One would be able to excuse the Californian judge reading papers filed in the case of EchoStar versus NDS for thinking he is reading a spy novel, since that is exactly what it sounds like!

In essence, NDS, partly owned by Rupert Murdoch’s News Corporation group, was the manufacturer of smartcards for an American pay-tv company, who found themselves in a spot of bother when the smartcards were hacked and distributed over the internet, leaving the pay-tv company feeling like the SABC, with the nightmare of thousands of pirate viewers. Without a not-so-clever “it’s the right thing to do campaign”, the pay-tv company was forced to replace all their clients’ smartcards at a cost of several million dollars.

This posed a serious dilemma for NDS, since the pay-tv company started looking around at some other companies to manufacture their smartcards and encryption technology – the main contender of which was involved with EchoStar. In order to tackle this dilemma, NDS (allegedly) went about a campaign to compromise EchoStar’s smartcards and encryption technology.

The (alleged) campaign plays out like a serious spy-novel, in great 007-fashion. NDS (allegedly) recruited some of the hackers who initially hacked the NDS smartcards from Bulgaria, Germany and Canada and set up a top-secret facility in Israel with the (alleged) express instruction to break the encryption of the EchoStar smartcards. Other staff on the facility’s payroll included the former Shin Bet (Israel’s secret service) deputy-head, a former US Navy Intelligence Officer, a former Scotland Yard commander and an alleged terrorist.

The campaign started to unravel in 2000 when US Customs agents found US$40 000 worth of cash stashed inside electronic equipment such as DVD players and the like, shipped to one of the (alleged) hackers (an engineer on NDS’ payroll) in California from Canada via Texas. Just prior to that, a german hacker, who had been able to get hold of the encryption codes and schematics for the EchoStar system (and who NDS confirmed they offered a job, which he had rejected) disappeared from his home and was later found dead, hanging from a belt in a local park. The death was ruled a suicide, however there was indications of foul play, such as the deceased feet touching the ground when he was found.

EchoStar realised that their smartcards had also been hacked when they met the pay-tv company who wanted to switch from NDS to EchoStar. EchoStar claims that NDS was behind this hack in order to discourage pay-tv companies to switch from NDS to EchoStar.

During all of these events, EchoStar wasn’t the only company faced with hacked smartcards. The French company, Canal Plus, also instituted action against NDS for allegedly hacking its smartcards. This case was eventually dropped when Canal Plus’ holding company and NDS’ holding company struck a deal in Italian pay-tv services, which included a condition that Canal Plus drops its claims against NDS.

On the flip side, NDS is denies all of the allegations and maintained that they were reverse-engineering EchoStar’s smartcards in order to understand their competition without distributing the information. In an email statement to wired.com, NDS declared: “The hacking of EchoStar was the result of inferior technology arising from inadequate investment in research and development by [EchoStar]. NDS, on the other hand, invests heavily in research and development … we reinvested over 30 percent of our revenues into R&D — the result is that we have zero piracy and the platforms of our customers are completely secure.”

Strangely enough, this case has received very little media attention in the US, a country where most of the media companies are somehow linked to Murdoch’s empire. The case is expected to last another two to three weeks in the US Central District Court of California.

* apologies for the (alleged) in the article – at this stage none of the allegations have been proven in court and since br!ghtshark is no 008, he’d better play it safe at this stage.

Whilst economists seem to think that the South African domestic market will only be able to support two additional players to the current monopolist MultiChoice, Icasa announced 4 new licensees from the 18 bidders. MultiChoice’s tender for a license was also successful, bringing the total local players to 5.

The two most interesting new providers seems to be TelkomMedia and On Digital Media (ODM). TelkomMedia will provide its service via broadband and satellite and its service will be clocking in under R100 for its 15-channel offering. ODM will charge between R150 and R370 for its 40 to 50 channel offering but will allow consumers to choose exactly which channels they want to have access to.

Whilst it will probably be difficult to compete against MultiChoice, which has a 10-year advantage over the new players, there does seem to be quite a large untapped market out there which cannot afford MultiChoice’s R470p/m offering and any competition in the area will be welcomed.

Some new providers seems to be able to start broadcasting by December 2007, but most probably SA will only get a taste of the new TV offerings by mid-2008.