If you meet the people that work for NDS, you get the impression of a family of professional co-workers, dedicated to the twin arts of making money and keeping content secure. If you read the more sinister view paraded through the media over the years, NDS helps hack its rivals’ smart cards, and publishes the results on hacker web sites, just so that it can win business. Both views can’t be true and NDS would claim that rivals in the market try to smear its name, because their protection systems just don’t work.
The case of EchoStar and its joint venture NagraStar, which it runs with Nagravision, which will begin revealing evidence during April, with initial papers submitted this week, threatens to show us which NDS is the real one.
NDS was originally built around writing encryption for the BSkyB
DTH business in the UK, and took many of its staff, and therefore ideas, from the Israeli military and university circuit. It became accused of breaking code supplied by a subsidiary of Canal+, and a $1 billion legal action was filed, which only went away when NDS acquired the Canal+ subsidiary, with the help of News Corp money.
Nagravision provides the conditional access technology to NagraStar and DirecTV was thought to be on the verge of taking NagraStar technology, when News Corp somehow engineered the purchase of control of the company, and reversed that decision and cancelled another legal action over ‘corporate espionage and piracy.’
We can’t quite see how NagraStar and EchoStar and its subsidiaries could settle out of court, so this time it looks like the court room will be full of juicy allegations about spies, death threats, and electron microscopes used to reverse engineer smart cards. The details claim to stem from leaked NDS emails, stolen from the PC of one of its heads of security, employed ostensibly, depending upon who you believe, to catch hackers, not help them.
One of the problems about smart cards is that they cost a fortune to replace once the underlying algorithms are broken, which is why we would always use a downloadable, replaceable software based system by choice. NDS will tell you that’s not as secure, and so would Nagravision, but they would, wouldn’t they?
The action was filed in June 2003, and has taken this long to come to court, and alleges violation of the Digital Millennium Copyright Act and the Communications Act of 1934, and the Electronic Communications Privacy Act, The Computer Fraud and Abuse Act, California’s Unfair Competition statute and the Federal RICO statute on racketeering. They have thrown in civil conspiracy and misappropriation of trade secrets just to be sure.
My money is on a quiet outcome, with some money changing hands and all the charges being dropped. How about NDS acquiring NagraStar, with the funds going to drive the new technology business at EchoStar Holdings? Perhaps Nagra would have something to say about that.