent back to NDS's offices in California with an instruction that they be posted on the internet, according to the US legal claim.
It found its way to a specialist US website called DR7.com.
Using the codes, counterfeiters across the world were able to manufacture their own smart cards and upgrade existing cards, depriving operators like ITV Digital of revenue.
Canal Plus's encryption technology is used by almost all of News Corp's pay TV competitors across Europe and in the US.
"No company is above the law and we intend to see the law applied to halt NDS's illegal actions," said François Carayol, the executive vice-president of the Canal Plus Group.
"Competition should be about fair contests for customers, not 'cloak and dagger' operations aimed at undermining a competitor's products and services."
By late 1999 the first counterfeit cards had begun to appear and, according to Canal Plus, by September 2000 the Italian market was flooded and proliferation across Europe was under way.
Canal Plus is owned by Vivendi Universal, the French media and telecoms empire built by Mr Murdoch's great rival, Jean-Marie Messier. Mr Messier is said to have offered his full support to a suit that is being painted as a lethal showdown between two of the world's top media moguls.
NDS last night described the lawsuit as "outrageous and baseless" and said it planned to file a counter-claim.
Chief executive Abe Peled denied NDS had any involvement with the piracy Canal Plus had suffered. "The clear evidence is that the pirate community targeted Canal Plus early in 1998 and succeeded without any help from anyone, particularly NDS.
"This lawsuit is a blatant attempt by Canal Plus both to deflect criticism of its new generation card, which is not believed to be state of the art, and to shift blame for its inadequate technology and its past losses."
Margot Field, an NDS spokesman, confirmed the financial link to the House of Ill Compute website. "Payments were made for information about hacking activities," she said. "It was a commercial arrangement to gather information. It is all part of normal intelligence gathering".
NDS, which has in the past been at the centre of allegations of tax avoidance at News Corp, recently appointed Rupert Murdoch's son Lachlan as one of its directors.
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How codebreakers cracked the secrets of the smart card
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'Unbreakable' code was posted on the internet
John Cassy and Paul Murphy
Wednesday March 13, 2002
The Guardian
http://media.guardian.co.uk/news/story/0,7541,666457,00.html
The process was complex, time-consuming, and very expensive. This was not about a lone hacker sitting at a computer screen trying to guess passwords. Instead, it was an attempt to split the foundation stone supporting an entire industry - the technology protecting pay TV.
The challenge handed in the autumn of 1997 to a team of scientists working quietly at a laboratory in Haifa, northern Israel, was to crack the encryption technique used to unscramble TV signals delivered to many paying customers through cable and satellite across Europe and the US.
The so-called "smart" or "conditional access" cards used to access Sky, ITV Digital, and other premium channels contain wafer-thin computer chips holding complex codes to make sure viewers see only what they have paid to see.
The Haifa team knew all about this. They worked for NDS, a Murdoch company which had begun life as a start-up firm, News Datacom, in Israel eight years earlier. Rupert Murdoch's News Corporation had backed the venture in the belief that the coming digital age required a quantum leap in areas such as data security and the encryption of communications.
NDS was to go on and design the encryption process that would be used on the smart cards handed out with every Murdoch pay TV package in the world. With 27m viewers using its cards in 40% of the world's satellite receivers, it would become a company valued at well over $1bn in its own right.
But NDS had one important rival, an encryption technology developed in France by the local broadcaster Canal Plus which had been adopted by just about all News Corporation's rival broadcasters.
The NDS team in Haifi, according to a lawsuit filed in the US district court for the Nothern District of California, set out to "sabotage Canal Plus technological security measures engineered into its smart cards."
Breaking the encryption alone would cost up to $5m. The process demanded the use of ultra-expensive electron-scanning microscopes, with the team probing wafer-thin chips no bigger than a thumbnail. Each chip contained up to 50 layers, with each layer in turn carrying up to 1,000 transistors, every one of which had to be pulled apart and analysed.
Unlimited funding
Even with access to the most sophisticated equipment and seemingly unlimited funding, it took the Haifa team six months to unravel a code which was supposed to be impossible to decipher.
From there, according to Canal Plus's $1bn claim for damages, it was a relatively straightforward matter of releasing the information and then waiting for the world's counterfeiters to undermine every rival broadcaster using the French encryption system.
In early 1999, the NDS team isolated a piece of the encryption software known as the UserROM, a portion of computer memory on a smart card which controls access to the rest of the digital data. This information was dropped into a downloadable internet file called Secarom.zip, which, according to the Canal Plus claim, was then sent to the Haifa team's colleagues in California at NDS Americas with instructions that it be published on the internet so that anyone wanting to produce pirate Canal Plus cards could do so.
Canal Plus claims that the file was then transferred to a web operator called Al Menart, who ran a website known as DR7.com, a geekish internet service which promptly published the Canal Plus code for all to see.
By late 1999 the first counterfeit cards had begun to appear and, according to Canal Plus, by September 2000 the Italian market was flooded. Proliferation across Europe was in full swing.
The cards have become commonplace in Britain, with ITV Digital complaining recently that more than 100,000 pirate cards are in circulation here.
Executives at ITV Digital, which has struggled to build a strong base of subscribers and which continues to haemorrhage cash, were apparently appalled recently by comments made by Sky's chief executive, Tony Ball, during an address to the company's US investors. "ITV Digital/DTT is completely pirated, a joke. For $7 you can buy a card for all channels," he is reported to have said.
Canal Plus faces the exhaustive process of renewing the technology in the 12 million cards issued worldwide. ITV Digital customers can expect completely new plastic by the end of the year.
François Carayol, chairman and chief executive of Canal Plus Technologies, said: "When it emerged that the most secure part of our smart card system had been invaded we immediately launched an investigation into why and how it happened.
"We certainly didn't expect our investigations to lead us to NDS. It is not the type of action we would have expected from such a well-established firm."
For its part, NDS says the whole piracy claim is an outlandish fabrication. A statement from Abe Peled, the company's president and chief executive, last night said the counterfeiters had simply targeted an inferior technology and succeeded without any help from anyone.
He suggested that Canal Plus is in commercial trouble and revealed that the French firm had approached NDS before Christmas suggesting a merger, adding that the French had been trying to poach the NDS employee accused of leaking Canal Plus's code.
Corporate battle
In a pointer to the corporate battle that is unfolding, Mr Peled also drew attention to news reports over recent weeks suggesting disagreement within Canal Plus's parent company, Vivendi Universal, over what direction the French media business should take.
Vivendi, in its current form as a media and communications giant with interests ranging from Hollywood movies to third-generation mobile phones, has been built in double-quick speed by a former investment banker called Jean Marie Messier. He is known as Jean 2M and considered a messianic figure in French business circles, having burst out of the confines of the French national market to create a real threat to Mr Murdoch.
But he built Vivendi with a furious round of acquisitions just as the internet boom was hitting its peak.
Last week he was forced to take a write-down in Vivendi's accounts to cover the value which has been destroyed as dotcom and technology companies have imploded.
The battle with NDS is likely to test his mettle even further.
As for News Corporation, executives there will be well aware that this is not the first time that its 80% owned associate NDS has polluted the group's public image.
One morning in October 1996, Israeli tax officials, apparently acting on a tip-off from a former employee, raided the company's Jerusalem offices and also the site in Haifa. They were looking for evidence that NDS had evaded £100m in tax oversix years; 70 tax officers removed more than 50 cartons of papers from the NDS offices.
In the event, the allegations never stuck. But the mud did.