All language subtitles for Code.2600.2011.1080p.WEBRip.x265-RARBG

Okay.

Less than 48 hours ago, that sound had
never been heard on this earth.

Suddenly, it has become as much a part
of American life as the sound of your

vacuum cleaner.

It's a report from outer space, a radio
signal transmitted by the Soviet Union's

Sputnik, the first man -made satellite
as it passes over New York earlier this

evening. This is now the satellite which
surrounds all of us. In the competition

for leadership in space, where is it?

the finish line.

In the Cold War, it's pretty clear who
shot a nuclear missile at you.

You can see it.

But in today's world, it's pretty
unclear who just launched the cyber

against you.

People have always been robbing banks.
People have always been embezzling

People have always been lying and
cheating.

And the Internet just gives people
another avenue to lie and cheat and

The nation's largest credit rating
bureau may have been the target of a

attack by amateur computer wizards.

TRW's Information Services Division has
computer records on 90 million

Americans, 85 % of the breadwinners in
this country.

They look at data as ones and zeros that
should be liberated and are free for

everybody. And they don't see the
boundaries that we all have.

Privacy is one of those things that you
don't really notice it until it's gone.

We're entering in a world where all data
is now saved.

And this is the end of prehistory. Now
your kids are going to have everything

saved.

And that's a real different world.

Good evening, America.

It troubles me to tell you that your
personal and private information is in

hands of thousands of people who you
never met and will never know.

The stereotype is it's the kid who
didn't have a girlfriend, right? And so

spending all of his time down there in
the basement, right?

There was something to that. There's
sometimes stereotypes at the core of the

stereotype. There's a little bit of
truth.

So we had all of these.

kids who were bored and they were
exploring and you started to see this

phenomenon where the anonymity of the
network let people feel entitled to do

things that they probably wouldn't do
otherwise.

The physical morphology of the hacker is
something that I think that people have

made a lot of jokes about. And I don't
think that the stereotype is necessarily

wrong, that it's somebody with a black t
-shirt, drinking a Jolt Cola with a

kind of pale complexion because they
haven't been out that much and they

all day and they're up all night. But if
you go to hacker conferences like I do,

while that description may...

fit a majority of the people at the
conference, there's still ample other

of people who are interested in
computers and computer security.

Sometimes hackers mean computer
criminals.

I'm using hackers in the term, the old
Stephen Levy sense of hackers are

explorers. Just like you have criminal
plumbers and non -criminal plumbers, you

have criminal hackers and non -criminal
hackers. The media loves to jump on.

The stereotype of a hacker is some
little teenager in his basement who's

at midnight on his little computer and
breaking into the Pentagon and launching

ICBMs at Russia.

I mean, that's Hollywood.

It makes a good story, but that is not
true. A hacker basically is somebody.

They're not necessarily malicious.
They're just curious.

I first heard the term hacker in the
80s, and it was in reference to

hacking their way through something in
other words someone learning something

that was difficult in context of
computer programming you were just

together to get it to work you weren't
making it beautiful you weren't doing it

necessarily right you were hacking it
together.

Basically what you're seeing here is a
modern day hacker space.

You'll find things not just about
computers, you'll find people doing

lock picking, computer hacking, cyber
security, physics, chemistry, a whole

bunch of stuff. A hacker is a person who
pushes the boundaries of their form and

art. And basically you find people here
that are polymaths, like people that

actually do multiple things and they're
jack of all trades, master of none, but

more often better than a master of one.

The first time I ever heard the term
hacker, I was... As a teenager, I was

living in Raleigh, North Carolina, and
they had just apprehended Kevin Mitnick.

So, you know, I grew up associating
computer hacker with computer criminal.

My early impressions of the word before
I really could have lived any of it were

just someone who had the power to work
with computers in a way that was kind of

like magic. So they were basically
wizards of the computer world.

Mathematician Claude E. Shannon.

of the massachusetts institute of
technology designed this electronic maze

to prove any special point but mostly
for fun the movable walls of the maze

be arranged to make millions of
different patterns through which the

mouse must travel to reach its goal to
find its way through the pattern the

mouse proceeds as we would by trial and
error

The Pentagon was accused today of not
paying enough attention to the security

its computer system. Earlier this year,
a network of foreign computer hackers

broke the code of a number of Defense
Department computers giving them access

information on American weapons.

We're going to use this modified phone
to attack and take over a Windows

computer.

A white hat hacker is doing hacking for
a good purpose.

Sometimes they're hired to go in and do
what's called a penetration test of a

company and expose any vulnerabilities
and report that back.

Other times they're doing research that
can benefit the Internet community. On

the other end of the spectrum is black
hat hacking, which is malicious.

and it tends to benefit the individual,
or sometimes it's for profit of an

organization, or it can be a political
expression.

Do you ever come comfortable with the
idea of actually serving a little time

what you were doing?

No.

But you still kept doing it. Oh, yeah,
of course.

It's an addiction.

It's a complete addiction.

So the prospect of jail wasn't enough to
stop you?

No.

Don't have too much time to think about
that, actually.

I think part of it is the obsession.

It's the obsession of, I have to make
this work. It's kind of like a chess

I have to win.

And it's not like playing, you know, tic
-tac -toe. Nobody ever wins, right?

When you play chess, it's very
strategic.

Attacking computer systems is also very
strategic, and it can take days and

weeks to physically get what you want.

So you have to target it out and figure
out where the weak point is. How do I

move there to get... over there under
that system it literally i mean i can't

even tell you how long i've stayed up in
periods of like time to like hit a

system that i wanted i think when i was
younger i just didn't care if i got

caught i mean i still worked really hard
not to leave any traces the

ramifications were just never more
intimidating than the thrill of doing a

attack and it was always really exciting

The hack that I spent considerable
amount of time on, I had to have some

reason that I really cared about that
data. If someone tries to keep some data

closed, and it's not some ethical rule
that's stopping you, it's just their

-up rule and their attempt at secure
technology, then it's almost a moral

imperative to take that data.

The question really is, is the law
right? Do we need that particular law?

So even though there's a law that says
you can't do something, hackers are

really questioning should it even exist.

For most people that I consider to be
hackers, the innovators or

it is a desire to know and a desire to
learn, often coupled with a slightly

antisocial belief that the man has been
lying to you and that what they're

telling you isn't all there is.

to life.

I think always about the Matrix movie,
which I think of as one of the

quintessential hacker movies where
there's so much more going on under the

surface and you can choose to blind
yourself to it or you can choose to

And the hacker is always going to choose
to know.

In October 1957, the United States was
losing the Cold War.

Russia announcing she had shot

a man -made moon 560 miles into space
where it was circling the Earth at the

dizzy speed of 18 ,000 miles per hour.

The launching of Sputnik and what
happened subsequent to that radically

the American attitudes towards their own
personal safety or the safety of this

country. When it was reported, it
shocked the American people absolutely

belief. For them to pull off this feat
sending the first satellite into space

created a kind of atmosphere of
questioning.

As to what we were, where we were going,
Americans had always prided themselves

on being by far the advanced
technological culture of the world. So

really two shocks, in a sense. A culture
shock, namely how could these backward

peoples have produced something that we
were incapable of doing, but also a

shock in terms of our own national
safety, because if they could put a

into orbit, into space, surely they
could hit any American city.

that they chose to. As a primary
deterrent to war, maintain a strong

retaliatory power.

The Soviets must be convinced that any
attack on us and our allies would

regardless of damage to us, in their own
national destruction.

Now we were part of a globe in which no
one was protected by physical barriers.

In a purely strategic sense, it meant we
had to advance so much that we would

have an unavailable advantage over the
Soviet Union.

The Soviet Union now has, in the
combined category of scientists and

a greater number than the United States.

And it is producing graduates in these
fields at a much faster rate. And the

result was the National Defense
Education Act.

which called for spending billions of
dollars into the sciences, into

engineering. So it seemed to be that we
were moving into a world that was

totally unfamiliar to us, a world,
again, of computers and of missiles and

sort of thing, just a very confusing
period for Americans.

Indeed, according to my scientific
advisors, this is, for the American

the most critical problem of all.

Let me begin by taking you back into
time to the origins of the Internet.

Before there was an Internet, the
Advanced Research Projects Agency and

Defense Department started a project
that they called the ARPANET to try out

this idea called packet switching, which
is a very distinct way of switching

data around than the traditional
telephone system, which uses what's

circuit switching.

So we built a four -node network, and I
was lucky enough to be a graduate

student at UCLA at the time.

I wrote the software that connected the
Sigma -7 computer to the first packet

switch of the ARPANET that was installed
at UCLA in September of 1969.

And by December, we had four nodes up
and running. And then by landline across

the United States, and actually a
portion of it went into Europe.

That's just for rich men and gabby
women.

Nothing but a gadget.

Oh, he says that, does he?

Will you listen to me, Mr. Kendall?

You've got an uncle who's a fool, and
you can quote me.

You're talking to a man who helped
install one of the very first

there ever was, back in New Haven in 78,
who helped string the first line

between cities, from Boston to
Providence.

A man who's seen what this telephone has
done for the country already in 25

years. A gadget is it? One thing to keep
in mind as you're talking about the

phone company in the 1960s and 70s and
even up into the early 80s, for the most

part, it really is one giant company. It
was all run by AT &T. American

Telephone and Telegraph was a monopoly.
It was, in fact, the largest company on

Earth.

Today's telephone network far exceeds
Mr. Bell's grandest dream.

And every last inch of it can be linked
together to serve the home, business, or

continental defense.

The very size and diversity of this
network helped to make it strong.

The telephone system was the closest
thing that anybody got to a computer,

the sophistication of the telephone
system and the telephone network was

approaching that of a computer.

And so the phone company was really sort
of the forerunner of a lot of

computing. Phone freaks were, you know,
today they'd be called network hackers,

right? The only difference is they're
playing around with the telephone.

Finally tonight we have a report on
phone freaks, underground hobbyists who

illegal phone calls around the country
by confounding the technology of the

telephone companies with technology of
their own. For this phone freaking

business to make any sense at all, you
almost have to get in a time machine

because you have to go back in time to a
time that is really unlike today.

that in the very old days, when you
wanted to make a long -distance call,

you did was you picked up the telephone
and you talked to an operator.

And you said, I want to call Chicago,
and here's my phone number.

That operator would get another operator
on the line, which might involve maybe

a couple intermediate cities, and you'd
eventually get to Chicago. So there were

human beings in the loop all the way
through.

What made phone phreaking possible
was...

When that started to get automated,
where operators started to get out of

loop so that you could actually use
automated equipment to place a call from

Francisco to Chicago.

And what that meant, the automated
equipment had some vulnerabilities in

which allowed somebody with a little bit
of technical skill to be able to place

their own calls or reroute the calls or
otherwise play with things.

John Draper, who's known as his phone
freak handle as Captain Crunch, was the

guy who discovered something really
interesting about Captain Crunch cereal.

Back in the day, Captain Crunch cereal
came with a little prize, and one of the

prizes was a little tiny whistle, a
little plastic whistle. And it turned

that if you covered up one of the holes
in the whistle, it actually allowed you

to generate a perfect 2600 hertz tone,
and that you could use to whistle your

way into free phone calls.

So if you were good at whistling and you
could whistle 2 ,600 hertz, you could

actually whistle your way to free phone
calls. And there were several people who

could do that. The most famous was a
phone freak at the time known as Joe

Ingresia, later known as Joy Bubbles,
who was a blind fellow gifted with

pitch and able to whistle free phone
calls.

Let's see if I make it this time.

This is really hard to do. It sounded
like all the tones were present, so the

phone should be ringing about now.

Okay, it hit the phone. It just takes a
little while to... From his one phone to

a town in Illinois and back to his other
phone. A thousand mile phone call by

whistling.

So this is a huge problem because we're
not talking about software today where

you just patch a few lines of code and
mail out a CD -ROM or have people

download updates from the Internet.

This is physical plant. This is central
offices all throughout the country that

are using big, huge racks of equipment
that this has got to change if you want

to patch this whole.

Phone calls were really expensive.

It might cost, you know, the equivalent
in today's dollars of $55 for a 10

-minute phone call from San Francisco to
New York, right? It was really

expensive. Long distance was a big deal
back then.

Everyone knows long -distance rates are
lowest at night.

But did you know those same low rates
are in effect all day on Sunday? You can

make a three -minute station -to
-station call to any of 48 states.

For 90 cents or less, anytime on Sunday.

The way a blue box works is it was based
on the observation that when a line is

idle, there's this 2 ,600 hertz tone on
it. So the first thing you do with a

blue box is once you've dialed a long
-distance call and the call is starting

go through, you would send a burst of 2
,600 down the line.

And that 2 ,600 hertz would confuse the
remote central office.

And now they're again listening for
those, they're called multi -frequency

digits. So a blue box is kind of like a
touch -tone generator that can generate

these special digits.

And with those, you can now dial your
own call.

So if you were a bookmaker as part of
organized crime, you spent a lot of time

on the telephone. That cost you a lot of
money in the 1960s. And even worse, it

left telephone records that the FBI
could later get to figure out who your

associates were. If you were using a
blue box, you didn't have to do that.

problem the phone company had is that
they had, from the 1940s on, based

their...

entire network and infrastructure around
this multi -frequency signaling system.

They had been rolling this out across
the entire United States. They'd spent a

lot of money on this. And then it turns
out that, well, it's got this problem

that, you know, a guy with a blue box
and a tone generator, or even a guy who

can whittle, can make free phone calls.
And some estimates at the time were that

it would be, you know, upwards of a
billion dollars, and this was back when

billion dollars was real money, to fix
this whole thing.

So you've got this vulnerability.

What do you do about it?

You can't make it go away overnight.

Even if you had a billion dollars, you
couldn't make it go away overnight.

So then you get into this problem of,
well, we're obviously going to have to

live with this for a while.

But at the same time, we want to keep
this as quiet as possible so that it

doesn't get out that we have this
problem.

But then what do you do when you catch
somebody, when you catch a college kid

who's figured out how to make a blue
box? You've got a blue box outbreak

someplace, right?

What do you do about that? Because if
you prosecute and it gets into the

newspapers, you might well have just
done yourself more harm than good. Now

everybody in that area reads about it
and says, oh, what's the blue box?

That sounds pretty good. I'd like to be
able to make free phone calls.

So in 1971, there was an article in
Esquire magazine by Ron Rosenbaum, which

called Secrets of the Little Blue Box,
which elevated phone frequency and

national attention.

It was so well written and so
intriguingly written, it made what was

a boring and geeky hobby of playing
around with the telephone system seem

it was something out of an espionage
novel.

And it really captured the imagination
of so many people.

The phone company now has a real problem
because they still haven't fixed their

network. They've got a fix on the
horizon, but that fix was going to take

to deploy.

And now you've got all these people who
know about it. When phone freaks have a

convention... As they did in the
ballroom of a seedy New York hotel

Masks are given out at the door.

People don't give their right names.

And the illegal electronic devices which
phone freaks use to defraud the

telephone companies are nowhere to be
seen.

So the cat's out of the bag at this
point. So at that point, starting right

after, around 1970, 1971, right after
the Esquire article, the phone company

started to adopt much more of a
prosecutorial stance, where every time

this, we're going to prosecute it, we're
going to go to law enforcement.

And now at this point, it has to be just
pure deterrence. We have to scare

people into not doing this.

One of the things that the phone company
did when it became aware of blue and

black boxes was it started an internal
investigation unit. And from 1964 to

1970, they randomly monitored some 33
million long -distance calls.

And of those 33 million calls, they
actually tape -recorded between 1 .5 and

.8 million calls.

So in some sense, it's probably the
largest warrantless wiretapping campaign

that anybody has ever undertaken, and it
was done entirely without any approval

from anyone, the government or anything
else. It was simply AT &T doing this.

Keep your eye on that bell, son, and
mark my words.

That as this nation grows, the telephone
will grow with it, and it will play a

strong part in that growing.

And the future that lies ahead is beyond
the belief of any man.

Much of what we've learned about the
universe has actually come from radio

telescopes because they can see things
that optical telescopes can't.

And behind me is one such amateur radio
telescope here in my backyard.

This is a 12 -foot satellite dish that's
been repurposed to operate as a

telescope. If you're a professional
astronomer, you usually are using very

instruments and you have limited...

time to use them because you're
competing with other folks for the

If you have your own system, you can run
it as much as you want and observe

anything you wish.

And the people who do this are hardware
hackers.

These are folks who, just like in the
Homebrew Computer Club, want access to

something that ordinary people normally
can't have.

Well, there's no question that what came
out of the Homebrew Computer Club

changed the world in a major way.

Some may wonder, when did the computer
begin to really compete with television

and radio for our personal attention?

I'd say that for members of the Homebrew
Computer Club, that competition began

back in 1975.

Folks building their own systems became
obsessed with what they were doing to

the point where not only were they not
necessarily watching much TV,

but they were probably not spending much
time with their families because it was

very time consuming to design and
construct and code your own machine.

One of the most well -known members of
the Homebrew Computer Club was Steve

Wozniak.

I was there the night that Steve brought
in a circuit board that he said he was

going to call the Apple and wanted to
know what we all thought about it. It

pretty cool. He had mounted a circuit
board onto a piece of wood and had a

keyboard on it, and it was a self
-contained computer.

A lot of the folks in the club were
making systems that were somewhat

No one at the time had any idea where
his system was going to go.

Nobody in the large corporate
environment really saw much use for the

in the home.

In fact, when we first developed these
systems, there was a lot of skepticism

that we had heard from people on the
outside saying, why do you want a

Who needs a computer?

What good would it be to have one in
your house?

And they just didn't get it.

Comes as no surprise to say that it's
all but impossible to conduct any kind

business these days without a computer.
What is new is that computers are

suddenly becoming a factor beyond
business.

Overnight, manufacturing personal
computers has become a half -billion

business, one that's doubling every two
years.

Stephen Jobs is a 27 -year -old
multimillionaire whose large fortune is

something little, the personal computer.

How many calculators do you own?

Two, maybe? Right. And you have to use
the automatic bank telling machines?

Sure. So life is already seducing you
into learning this stuff.

Random access memory is internal memory
that's built inside of this computer.

They talk their own language here. At
trade shows across the country, when

manufacturers show off their wares, the
house is usually packed.

Small personal computers, selling from
$500 to $5 ,000, are fast becoming a

multi -billion dollar business.

And if words like bits and bytes mean
nothing, try this one.

Money. I have seen the future, said one
industry observer, and it computes.

It is becoming so commonplace that many
of us are becoming dependent on it.

Something that didn't exist a few years
ago to a very large business today. And

in the future, of course, personal
computers, a lot of people anticipate,

be as ubiquitous as the telephone.

Computers have become personal tools as
prices dropped and components shrank.

This personal computer costs about $1
,400 and fits nicely on a desk corner.

The idea of the small computer has
become so big that the giant of computer

companies... IBM is busy marketing its
new small computer.

IBM spending an estimated $13 million on
TV this year alone. Wall Street hit a

record high again today. One of the
better performers was IBM.

The first reliable computer was built by
an American about 50 years ago. Since

then, computers have multiplied like
puree.

Big Mac Day, the day Apple unveiled its
new Macintosh computer to shareholders.

Suddenly, personal computers have become
the business of at least 25

manufacturers, RadioShack, Apple, and
Commodore, grabbing three -quarters of

market. For weeks, the Macintosh has
been rolling off the line, one every 27

seconds. A whole generation is being
weaned on computers, and manufacturers

that guarantees that computers will
become the household appliance of the

future. In more and more schools, small
computers are taking over the job of

teaching reading or math or foreign
language. A generation of children is

becoming comfortable with computers.

Steve Wozniak co -founded Apple, the
most successful of all home computer

companies. In just six years, Apple has
become a half billion dollar a year

corporation, leaving Wozniak worth more
than $50 million.

Retired now at 32, Wozniak had never
been to an outdoor rock concert, so he

$12 .5 million of his dollars and bought
one.

The significance of the emergence of the
personal computer really can't be

understated. Its impact has been
profound and reaches almost every corner

lives.

The big changeover came when people
started getting modems on their home

computers. So you got the home computer,
and you can play your game on it or

whatever, and there were these bulletin
board systems out there.

In the bulletin board systems, you'd
have somebody who was a hobbyist also

get a computer and put a couple of
modems on it and write a bulletin board

package that allowed people to dial in
and yell at each other, make friends,

fight, talk about whatever their hobby
was.

200 years ago in this country, notices
were tacked up on a tree in the village

square which served as a community
bulletin board.

And in the years since, when people
wanted to post a bill, they've used

barns, walls, and buses, not to mention
newspapers.

But now the village bulletin board has
gone electronic.

Generally in your neighborhood or in
your dialing area, there'd be maybe 50,

80 bulletin boards for you to call. And
in a really small town, there might only

be 5 or 10.

And each bulletin board had a different
sort of group of follower.

Like the engineers might like this one,
the hackers might like that one, the

game people might like this one, the
hobbyists might like that one.

And so...

you'd get accounts on a bunch of systems
locally to figure out what the local

scene was like. Phone long distance kept
getting cheaper, so it went from the

standalone island bulletin boards to a
network.

And some of these networks had thousands
and thousands of other bulletin boards.

Back then, it was probably 83 or
something, and computers were just

We were in San Francisco near Silicon
Valley, and my dad decided it was time

get the family a computer.

My sister had no interest in it, so
therefore it ended up in my room. And

when I got hooked, addicted to
computers.

And one guy I was totally jealous of, he
had a modem. He had a 110 -bot acoustic

coupler modem, which is what you see in
old movies now. But through that, he'd

dial up the phone, stick it on the
coupler, and dial up bulletin boards in

San Francisco Bay Area. And through my
friend's computer, a whole new universe

opened up for me. It was unbelievable.

You could be on a bulletin board chat
system.

It's a 14 -year -old kid.

Nobody knows your name. Nobody knows
your age. Nobody knows your education,

ethnicity, anything about you. All they
know about is what you type on the

keyboard. So their entire opinion of you
is based on how logical or how

intelligent you sound.

So you could have these great debates
about music or movies or whatever it is,

and for all they know that you could be
a professor at Berkeley.

And that was really liberating because
it taught me it was all about what you

know. It wasn't about what you looked
like or where you were from or any of

because that just didn't come into the
picture.

And the other thing is that it opened up
this whole other adult universe.

You know, you're like 13, 14 years old.
You're kind of sheltered. You know, you

can't drive a car. You're not watching R
-rated movies. And here you are talking

about drugs or movies or sex or whatever
it is, adult concepts.

You're like 14 years old. The whole
world opened up through the computer for

It was awesome. Because in those days,
it really did feel like exploring. There

was no standard addressing, the WWF,
whatever.

You kind of just got this phone number,
and you would get in there, and then

you'd see what was on the other side of
that computer and where it led to.

Because there were people who really
weren't Internet users. You couldn't

track them back and figure out what
machine they were coming from because

were some kid.

sitting in their parents' basement with
a modem attached to a computer.

And they were on this fairly small sea
of information, but they were completely

anonymous, and they had no vested
interest in behaving because they could

misbehave all that they wanted, and then
all they had to do was turn off their

connection and disappear.

And I remember back then, you would
start to get the first generation of the

games dialers or war dialers who would
call all of the telephones in an entire

urban area and see if a modem picked up.

And then when they got a pickup, they
would try to log in as guest, password

guest, admin, password admin. And
sometimes they'd get in, and it was

shocking. When it makes contact with the
wall of the maze and discovers it

cannot go straight ahead, it turns and
keeps on turning until it has found its

way again.

It explores each step of the way with
its copper whiskers.

Those of us who were running the
machines on the administrative side, the

problem that we were seeing was we would
just see in our system logs that, you

know, someone had tried to log in as a
guest 800 times, and we'd laugh because

maybe we didn't have a guest account,
and we'd know that somebody was playing

around. And it was all seen as kind of
fairly benign activity because we hadn't

really started to see a downstream cost
for all of this kind of activity.

In the mid-'80s, a lot of the hackers
would launch physical attacks.

They would go find a phone company
office, and they would walk in with a

clipboard and try to look official, and
they would look around, and they'd try

to find a modem.

If you found a computer sitting
someplace and it had a modem connected

frequently if you turned the modem over,
there'd be a little plastic tag with

the phone number that the modem was
sitting on, and sometimes there'd be

usernames and passwords.

And some of the hackers had no qualms
whatsoever about just walking into a

building.

coming out with whatever information
they could. Pretty much every kid who's

interested in science and technology at
some point or another goes over the edge

of the dumpster. But there were always
people who would be going in there and

looking for printouts, and it was really
pretty shocking some of the stuff that

you would find getting thrown away.

Oh, wow, look, it's billing information
from the hospital from five years ago.

There wasn't really a model for how to
make money off of that stuff. And we

didn't realize at the time how much it
was going to wind up costing us in the

long run. It was kind of a hobby
environment where people didn't really

like there was anything wrong with going
and diving in somebody's dumpster and

trying to come out with whatever you
could find.

But things were a little bit more Wild
West in those days.

In the early days...

You couldn't own a computer. It was too
expensive.

You couldn't get on the Internet. It was
only for universities and governments.

You couldn't get a computer programming
manual generally, and you couldn't learn

anything about security because there
wasn't anything really written. So

everything was closed, and you had to
break into it. You had to find a way in.

You had to break into a university to
get access on a computer, and then you'd

read all the manual pages learning how
did the computer actually work because

there was no...

material available. And then you had to
find somebody that knew something about

security and convince them to teach you.

And then maybe you would teach someone
else. And then you'd build this

around sharing information.

I think it would have been unheard of in
the mid -1980s that if you found some

kid wandering around in a telephone
company building that they'd call the

and have the guy hauled off. Nowadays,
in the days of Homeland Security, the

would be at Gitmo being waterboarded or
something. What were you doing in the

phone company office? All this kind of
thing.

But in the 80s, it was kind of cute. And
that's how you get these guys like

Kevin Mitnick, who are basically loser
sociopaths, but the entire community

them as cute and interesting people. We
love you, Kevin!

Kevin Mitnick is arguably the most
famous former hacker.

You got me, dude!

At a hacker gathering in Las Vegas,
where he now lives and works as a

consultant, he's treated like a
celebrity.

He served nearly five years in federal
prison for break...

If the 80s was the Wild West, the 90s
would have been the gold rush.

That was when things really started to
get interesting, and that's when the

knives came out as well, because
suddenly you were injecting value into

As soon as the money comes, then you get
these streams of parasites coming in

after the money.

And the innocence of the Internet really
ended around

1994.

Can't afford a computer at home? It's
okay if you have some spare change.

Coin -operated computer terminals have
started popping up in public places like

this San Francisco coffee house.

Users send electronic mail all over the
globe.

Cost, two bits for four minutes.

Connecting people in new ways has become
a major business in this country.

Commercial services like Prodigy,
CompuServe, and America Online, which

information into people's computers
through regular phone lines, now have 4

million subscribers.

The fastest growing of these services,
America Online, charges $9 .95 a month

plus $3 .50 an hour after the first five
hours of use.

Soon as the Internet hit, I'm saying
within two years, within two years

probably, Dial -up bulletin boards went
away. I mean, they died that quickly.

What was the point of dialing up and
having the slow interaction where you

get online immediately?

So what happened there is information
sharing took a great leap forward, but

community collapsed because anybody
could come to your system now on the

Internet from anywhere.

So you got a whole lot of idiots, people
that you couldn't filter them out. I

mean, they used to call it the AOL
effect.

Dial -up system hit the Internet, and
all those people, millions of users,

flooded into the early Internet. It was
just, you know, the IQ level just

dropped like a rock. And so that forced
the people that were trying to have

serious conversations on the net into
the corners, into private groups, and it

stratified the Internet.

AOL was a really interesting aspect of
the early history of the Internet.

They used their huge dial -up
infrastructure to become this portal to

Internet for millions of people. And
that's part of why AOL got so rich, that

they were able to buy Time Warner, if
you think about that.

That moment epitomized the early stage
of the Internet gold rush.

Here you have an old -school mainline
media company, which is used to kind of

shaping American popular culture, gets
bought by a bunch of computer kids who

just... appear out of no place. And it
was, as we all know now, it was a merger

made in hell. But that was really kind
of the symbol of the early stage of the

gold rush. From a security standpoint...

AOLs coming on the Internet brought us
millions of new users.

And I think that was really when you
first started to see people doing scams

get people's passwords, people doing
online fraud.

Millions of new users means millions of
new victims. People were literally just

kind of buying machines and plugging
them in as fast as they could. And

everybody was saying, well, we'll worry
about securing it later.

And now for a traffic report of sorts.

This one is from the Information
Superhighway. In a word, it is jammed.

online jams the Internet.

And for some, the World Wide Web becomes
the World Wide Wait.

Hacking really changed when money got
involved, when computers became free,

AOL gave away free Internet access, when
everybody has a spare computer. The

things that were motivating you in the
first place are no longer there.

So you have to find a new reason. What's
the new thing that motivates you if all

the old motivations are gone?

All of the systems, all of the software,
all the components on which the first

couple of years of the big commercial
Internet were built, none of it was

designed really with good security in
mind.

I'm informed that you think that within
30 minutes, the seven of you could

make the Internet unusable for the
entire nation.

Is that correct?

That's correct. It would definitely take
a few days for people to figure out

what was going on. This will be an
ongoing effort to try to make sure we

all the benefits of the Internet, all
the benefits of the computer revolution,

but we develop better defenses and
better defenders.

Hacking has changed a lot over the
years. It used to be almost an

pursuit. I heard it likened to a
spelunking one.

where you're just kind of exploring.

And in the late 80s, early 90s, it very
much felt like that. There was this

cavernous, dark internet.

And you could find things in there if
you went looking. And most of the people

that I knew at the time that did that
were out for access. They were out for

exploration, for learning, that sort of
thing. Very few people were out for

profit. Police say they've arrested the
cyber mastermind responsible for

infecting 12 million computers around
the world. Today, it's very, very

different. Even the hacker mentality.

is a much different breed. Some of the
younger kids have a moral flexibility

that would make a Fortune 500 CEO blush.

The hackers nowadays are oftentimes
professionals.

They've been trained to do this. They
work for organizations that do this.

You yourself sitting at home, you know,
shopping online and reading your email,

you are the target. And they're after
you and they're after your financial

information. They're after your money.

in Eastern Europe, you have a lot of
individuals that are very intelligent

underemployed. And that may sound
cliche, but that is the circumstance

they're in. And so they become
entrepreneurs.

And they create companies. However, the
motivation of the company is not to make

money for the common good. It's to make
money for themselves.

And so they remain black hats and they
remain hackers.

Computer hackers in Russia reportedly
succeeded in breaking into the

money transfer system of Citibank.
Organized hacker groups, primarily from

Russia and Ukraine, are said to be
targeting U .S. companies, stealing

of dollars in credit card numbers.
There's a lot of bias.

that exists.

When I work with U .S. representatives,
you know, they will say that, oh, this

other country is attacking us. And then
I go to the other country and they're

saying, oh, the Americans are attacking
us.

And they're more technologically
advanced. So every country is panicking

each other.

The newspaper gets all upset, you know,
North Korea or China is hacking into our

computers. Well, yeah, they are.

But the other side is the United States
is doing that to Russia and China and

Japan and France is doing it to us and
England's doing it to Norway and

everyone's doing it. The advantage that
I have is I'm, in a sense, neutral.

I'm in the business of tech, media,
cyber security.

I don't particularly represent any
government or...

any corporation.

Growing up, being a little boy, I

always looked at technology and media as
a means to

Look, a window to the outside.

And my father was the first person who
brought a personal computer into the

Soviet Union. And I remember being a
little boy, playing on this massive

machine, typing like this, big keys. And
all of this made me realize how

important and how fast this technology
grows.

It really, truly is a fascinating place.

Three, two, one, zero. All engines on.

You have air, land, space, and maritime.

Cyber is the new sphere. It's the fifth
common domain.

It's not just internet.

Cyber is your cell phone, your mobile
phone connected to your PC.

which is connected to the grid, which is
connected, the grid's connected to the

traffic lights, to the air traffic
control, to the satellites, to the

weapons, to the nuclear power station
and the arms forces.

So suddenly you have this massive
connection everywhere.

It is kind of amazing the
transformations that have occurred even

lifetime, and I'm not that old. We've
seen just an increase in data being

everywhere and the ability to access
things on the Internet.

Whenever my kids ask me a question and I
don't know the answer, they say, well,

we should just ask Google. Google knows.

And they just kind of take for granted
that information is out there and

available. Privacy was sort of de facto
protected in the olden days just by

virtue of how difficult it was to
collect information.

And now with computer technology, what's
happened is that it's really made the

collection of this information.

Very cheap and easy because primarily a
lot of companies have interest in

collecting information about you, and
consumers have an interest in giving up

this information about themselves,
whether it be to a social network that

who your friends are or to Amazon that
knows what books you're interested in or

to Google that knows what you're
searching for.

I remember at one point when I was
traveling in China and in the gift shops

they like to bring American tourists
into, they actually do follow you

and every time you look at something,
they're like, They offer a suggestion

that, oh, very nice product, you should
purchase it.

And it was kind of a creepy feeling.

And that's sort of what happens online.

When you use a bookseller like Amazon
.com, they're keeping information not

about what books you buy and where your
house is that they have to ship the

books to, but about what books you
browse.

All that information gets collected and
stored and is potentially available to

civil litigants and to the government
later on. This is some of the most

kinds of information, what books you're
interested in, what you search on

Google. You know, Google looks at your
search histories and they use that

information for all sorts of purposes.

Think about how you would feel if
somebody could get access to...

What you're searching for is basically
what are you thinking? What are you

interested in? Some of the most intimate
personal information that's out there.

As we move around with our mobile
phones, we move from cell tower to cell

and this creates records.

And these records are retained by the
service carriers for many years,

ostensibly for billing disputes.

But they can also be used later to
figure out where you were at any given

in time.

Every time you have your cell phone on,
not even when you're making a call. But

just when you have your cell phone on,
that enables them to find out physically

where you are. It's something that I
think is really of concern to people.

People think that that information
should be private. And we understand

could be followed on the public street,
but we think that that requires the

government to have a good reason and to
be worth the money for them to appoint

an officer to follow us. In the U .S.,
we actually don't have very many privacy

laws, which comes as a surprise to a lot
of people who just sort of assume that

the government maybe is protecting them.

There is no right to privacy in this
country. Let me just say that out loud.

It's not in the Constitution.

It's not in any of the Bill of Rights or
any other amendment. There is no right

to privacy. The way it is now, I don't
own my own identity. If I give it to

Facebook, they own it. I can't go back
to them and say, you know what?

I want to change that. I don't want that
to be visible anymore. They say, too

bad. You gave it to us. It's in our
systems. It's there forever.

We're going to sell it. We're going to
monetize it. We're going to create like

graphic analysis of who our users are so
we can better target advertising to

them. People think that they're the
customers of Facebook or Google or

LiveJournal or Twitter.

In fact, they're not.

They're the products of these companies
that they sell to their customers who

are the advertisers.

The reason Facebook is free, the reason
Gmail is free, is not because the

company likes you.

It's because you are their product.

And by making it free, they get a better
product they can sell to their

advertisers. Over the last few years,
we've heard the CEOs of several major

technology companies talk about the
death of privacy.

Eric Schmidt of Google talks about it.
Larry Ellison of Oracle.

We're hearing it from Mort Zuckerberg of
Facebook that the rules of privacy are

changing and people expect less privacy.

What's interesting is those are the very
CEOs that are deliberately undermining

privacy. At a presentation to
advertisers in 2007, Mark Zuckerberg

benefits of Facebook's vast database.

On Facebook, we know exactly what gender
someone is and exactly how old they are

and exactly what they're interested in.
We're finding a very slow and deliberate

ratcheting down of privacy from all of
these companies because they make

money from people sharing, from
information being visible, from

being collated and networked.

and being seen by others. A lot of my
friends have grown up with nothing but

computers. That's all they know are
computers.

Well, starting with them, there's an
electronic digital record of everything

they've ever done online.

Now, whether or not the record is kept,
somebody deletes the hard drive or

throws away the backup tapes, fine.

But records are being kept.

Hard drives, data storage is cheap.
It'll be around forever.

So can you imagine the implications? How
does that change your behavior if

everything you've ever done is recorded
somewhere?

Can you imagine what the presidential
debates will be like 20, 30 years from

when they're pulling up your first
tweet, your first Facebook love note,

first status change on Google Talk where
you said you were going to go get

hammered? I mean, it's fundamentally
going to change the way that people

There's a common myth that privacy is
about something to hide. I don't have

anything to hide, so I don't need
privacy.

But you know that's not true.

I mean, we don't have anything to hide
when we sing in the shower or write a

love letter and then tear it up.

Privacy is about us as individuals.

It's about our ability to be who we are
without necessarily telling everybody.

I mean, when someone says I have nothing
to hide, just ask them, what's your

salary? What are your sexual fetishes?

What kind of diseases do you have?

I mean, it's not about hiding. It's
about personal dignity.

This baby is just one second old.

Here in the delivery room of Mount Sinai
Hospital in New York, he has just won

his first fight, the fight to life.

His footprints are taken for
identification.

He is still less than a minute old, and
this is his first record.

This newborn boy and all the others of
his generation face a new and serious

battle. which they may not win the right
to privacy.

Data is a fundamental byproduct of every
computer -mediated interaction.

You used to throw a quarter into a toll
booth. Now you use an E -ZPass, and a

record is saved.

You used to chat with someone over a
water cooler or across a partition in

office, but now that's done over IM or
SMS, and that data is being saved.

Right? So things that used to be
ephemeral are now permanent.

And more and more of that data is being
saved and sifted through and used by

government, by corporations, by
marketers.

I mean, you can find, if you go on the
net and you start searching for, maybe

you're going to buy a new house or move
in and get a new apartment, start

looking at real estate or rental
listings, you go on Facebook and

you're going to see ads.

For real estate companies or rental
companies.

And that sometimes feels a bit icky.

We're finding more and more that as
people surf on the net, they're being

followed. They're being followed and a
profile about them is being collected

then sold to others.

And this is without people's knowledge
or consent.

You might sort of know what's going on,
but not really.

A meeting of the American Civil
Liberties Union in Washington.

These men are fearful that the National
Data Center poses a threat to privacy

and the American way of life.

All we can expect is to hold off the
data bank for a while, to get in our

links, because there are not only
governmental data banks, there are

data banks. The data center is not just
here and now.

You build it with the best intentions
now, you build it with limitations now,

and tomorrow those...

intentions may pass and the limitations
may dissolve.

We always talk about security versus
privacy.

There's some sort of balance.

And the government likes to use that
trade -off. How much privacy would you

up for security?

Being secure requires you to give up
some privacy.

I think it's a false dichotomy. I think
it's actually a red herring.

Security and privacy go hand in hand.

We do not feel more secure when our
private data is released.

We don't feel more secure.

in a police state with its ubiquitous
surveillance.

That privacy is essential for security.

And good security provides for privacy.

It's only bad security that goes in
opposition to privacy.

A great example is airplane security.

After 9 -11, there have been exactly two
things that have improved security.

The first one is reinforcing the cockpit
door. And the second is passengers

knowing they have to fight back.

Those two measures have nothing to do
with privacy.

If you think about the airplane security
measures that affect privacy, the photo

ID check, the full body scanners, they
actually don't improve security.

They're what I call security theater.

Real security goes hand in hand with
privacy.

How do we create a world where freedom
and expression is still valued and

protected at the same time as security
is maintained?

So there will always be a battle, a
battle between privacy, security, and

essence of the Internet.

This is Harry Butler, a real great guy.

Harry's a very busy man, and he's
conscientious and hardworking.

But security -wise, Harry is naive.

What? You heard me. You don't know what
security is.

What do you mean?

Information security has a physical
component. There's no doubt about it.

It's not just someone from overseas
trying to get in with an exploit.

That's kind of the trick shot of
hacking.

There's a physical aspect to it,
especially at a local level, where if

can access your data networks, they can
steal your data. And we're often paid to

test that.

One of my favorite ways into a company
is the smoking door. You'll find like a

car swipe to get in and out.

So all you have to do is find the
smoking door, walk up to the door when

one's there, and have a lit cigarette.

When the door opens, just quickly crush
out your cigarette and say thank you,

grab the door and walk in, and it works
every time.

Another really clever way that I like
getting in is a USB key, which

I've written some very simple software
that will use the computer it's plugged

into to tunnel out and give us control
of that computer.

And then we take that key and we label
it, usually something to the effect of

your company's name and HR.

you know, something tempting to plug in.
And then we have someone walk that into

the receptionist and explain that they
found it in the parking lot or they

it in the lobby of the building and it's
got your name on it, it must be yours.

Of course, minutes after the person
drops the key, we're waiting for this

get the hookup from the computer when
they plug it in and then we're in and

and running.

Would it be dangerous for everyone to
walk around with the knowledge I have? I

would worry about that.

Throughout my career, I've made a lot of
difficult choices. The temptation to

just do something that goes over the
line is always there. I've been working

this for many, many years. I have a lot
of experience, and I've been offered

some pretty tempting...

In one case, a briefcase full of cash to
do something that was very wrong would

have been very easy to do, probably
wouldn't have gotten caught. But you

make a decision in life because once you
go to that side and get caught, you can

never really come back.

People can't protect what they don't
understand.

How do you evaluate the risk around
what's the risk of having a computer

-controlled car?

Well... People don't really know. We've
never had computer -controlled cars

before, and it's not something that we
sort of intuitively understand.

You know, if you're at the ATM and
there's a shady guy next to you, you get

that, like viscerally. Your brain, your
little reptile part of your brain says,

danger, danger, something weird here.

But your brain doesn't necessarily pick
up that the keypad looks a little

unusual. because somebody swapped it
with a keyboard capturing device.

Or where you put your card into the ATM,
that looks a little fatter than it

normally does. Well, that's because
somebody's put a capture device over it.

We don't get that intuitively, not like
a shady character right there.

And so as humans, we just aren't good at
estimating and managing risk when it

comes to computers. And that's going to
get us into all kinds of trouble.

I see people that will go out to a
public, free public Wi -Fi cafe.

And they'll access their banking
information or they'll make a purchase

And they won't stop and think, is this a
safe place for me to be conducting a

transaction? Is this something I should
be doing out in public?

Until we start thinking in those terms,
I think we're going to find that the

problem of identity theft and cybercrime
is going to be with us for a while.

A lot of people who are on the network,
people we want to have on the network,

like my mom and dad, aren't really
capable of securing their own computer

or maybe even of understanding why it is
that they shouldn't be checking their

email or their bank statement in the
coffee shop or something like that.

Or they may just simply...

They misassess the risk. They may
understand that there's a risk that

might be using a sniffer and they look
around the room and they think everybody

looks pretty busy, you know, reading the
paper and drinking their coffee and

they really need to get their email and
they take that chance.

I just don't think that it's fair to put
the full burden of that on the

individual. There's a whole hobby called
war driving, which is just driving

around and accessing other people's
wireless networks and seeing how many

can rack up.

It's really easy to just drive around
the neighborhood and get into people's

networks. And even if they have basic
wireless encryption, that's usually not

preventing people because most of those
protocols have been hacked and you don't

even need to do any work to get in. Once
you're in someone's wireless network,

then you're seeing all the traffic
that's getting sent across.

So if they're typing credit card
information or social security numbers,

data can be sniffed right out of the air
by anyone.

within range of that network. And there
are people driving around just trying to

do that for fun. So if someone wants to
steal your private information, they're

probably going to get it. Years ago,
you'd have to have a complete computer

system with you to do any hacking or
access to a complete computer system.

Nowadays, you can make a complete
hacking system out of a cell phone.

This looks like a fairly typical iPhone,
or at least it would appear so. This

iPhone has been modified, though, to run
applications that are not approved by

Apple. In this case, specifically one
designed to remotely take over other

computers from either across the
Internet or, in our case, across an open

wireless network. It's actually a cafe.

So we'll start by pulling up a terminal.
And in the terminal, what we're going

to do is run an application called
Metasploit that will allow us to run an

exploit and take over a machine. You can
look at the exploit as how you get into

the vulnerable application.

So having identified a specific
computer,

From across the street, over an open
wireless network, we'll collect our

first. In our case, we're going to
choose a Microsoft exploit, since our

computer that we're looking at appears
to be quite behind on its patches. We're

going to choose a payload that causes
that machine to give us control of it.

And a payload is what you want the
machine to do.

once you've exploited a vulnerable
service.

All right, now we're ready to go. Let's
give it a try.

We type exploit and enter.

And we have successfully exploited our
target. We now have control of it. At

this point, we would set software on
this computer so that when the person

leaves the cafe,

The machine would report all user
activity.

That activity would include website
visited, login ID, and password pair.

We could even activate the camera or the
microphone on the particular computer

at will. So we'd have complete control
over it. So, I mean, that right there is

pretty cool.

Yeah.

Hacking and causing disruption.

is sipping into the mainstream, into the
general public.

You no longer have to be an MIT or
Cambridge computer science graduate to

how to hack into a system. You can just
be a kid from around the block, go buy a

computer for 400 bucks, have a
connection for 30 bucks, and go online

out how to hack into different systems.

Having been through the maze just once,
the mechanical mouse is able to remember

the correct path.

Set down anywhere along that path, it
takes the most direct route without

a single false turn on through to the
end of the trail.

As the crime continues to be effective
and make money,

and the victims become more numerous,
that you're going to get... the effect

where people start saying, well, someone
should do something about that.

And the victim there is going to be
freedom on the Internet.

All right, all right.

I'll abide by your red tape regulations.

Red tape regulations?

I'll wear a badge and lock my desk when
I go home at night.

But I still say we've got guards for
that sort of thing.

We'd have to put a permanent guard on
everyone in the business.

We probably could build a society in
which it was impossible for people to

from each other, but the consequences of
building that society are probably a

society none of us would want to live
in.

There'd be a tremendous amount of
surveillance. There would be a

amount of onerous security on top of us.

We could build an Internet where there
were no hackers.

The downside of building an Internet
where there were no hackers would be an

Internet where there was no anonymity.

There was no ability to post anything
that was not subject to censorship.

You might find yourself being held
liable for anything that you said

could be proven to be having come from
you. If we built a perfect internet that

was completely hacker -proof, we have
built a perfect surveillance system for

Big Brother that you can never evade.

We meet today at a transformational
moment.

A moment...

in history when our interconnected world
presents us at once with great promise,

but also great peril.

The very technologies that empower us to
create and to build also empower those

who would disrupt and destroy.

This world, cyberspace, is a world that
we depend on every single day.

It's our hardware and our software.

Our desktops and laptops and cell phones
and BlackBerrys that have become woven

into every aspect of our lives.

The broadband networks beneath us and
the wireless signals around us. The

networks in our schools and hospitals
and businesses and the massive grids

power our nation.

The classified military and intelligence
networks that keep us safe.

And the World Wide Web that has made us
more interconnected than at any time in

human history.

The vast majority of our critical
information infrastructure in the United

States is owned and operated by the
private sector. Traditionally,

military stuff and civilian stuff were
different.

Both had planes, the avionics would be
different.

Both had computers, they would work
differently.

That's changing.

Technology is moving so fast that
government can't keep up.

They're forced to buy the same stuff
that we use. That's a very interesting

situation.

Everybody is using the same operating
systems, the same networking

the same hardware, the same software.

And whether it's a person or a bank or a
military or a foreign military, we're

all using the same stuff.

And yes, this is different and we're not
used to it. It's not going away.

We're never going to go back to the
military being on the leading edge.

Because leading edge moves so fast and
only industry has that distributed

ability to try every option and have the
correct one succeed.

Only the market can do that. Government
can't.

The government is forced to rely on
corporate security.

We've just come out with the Cyberscope,
which is this probe right here.

And as far as network security, it takes
it to a new level. We have over 140

federal agencies that use this, from the
intelligence community, Department of

Defense, as well as civilian agencies.

We sell a bit to the military and U .S.
government, but we also sell to

organizations that are just trying to
audit their system.

So all of a sudden you have the military
with...

Next generation cellular communications
in an area that typically wasn't

available. The private industry owns at
least 85 % of the digital

infrastructure that we are all so
dependent upon.

When you mention cybersecurity to most
members of Congress, they just kind of

glaze over.

And they don't really get it. They don't
want to get it. My administration will

pursue a new comprehensive approach to
securing America's digital

infrastructure. I think there is a lack
of understanding among the politicians,

and it might be due to the fact that the
know -how has moved to the younger

generation, and they are not very eager
to move to politics.

I get the phone call, and, you know, hi,
I'm from the White House. Well,

actually, I'm really from DHS. Well,
actually, I'm the liaison between the

so, you know, I have a couple different
titles. But anyway, there's this

Homeland Security Advisory Council we
want you to be a part of.

And I'm thinking, oh, that's not so bad.
I can read white papers. I can provide

my advice. Sure, yeah, sure. Yeah, I'll
take it.

The next day I come into work and I've
got all these ethics disclosure forms

Office of Professional Responsibility
and security clearance.

I call them back.

How is this really working? What are my
responsibilities?

But as a technologist, I get to deal
with a lot of questions that touch our

lives every day because almost every
government initiative depends on IT

systems. Anything to do with border
crossing, that's technology.

Air traffic control, FEMA, emergency
communications, all of this stuff relies

computer networks.

But there's never been an overarching
coordination.

And to me, that's an acknowledgment that
there has never been a recognition on

the part of the federal government that
this is a really serious thing.

Nations want secrets.

They're going to break into governments
and companies and try to steal plans and

chemical formulas and troop movements
and how we route airplanes.

things that might help them at a very
strategic level or might give their

companies a competitive advantage.

China's interests have been long -term
to look at our government.

And to look at what our military is
doing, looking at what various agencies

the federal government are up to, and
also what our academic institutions are

capable of doing, stealing research and
the intellectual property associated

with universities.

And they even go so far as to look at
individual companies and trying to

out what their business plans might be
and how they might impact Chinese

companies. CBS News has learned that
there are factories in China and

Asia. that are exact replicas of plants
in the United States, built with

everything from hacked blueprints and
supplier lists down to the settings used

to regulate valve pressures for
individual machines.

Two years ago, hackers stole top -secret
exploration data from oil and gas

industry giants ExxonMobil,
ConocoPhillips, and Marathon Oil. In

Systems of Central Command, the State
Department, Department of Commerce, and

NASA were successfully hacked. They
lost.

Millions of pages of classified
information.

This country is completely under attack
24 -7. And not just our country,

everybody's country.

And not just governments, but companies
and corporations.

It's a giant feeding frenzy out there.
Here's another question.

And this might have an interesting
perspective from the various areas that

come from, the various nations they come
from.

What's your nightmare scenario?

In other words, the event that you fear
the most.

I live in a world of nightmares.

In fact, I'm in charge of the cyber
defense agency in France, and I'm paid

imagine nightmares.

In addition to the attacks on the
nation's telecommunications

are also now receiving alarming reports
of significant and growing power outages

in major metropolitan areas in the
eastern half of the United States.

You're going to see planes being
grounded now. You're going to see trains

taking to the track.

People are going to stop moving.

Do we have a declared policy in the
cyber realm in the same way we had for

decades in the realm of nuclear weapons?

So I want to answer a question from this
morning.

What's your nightmare scenario?

My nightmare scenario is that we spend
our time thinking about nightmare

scenarios.

This is important. There's a certain
blindness that comes to worst -case

thinking. It leads to bad decisions, it
leads to bad system design, and it leads

to bad security.

And you all know an example of this,
airline security and the TSA.

That's what you get when you think about
nightmare scenarios.

That's what you get from worst -case
decision -making.

We will take action against that nation
-state. Now, specifically what that is,

I don't think you should say publicly,
but we have ways to do that. What

everybody in this room will be judged
on, and trust me, you'll all be judged.

when this is all over for years to come,
is did we carve out every absolute

option, every piece of power we had?

Cyber war is largely hype.

I mean, it's hype by the media because
it's cool and interesting, but it's

really hype by the government trying to
seize more control.

I mean, there's a huge power struggle
going on in government right now. It's

the NSA, Homeland Security, FBI, over
who gets control over the Internet and

Internet security.

And the NSA is winning.

And they're winning by pushing this
cyber war fear, this fear of cyber

attacking us. It's largely nonsense.
It's largely hype. It doesn't hold up to

scrutiny. But it's big and scary.

And when people are scared, they're much
more willing to give up their

liberties, their privacy, their freedoms
to someone who will make them feel

safer. Is the public scared?

Yes, and that's a good thing.

Now the maze has changed again.

near its very end. Things go smoothly
enough at first as the mouse proceeds on

the basis of information it remembers.

Now it's running into trouble.

But fortunately, it is able to adapt to
this new situation.

It resorts once more to trial and error
and acquires reliable new information to

replace the old.

My doomsday scenario is a single EMP
bomb above the country.

If you can build one nuke and you can
blow it up 200 to 500 miles above the

country, the resulting electromagnetic
pulse is enough to basically stop almost

all electronics in the United States,
Canada, and Mexico.

And when that happens, you're screwed.

There's no fixing that.

It would take us back to the 1920s.

with the resulting population of the
1920s, because that's all our

infrastructure would be. And I think
about 180 million people would die in

country within six months.

It's pretty severe.

And that's how dependent we are on
technology.

Is there anything that East West or
government institutes around the world

working with education programs to help
close that divide, make it part of the

mandatory curriculum to help educate
kids?

on the foundation of technology?

So I think that's kind of backwards. I
think the kids need to educate us. I

mean, the thing about generation gaps is
the younger generation always wins

because the older generation dies.

And the way the kids are doing it is the
correct way. We're doing it wrong.

We're doing it old, right? Emails for
old people, not for kids.

And that's the way it's going to be. So
I think better than us educating...

the younger generation, is let them
educate us on how they use the net, how

want the net to work, how it fits into
their lives so we can build

infrastructure that benefits them.

Because the education is not going to go
the other way.

I mean, the internet is the greatest
generation gap since rock and roll.

You know, younger people are using these
technologies in ways that the older

people can't even fathom.

Regularly, I get people asking me, what
can I do to convince my kids not to do

these things on the net? And I tell
them, You can't.

And more importantly, they're right and
you're wrong.

But the younger generation gets to
decide how technology will be used.

I mean, they're going to build the
social systems that will be used in the

10, 20, 30, 40 years. Because Internet's
about people, about connecting people,

about people being able to find other
people of common interest.

We're being able to communicate with
their family or friends in ways that

impossible before.

Be able to bring information into
communities that didn't have access to

before. To democratize knowledge and
information and communication. The

value of this information is so great
that it's changing the planet.

But sometimes there's a problem without
a solution.

And even a mechanical mouse must have a
helping hand.

I'm not sure if I know how to end this
story.

Where does this story end? Does it
happen anywhere? The problem with ending

we're still in the middle of it. We are
in the middle of the information age

revolution.

In 50 years, you can do this
documentary, and you know how it ends.

Now, in the middle, we can just guess,
and not even very well.

When you're riding the ride, you don't
know how it ends.

That's just the way it goes.

On the plus side, it's kind of a fun
ride.

This agile, three -wheeled little mouse
contains a small bar magnet.

100 relays and electrical circuits.
Remember the directions for the mouse.

Dr. Shannon's mechanical mouse
demonstrates that machines can learn by

experience and can revise what they've
learned when it no longer works. Two

important characteristics, at least, of
intelligent behavior.

Lives are being rapidly changed by the
development of large computing machines.

A complete computer system weighs 22
,000 pounds.

When the hero of any science fiction
show has a problem, he usually turns to

trusty computer for an answer.
Sometimes, they think so hard, they get

They blow their cool.

Around the world, Economic factors will
continue to stimulate the application of

computers to new areas.

But advancing computer hardware
technology is just one part of the

to Ken Jennings now. Bram Stoker is what
we're looking for, and we find.

Who is Stoker? I, for one, welcome our
new computer overlord.

Accurately and tirelessly.

Electronic computers.

can trace out the consequences of a
thousand possible actions, can pick out

best design among thousands of possible
designs, thus providing a better base

for the informed exercise of human
judgment.