Accused of Nagra 3 hacking

The owner of a California-based company that sells "free-to-air" (FTA) satellite receiver boxes has been arrested on charges that he attempted to hire computer hackers to try and break the encryption scheme used to protect Dish Network's satellite programming signals.

Jung Kwak, 33, owner of Viewtech, Inc., in Oceanside, Calif. was charged with one count of conspiracy to violate the Digital Millenium Copyright Act (DCMA) in the U.S. District Court in San Diego on Monday. Charged along with him were two alleged accomplices in the plot, Phillip Allison, 35, and Robert Ward, 54, both from Seminole, Florida.

If convicted they face up to five years in prison and a $250,000 fine.

According to indictment papers, Kwak's company imports FTA receiver boxes and resells them under the name Viewsat via a network of retailers.

FTA satellite receiver boxes are designed to allow users to grab free satellite TV programming such as religious and ethnic content. Often they can be relatively easily tweaked to allow illegally access to paid satellite programs from companies such as Dish Network, owned by EchoStar Communications, for free.

A USB port on the satellite receivers allows owners to get and update codes for unscrambling signals simply by connecting their devices online. The relative ease with which the boxes can be modified for illegal use is a factor that has resulted in the sale of "millions" of Viewsat FTA boxes, according to the indictment papers.

In order to defeat such piracy, providers of subscription-based satellite TV programming encrypt their signals and provide smart-cards which subscribers insert into their receivers to decrypt the signals. The use of new smartcards based on one such Dish encryption scheme, called Nagra 3, in the fall of 2007 threatened to seriously impact Viewsat's market because it was considered to be an especially strong encryption scheme.

So Kwak is alleged to have asked Allison and Ward to hire computer programmers who would be able to crack the Nagra 3-based smartcards. Kwak agreed to finance the effort, in addition to rewarding anyone who succeeded in breaking the encryption.

When Allison and Ward are alleged to have found an individual in Florida who agreed to do the hacking, Kwak was said to have paid $8,000 for a special microscope to dissect and analyze the smartcard being used by Dish for decoding Nagra 3 encoded signals.

He is also alleged to have paid $20,000 in cash for photographs, purportedly of the dissected Nagra 3 card. He then indicated his willingness to pay an additional $250,000 if the hacker succeeded in breaking the code.

It was not immediately clear if the alleged hacker, who was not identified in court papers was an informant for the San Diego branch of the FBI which investigated the case. Neither was it clear what exactly triggered the investigation.

Mitch Dembin, assistant U.S. Attorney in San Diego, said today that he was not able to speak about the case that has not been publicly disclosed yet. But he said Kwak's attempts to get others to hack Nagra 3 appear not to have been successful as of the time of his arrest.

"As best as we can tell Viewsat was one of the leading sellers of these boxes," though there are several others selling such devices, he said.

"The use of FTA in order to obtain pirated satellite signals has been very big since Nagra 2 was cracked," Dembin said, referring to the previous version of the encryption technology that Kwak is charged with attempting to break.

It's hard to say how many of those who purchase FTA boxes are using it strictly to grab the freely available programming signals that they are officially meant for, he said. But the fact is that a majority of the over 200 free satellite signals that are freely available are religious and ethnic programs in languages other than English.

"The market for such programming is relatively small and doesn't support the millions of FTA boxes sold in the U.S. and Canada," Dembin said.

In most cases, the set-top boxes themselves are highly sophisticated and are clearly designed to capture far more than the free programming signals they as ostensibly meant for.

This is the second time in the last two years that EchoStar has been involved in a run-in with Viewtech. In 2007, EchoStar and its NagraStar unit, which makes the Nagra descrambling card, sued Viewtech for allegedly illegally bringing Dish programming to about two million homes in the U.S.

That suit had asked the court to enjoin Viewtech from selling FTA devices. The two sides settled the dispute last September.

[Only registered and activated users can see links. Click Here To Register...]