No conspiracy, just the factsPUBLISHED: 13 Apr 2012 00:06:19 | UPDATED: 13 Apr 2012 05:52:45PUBLISHED: 13 Apr 2012 PRINT EDITION: 13 Apr 2012
How The Australian Financial Review broke the story.
The Australian Financial Review
In the two weeks since The Australian Financial Review revealed that a News Corporation subsidiary had promoted hacking in the early days of pay television, the reaction has been to attack the credibility and motives of this newspaper and the award-winning journalist who broke the story, Neil Chenoweth. But there has been no response to the substance of the allegations, nor to many questions that Mr Chenoweth has repeatedly asked News executives.
- The questions that News will not answer
- Emails cast doubt over NDS denials
- Download a sample of the 14,400 emails provided to the AFR detailing pay TV piracy
Several News and telecommunications industry executives, notably Austar chief John Porter, News Ltd chief executive Kim Williams (who led Foxtel for 10 years) and the former head of Telstra and Optus, Ziggy Switkowski, have declared that the allegations must be baseless because they knew nothing about the activities of NDS. A similar line was taken by Foxtel chief executive Richard Freudenstein, who was a senior executive at News’s British satellite arm, BSkyB, at the time of NDS’s activities.
This newspaper has never suggested that any executive of News Ltd in Australia knew of the unsavoury activities of NDS, which were not illegal at the time. But it was well known that pay TV piracy was rife.
A frequently quoted figure was that piracy cost the fledgling pay TV industry $50 million a year in lost revenue.
In 2003, Optus estimated that 15 per cent of its users were receiving a pirated signal, and Mr Porter claimed that an increase in the proportion of customers taking Austar’s basic package indicated that many were pirating its extra services.
In fact, the problem of piracy led to NDS being set up to provide a security service for News Corporation’s global pay television network. NDS then set up the unit Operational Security to actively chase those pirates. That unit soon turned from piracy prevention to fostering privacy for rivals. As Australian pay TV piracy expert Michael Speck put it, there was an “element of convenience in pirates focusing on competitors rather than yourself”. It’s like handing the pirates the keys to the house next door.
NDS reverse engineered the smartcards of competitors, with the keys to those cards later appearing on pirate websites. It also ran its own pirate website, The House of Ill Compute (THOIC), which carried the keys for rival pay TV broadcasters, including Australian broadcasters.
The BBC’s Panorama program has also alleged that NDS provided the keys for UK pay TV provider OnDigital to the THOIC website, which contributed to OnDigital’s £1 billion collapse. In addition NDS, part funded by BSkyB, operated a fund for police informants that made payments to Surrey Police, at the heart of the News phone-hacking scandal.
Operational Security also provided protection and piracy material to assist a Sydney hacker to crack Australian pay TV operators, tried to obtain private phone records in Australia, and fabricated a US lawsuit against a Swiss whistle-blower when NDS executives said they had “no case” against him.
In addition, it decided not to use a piracy fix for its client DirecTV for 15 months while News was negotiating to buy DirecTV.
All this activity has been noticed by the other pay TV operations. NDS has been accused of promoting piracy by five huge satellite broadcasters – Canal Plus in France, DirecTV and Echostar in the US, Sogecable in Spain and MEASAT in Malaysia. NDS is also indirectly caught up in an ongoing criminal trial in Sicily involving Sky Italia.
The Financial Review has just done its job in bringing the unsavoury activities of NDS, a part of one of Australia’s most successful companies, to the attention of the world.
The Australian Financial Review