Cracking the Digital Safe

Cable World, June 4, 2001 by David Connell

A new generation of cable boxes may help cut down on service theft. But not forever. Pirates will eventually find a way to overcome most of the high-tech security measures operators will deploy.

Old-fashioned cable piracy may not survive on the digital seas. But a new generation of hackers may arise to plunder the industry. The consequences of cable theft are very real to the MSOs, programmers and local governments who lose money from theft.

According to National Cable and Telecommunications Association spokesman Marc Smith, the basic theft rate for cable companies is 11.5% of annual revenue, or $4.01 billion. In today's economic downturn, that's a lot of missed dollars.

The numbers are so high because stealing analog signals is fairly easy. "Frankly, I'm hopeful the conversion to digital will help," says Jim Blair, VP-risk management and chief risk executive for AT&T Broadband. "But I can't assume that digital is the solution. Until a market is 100% digital, why would a pirate get trapped by digital when he can steal analog? [Also] I know there are smart people out there who can compromise the digital boxes."

MSOs aren't the only ones attempting to eliminate cable piracy. Set-top box manufacturers Scientific-Atlanta and Motorola are coming up with new ways to stop piracy at the set-top, particularly as cable moves into the digital realm.

"Digital is a totally different world," says Bob Van Orden, VP-strategy and management for the digital subscriber network at S-A. "In analog, you're tying to manipulate a signal--scramble it. Technologically that's the best you can do. Digital gives us a much more robust security approach than we've ever been able to implement in cable."

S-A, Van Orden says, uses a digital encryption method called "Public Key" to protect the digital signal. The system is similar to those used in banking to protect customer accounts.

Van Orden adds that S-A has learned from the mistakes made by satellite TV operators who rely on "smart cards" for their primary security against signal theft. Hacked smart cards for DirecTV and DISH Network are now widely available. But the companies can easily "fry" these compromised smart cards by blasting electronic counter measures (ECMs) through the system to make them unusable. Van Orden noted that these ECMs would be possible for cable companies in the digital world.

The other key set-top box maker, Motorola, is working in several ways to prevent cable theft in the digital world, says Larry Vince, the company's director of systems engineering.

Vince says that the company has thus far shied away from smart cards, opting instead for internal encryption methods. With internal encryption, he adds, "you can't take it out and fool with it."

Vince says that Motorola has a division of the company surfing the Web with the express purpose of keeping up with cable pirates and those selling illegal boxes.

"As far as cable security goes, Motorola very actively monitors the different Web sites and news groups to see what's going on there," he says. "We're constantly looking to come up with new security and counter measures."

While they are hopeful digital technology will help cut down on cable piracy and illegal box sales, cable operators are skeptical it will provide a complete answer to the problem.

Cablevision Systems VP-security Henry Hack believes Cablevision's digital service will have a "nice honeymoon of about a year" before hackers can compromise the company's new digital boxes, which are being provided by Sony.

The Sony boxes, Hack says, rely on smart cards as their encryption method-the same cards used by direct broadcast satellite providers. He estimates that hackers will need at least one year and probably "several hundred cards" to compromise the system.

Hack also says there are economic reasons the digital boxes won't be hacked right away.

"Economically, it won't be profitable for pirates until there are at least I million digital subscribers [on the system)," he says.

Still, both Hack and Blair believe that the digital boxes will be compromised in the future. Even S-A's Van Orden admits that while digital will make hacking harder, cable operators "must never say never."

Anything's got to be harder than stealing analog cable now.

Go to the Internet search engine Google and type in "cable descramblers" or "cable boxes" and you can find at least 10,200 sites that will provide you with the necessary equipment to pirate cable.

Sometimes it doesn't always take special equipment to steal cable. One individual in Washington, D.C., simply plugged the coaxial cable into the back of his TV when he moved into an apartment and was able to tune in CNN, TBS and the rest of the channels. He's never gotten a bill. He didn't buy a box, he didn't climb a poll to twist wire, he just plugged in his set and kept his mouth shut.

Whether pirates and cable thieves are organized or relatively innocent, cable companies are attempting to them in a variety of ways. They range from amnesty programs, audits to catch and gently prod unscrupulous customers into paying for full service, and the hardcore prosecution of those selling cable boxes for the purpose of stealing cable.