NDS head likens anti-hacking to an "Arms Race"



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Article in today's Guardian on Chief Exec of NDS Abe Peled:-

The hacker catchers
Critics of digital TV encryption firm say its success is due to counter-espionage techniques

Dan Milmo, media business correspondent
Wednesday August 4, 2004

The Guardian

Abe Peled, a leading figure in the war against digital piracy, plays down his military background. Born in Israel, he commanded an infantry platoon in the 1967 six-day war. He says his job as head of satellite encryption group NDS - protecting the world's largest pay-television companies from hackers - requires entirely different skills.
Despite his protestations, the analogy with his present job is easy to make; in fact Mr Peled makes it himself: "It's an arms race, to some extent."

The size of the business that hackers are chipping away at underlines the daunting scale of the daily task faced by NDS. With a customer base that includes BSkyB in Britain, Sky Italia and American satellite broadcaster DirecTV, it protects annual pay-TV revenues worth $20bn (£11bn).

The music industry has attracted most of the headlines charting the rise of digital piracy, but NDS has also attracted significant column inches.

Over the past two years it has faced lawsuits from broadcasters including Vivendi Universal's pay-TV arm Canal Plus, Sogecable in Spain and EchoStar in America. Litigation from EchoStar and Sogecable is still pending in California.

Allegations that the group has at times turned poacher - that it cracked rival technologies and made their secrets available to counterfeiters on the internet - are emphatically rejected by Mr Peled and NDS. They add to a perception that NDS operates in the murky world of counter-espionage, employing former hackers and secret service agents to blunt the growing threat of well-organised, sophisticated criminal gangs.

On the face of it, the majority of its business seems more prosaic. Founded in Israel, NDS is now based in Staines, Middlesex, employs more than 2,000 people and is 78% owned by Rupert Murdoch's News Corporation.

It supplies 44m decoder cards to pay-TV companies around the world, licenses anti-piracy software to technology companies and its new technologies unit helped develop the Sky+ personal video recorder. Switching to a new contract with DirecTV contributed to a 7% dip in revenues to £220.5m in the year to June 30, but turnover of up to £300m is expected this year with an operating profit of £60m.

Mr Peled is open about employing former hackers and people with law enforcement or military backgrounds.

The group's head of operational security, or chief hacker catcher, is Reuven Hazak, former deputy head of the Israeli internal security service. These appointments, which number one or two people in every country in which NDS operates, have an obvious logic, he says.

"This [pay-TV piracy] is not the uppermost crime in the minds of the police so we have to find out where they are, how they operate and then put together the package to help the law enforcement agencies. These are people that typically have an intelligence background, either from law enforcement or the military. When the music industry finally woke up, they started doing these kinds of things, tracking the internet, spamming websites - things we started doing years ago."

That was one of three innovations NDS introduced after it was established in 1988. The others were embedding customised software chips in set-top boxes and employing reformed hackers: "Obviously they are no longer pirates."

"I recognised that hackers are very different to the people that we have.

"The typical profile of a good hacker is that they are lateral thinkers, not particularly educated. They are autodidacts, whereas engineers are trained to think differently. So having people with that kind of thinking contributing to our designs was a necessary step up in improving our ability to respond."

Mr Peled talks of being "assailed on right and left", perhaps trying to place his company on the centre ground, surrounded by hackers and litigious pay-TV groups.

The most well-publicised spat came with Canal Plus Technologies in 2002, whose lawsuit alleging corporate espionage was dropped when News Corporation acquired Vivendi Universal's Italian pay-TV unit, Telepiu. Mr Peled scorns the idea that NDS would encourage counterfeiters to infiltrate a competitor's technology.

"The more money pirates make, the more powerful they are. They will not make money from cracking our platforms but if they crack other platforms they will make a lot of money. If you make a card for $5 and sell it for $200, it has a better margin than selling drugs. And then they can use the money to attack us."

News Corp's rivals claim NDS has destabilised competitors, and Mr Peled says: "Complete garbage. It's exactly that kind of envy. News Corp has been successful, so they look for wider accusations."

NDS has designs on the American cable market and on China, where the group has employed its first security man in Hong Kong. Mr Peled believes a government target of 30m digital cable homes by the 2008 olympics in Beijing is a significant opportunity.

There are an estimated 120,000 digital cable subscribers in China, and NDS is pitching to protect the digital infrastructure from piracy.

While Mr Peled is proud of NDS's record - BSkyB has been pirate-free for six years - he argues that copyright protection will become an even greater struggle as growth in digital distribution generates more opportunities.

"It has the dramatic potential of undermining the economics of the industry unless done in a way that is fair for the content owner and the artists.

"There have to be means of enforcement. Just because people are educated that stealing is bad does not mean they don't have locks on their doors."

Guardian Unlimited © Guardian Newspapers Limited 2004
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ah but that was 2002, and now the two companies are now much better friends. Still, if you dont trust Reggie over Ronnie, then dont let either of them through the door, and hand them money for visiting as they pass.