The technology giants who make Pay TV pay are at war over encryption. French broadcaster Canal+, part of Vivendi Universal, is accusing another company, NDS, of 鈥渟abotaging鈥� its Mediaguard encryption system with 鈥渟ophisticated and well-funded effort鈥�. NDS is controlled by Rupert Murdoch鈥檚 News Corporation, which owns a number of satellite broadcasters.
Canal+ filed a US lawsuit against NDS on Monday, claiming violations of the Digital Millennium Copyright Act, the US Racketeer Influenced and Corrupt Organizations Act and California鈥檚 Unfair Competition statute. The French company alleges 鈥渃onspiracy to harm Canal+鈥檚 competitive position in the digital television market鈥�.
Canal+ says it has 鈥渟olid evidence鈥� to prove to the US District Court in San Jose, California that an NDS laboratory in Israel used electrical and optical equipment to prise the security codes from Mediaguard smart cards.
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Canal+ alleges that NDS then provided the codes to a web site Canal+ says is frequented by counterfeiters. Other web sites mirrored the information and pirates used the codes to make fake smart cards that give viewers free access to Pay TV programmes protected by Mediaguard. 鈥淭he horse was then out of the box,鈥� says Franciois Carayol, Executive Vice President of Canal+.
However, NDS dubs the lawsuit 鈥渙utrageous and baseless鈥�. NDS President and CEO, Abe Peled, says: 鈥淭he clear evidence is that the pirate community targeted Canal+ early in 1998 and succeeded without any help from anyone, particularly NDS.鈥�
He adds: 鈥淭his lawsuit is a blatant attempt by Canal+ 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.鈥� NDS says it intends to counterclaim against Canal+ for their 鈥渢ortious conduct鈥�.
Big switch
Canal+鈥檚 case has been filed in California because the company claims the secret codes were handed to the web site in that state.
After two years of planning, Canal+ will in April start the mammoth job of switching broadcasters and customers to a new broadcast system. This involves replacing over 13 million legitimate smart cards. This will be completed by the end of 2002. 鈥淏ut we must also attack the root cause, or it could happen again,鈥� says Carayol.
Canal+ is asking for a billion dollars in damages, but Carayol says this can only be an estimated loss: 鈥淭his is an underground business.鈥�
Mediaguard is used to protect Canal +鈥檚 Pay TV broadcasts in more than a dozen countries including France, Italy, Spain, Poland, the Benelux countries and Malaysia, as well as by ITV Digital (formerly On Digital) in the UK.
Canal+ say the first hacking was seen in late 1998. But until now the problem has been played down. In June 2001, On Digital was still saying that piracy was not a serious issue. 鈥淚t鈥檚 a comparatively small problem,鈥� assured a spokesman.
But Canal+ now says 鈥減iracy became massive throughout 2000鈥�. The UK鈥檚 Federation Against Copyright Theft now raids pirate card makers and vendors in the UK, every week or so.