New Internet Crime Initiative

A pilot program targeting Internet crime—focused on establishing a model for sharing information and coordinating investigations—was recently launched by the FBI’s Internet Crime Complaint Center (IC3) and the state of Utah.

“The Utah pilot is the first step in our efforts to fix a gap that the FBI and our state and local law enforcement partners have recognized exists in the investigation and prosecution of Internet fraud,” said Richard McFeely, executive assistant director of the Bureau’s Criminal, Cyber, Response, and Services Branch. “Because not all Internet fraud schemes rise to the level necessary to prosecute them in federal court, we are enhancing how we package the investigative leads we receive at IC3 and disseminating those packages directly to state and local agencies.” Based on the initial results of the Utah pilot, he said, the FBI plans to expand it to other states.

Internet fraud and other Internet-based crimes for profit cause untold financial losses each year. The IC3 reports that in 2012 alone, victims reported more than $500 million in losses due to crimes like fraudulent auto sales, intimidation/extortion scams, online dating fraud, scareware and ransomware, auction fraud, charity fraud, and computer intrusions. Our new initiative, led by IC3 with the assistance of our Cyber and Criminal Investigative Divisions, combines law enforcement resources to strategically pursue criminals responsible for these kinds of crimes.

How the program works. Using its complaint database and its analytical capabilities, IC3 personnel create actionable intelligence packages that are connected to particular geographic regions. These packages can highlight trends, identify individuals and criminal enterprises based on commonalities of complaints, link different methods of operation back to the same organization, and detect various layers of criminal activity. They will also contain results of preliminary investigative research performed by IC3 analysts, including criminal record checks and basic web domain searches.

Once the packages are complete, they are submitted to the local FBI cyber task force for further action, giving investigators a leg up on any case before the first interview is even conducted.
Our cyber task forces, located in every field office, are made up of FBI agents, other federal representatives, and state and local law enforcement dedicated to investigating a whole range of cyber threats, including Internet crime. In the Utah pilot program, our agents team up with officers from the Utah Department of Public Safety State Bureau of Investigation, along with federal and local prosecutors. Decisions are made jointly whether to prosecute locally or federally, or if violations of local statutes can be combined in a federal prosecution going after an entire criminal enterprise that operates across jurisdictional lines.

Another vital aspect of our focused effort to investigate Internet crime is partnering with state agencies charged with the regulatory policing of the various entities being investigated—like consumer protection bureaus—as well as federal regulatory agencies. Our cyber task force in Salt Lake City has made those partnerships a priority.

A note to the public: The information extracted from crime complaints submitted to IC3 is the bedrock of this initiative, so the more complaints IC3 receives, the more effective law enforcement can be in identifying and arresting those responsible. If you believe you or someone you know may have been a victim of Internet crime, please file a complaint with IC3.

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Parental Snooping: Think It’s Legal?

You’re trying to be a good parent. You’ve explained the importance of treating people with respect online as well as face-to-face and the permanence of online comments, photos and videos. And in the spirit of trust but verify, you may occasionally scroll through your kid’s email or Google+ account, or pick up their phone to glance at recent texts. One would think this behavior it protected by law. Surprisingly, wiretap laws don’t have carve outs for parental snooping.

Before diving into the law, allow me to explain in one word why the law and court cases on snooping in the home are so muddled: Divorce. In the cage match that is divorce and custody battles, snooping and taping are as much staples as roundhouse kicks and choke holds. If parents had unfettered access to their children’s communications, they then would have such access to those communications with the opposing parent. Because this is not always in the best interest of the child, courts cannot say as a rule that parental snooping is okay in all instances.

The law actually starts by saying that snooping is not okay. There are both Federal laws and state laws covering wiretapping. For Federal law, we look at the Electronic Communications Privacy Act (ECPA). The ECPA covers both the interception of electronic communications in transit (Title III of the ECPA) and unauthorized access of those communications while in storage (Title II of the ECPA, also known as the Stored Communications Act). Courts have found an expectation of privacy in electronic communications while in transit (Title III), but that expectation diminishes once the transmission is complete and the communication is stored (Title II). What this means is that looking through your kid’s email is going to be looked at more favorably than putting a tap on their phone line and recording calls.

Let’s take a closer look at the Stored Communications Act. It says: 18 USC § 2701 – Unlawful access to stored communications (a) Offense.— Except as provided in subsection (c) of this section whoever—

(1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or

(2) intentionally exceeds an authorization to access that facility; and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system shall be punished as provided in subsection (b) of this section.

Putting this into English, you can go to jail for up to 10 years if you intentionally access stored communications where you don’t have the authority to access them or you exceed your authority by accessing them. The question then becomes whether or not parents have the authority under the law to access their children’s stored communications. This is where courts come in.

The United States is a common law country. Common law means that the courts help make law by interpreting the laws written by the legislature. This is why you hear lawyers reciting case names when arguing for their clients. They are arguing what is called case law. The case law on snooping on kids centers on taping phone conversations rather than accessing stored communications, but the court would use the same logic in a stored communications case.

In a 1998 court case Pollock v. Pollock, the court used the concept of vicarious consent to justify the interception of a minor child’s conversation. Recording of conversation is permitted when one of the parties involved consents to the recording. Vicarious consent occurs in this context when a parent consents to wiretapping on behalf of their child and when the parent’s snooping is motivated by the genuine, good faith concern for the child’s welfare. Therefore, if a parent is acting in the best interest of the child, courts should find that snooping is justified and allowable by law because the parent is consenting to their own snooping.

It’s a good thing parents have legal protection via the courts for good faith snooping because a lot of parents do it. A new study from the Digital Future Project finds 70% of parents say they monitor their child’s online activity while on Facebook and other social media sites and 46% have password access to their children’s accounts. The author falls into both camps but not on a regular basis. There’s a balance to be stuck between trust and monitoring. At least now I know I won’t be spending 10 years in jail for doing a bit of looking if I feel it’s in the best interest of my child.

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N.S.A. Able to Foil Basic Safeguards of Privacy on Web

The National Security Agency is winning its long-running secret war on encryption, using supercomputers, technical trickery, court orders and behind-the-scenes persuasion to undermine the major tools protecting the privacy of everyday communications in the Internet age, according to newly disclosed documents.

The agency has circumvented or cracked much of the encryption, or digital scrambling, that guards global commerce and banking systems, protects sensitive data like trade secrets and medical records, and automatically secures the e-mails, Web searches, Internet chats and phone calls of Americans and others around the world, the documents show.

Many users assume — or have been assured by Internet companies — that their data is safe from prying eyes, including those of the government, and the N.S.A. wants to keep it that way. The agency treats its recent successes in deciphering protected information as among its most closely guarded secrets, restricted to those cleared for a highly classified program code-named Bullrun, according to the documents, provided by Edward J. Snowden, the former N.S.A. contractor.

Beginning in 2000, as encryption tools were gradually blanketing the Web, the N.S.A. invested billions of dollars in a clandestine campaign to preserve its ability to eavesdrop. Having lost a public battle in the 1990s to insert its own “back door” in all encryption, it set out to accomplish the same goal by stealth.

The agency, according to the documents and interviews with industry officials, deployed custom-built, superfast computers to break codes, and began collaborating with technology companies in the United States and abroad to build entry points into their products. The documents do not identify which companies have participated.

The N.S.A. hacked into target computers to snare messages before they were encrypted. In some cases, companies say they were coerced by the government into handing over their master encryption keys or building in a back door. And the agency used its influence as the world’s most experienced code maker to covertly introduce weaknesses into the encryption standards followed by hardware and software developers around the world.

“For the past decade, N.S.A. has led an aggressive, multipronged effort to break widely used Internet encryption technologies,” said a 2010 memo describing a briefing about N.S.A. accomplishments for employees of its British counterpart, Government Communications Headquarters, or GCHQ. “Cryptanalytic capabilities are now coming online. Vast amounts of encrypted Internet data which have up till now been discarded are now exploitable.”

When the British analysts, who often work side by side with N.S.A. officers, were first told about the program, another memo said, “those not already briefed were gobsmacked!”

An intelligence budget document makes clear that the effort is still going strong. “We are investing in groundbreaking cryptanalytic capabilities to defeat adversarial cryptography and exploit Internet traffic,” the director of national intelligence, James R. Clapper Jr., wrote in his budget request for the current year.

In recent months, the documents disclosed by Mr. Snowden have described the N.S.A.’s reach in scooping up vast amounts of communications around the world. The encryption documents now show, in striking detail, how the agency works to ensure that it is actually able to read the information it collects.

The agency’s success in defeating many of the privacy protections offered by encryption does not change the rules that prohibit the deliberate targeting of Americans’ e-mails or phone calls without a warrant. But it shows that the agency, which was sharply rebuked by a federal judge in 2011 for violating the rules and misleading the Foreign Intelligence Surveillance Court, cannot necessarily be restrained by privacy technology. N.S.A. rules permit the agency to store any encrypted communication, domestic or foreign, for as long as the agency is trying to decrypt it or analyze its technical features.

The N.S.A., which has specialized in code-breaking since its creation in 1952, sees that task as essential to its mission. If it cannot decipher the messages of terrorists, foreign spies and other adversaries, the United States will be at serious risk, agency officials say.

Just in recent weeks, the Obama administration has called on the intelligence agencies for details of communications by leaders of Al Qaeda about a terrorist plot and of Syrian officials’ messages about the chemical weapons attack outside Damascus. If such communications can be hidden by unbreakable encryption, N.S.A. officials say, the agency cannot do its work.

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Company Settles Home Security Camera Hacking Case

A company that markets video cameras designed to allow consumers to monitor their homes remotely has settled Federal Trade Commission charges that its lax security practices exposed the private lives of hundreds of consumers to public viewing on the Internet. This is the agency’s first action against a marketer of an everyday product with interconnectivity to the Internet and other mobile devices – commonly referred to as the “Internet of Things.”

The FTC’s complaint alleges that TRENDnet marketed its SecurView cameras for purposes ranging from home security to baby monitoring, and claimed in numerous product descriptions that they were “secure.” In fact, the cameras had faulty software that left them open to online viewing, and in some instances listening, by anyone with the cameras’ Internet address.

“The Internet of Things holds great promise for innovative consumer products and services. But consumer privacy and security must remain a priority as companies develop more devices that connect to the Internet,” said FTC Chairwoman Edith Ramirez.

In its complaint, the FTC alleges that, from at least April 2010, TRENDnet failed to use reasonable security to design and test its software, including a setting for the cameras’ password requirement. As a result of this failure, hundreds of consumers’ private camera feeds were made public on the Internet.

“…hackers posted links to the live feeds of nearly 700 of the cameras. The feeds displayed babies asleep in their cribs, young children playing, and adults going about their daily lives.”

According to the complaint, in January 2012, a hacker exploited this flaw and made it public, and, eventually, hackers posted links to the live feeds of nearly 700 of the cameras. The feeds displayed babies asleep in their cribs, young children playing, and adults going about their daily lives. Once TRENDnet learned of this flaw, it uploaded a software patch to its website and sought to alert its customers of the need to visit the website to update their cameras.

The FTC also alleged that, from at least April 2010, TRENDnet transmitted user login credentials in clear, readable text over the Internet, even though free software was available to secure such transmissions. In addition, the FTC alleged that TRENDnet’s mobile applications for the cameras stored consumers’ login information in clear, readable text on their mobile devices.

Under the terms of its settlement with the Commission, TRENDnet is prohibited from misrepresenting the security of its cameras or the security, privacy, confidentiality, or integrity of the information that its cameras or other devices transmit. In addition, the company is barred from misrepresenting the extent to which a consumer can control the security of information the cameras or other devices store, capture, access, or transmit.

In addition, TRENDnet is required to establish a comprehensive information security program designed to address security risks that could result in unauthorized access to or use of the company’s devices, and to protect the security, confidentiality, and integrity of information that is stored, captured, accessed, or transmitted by its devices. The company also is required to obtain third-party assessments of its security programs every two years for the next 20 years.

The settlement also requires TRENDnet to notify customers about the security issues with the cameras and the availability of the software update to correct them, and to provide customers with free technical support for the next two years to assist them in updating or uninstalling their cameras.

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Mother/daughter team jailed for million-dollar internet dating scam

A mother and daughter have been jailed for over a decade apiece after pleading guilty to money laundering for an internet dating scam that persuaded the gullible that they were helping US troops in search of love.

Karen Vasseur, 63, and daughter Tracy, 42, were part of a gang that spent three years searching dating sites and social networks for likely targets. Other collaborators posed as members of the US military overseas and persuaded dupes to send them money, supposedly for satellite phone calls, customs fees, and for travel so they could meet their imagined paramours.

For smaller amounts of cash, the scammers persuaded their victims to use Western Union or MoneyGram, but larger transfers would have attracted attention from the companies’ anti-fraud systems, so the Vasseurs were recruited to set up bank accounts to receive funds.

Posing as military agents, the two accepted over a million dollars (one British victim sent in $59,000) before funneling it to the scam’s organizers for around 10 per cent of the take.

The two set up 68 accounts in 19 different cities using 24 aliases to handle the transfer of funds and sent the bulk of the money to individuals in Nigeria, who set up the operation. Money was also wired to addresses in the UK, Ecuador, India, the United Arab Emirates, and the US, none of which has been recovered.

All the victims mentioned in the court papers were women, usually married, who had been conducting online dalliances with what they thought were male soldiers, usually claiming to be stationed in Afghanistan and with fake Army records to bolster their claims. Many of the women sent tens of thousands of dollars at a time to help these imaginary soldiers.

“Not only did this mother-daughter duo break the law, they broke hearts worldwide,” said Colorado attorney general John Suthers in a statement. “It is fitting that they received stiff sentences for their unconscionable crimes committed in the name of love and the United States military.”

Tracy Vasseur was sentenced to 15 years in prison for her part in the scheme. The authorities added an additional four years to her time in the Big House because she carried on transferring money even after being indicted, and also tried to influence a public official and take control of her children’s inheritance.

Her mother Karen was sent down for 12 years plus five years of parole. She will also serve a 10 years sentence for a separate fraud in which she convinced at-risk adults to pay fees to free up a bogus Nigerian inheritance, but that sentence will be served concurrently.

The case shows that one of the oldest internet scams in the book is still going strong, and that the ringleaders are getting away with it. The Vasseurs weren’t actually involved in duping the victims but were simply money mules, and the masterminds behind this operation are no doubt already finding new victims to fleece.

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N.Y. Times Restoring Website After Syrian Group’s Disruption

The New York Times is working to make its website available again for all readers after it was disrupted by a group calling itself the Syrian Electronic Army in an exploit that also affected Twitter Inc.

The group disrupted traffic to the websites by hacking yesterday into registration-services provider Melbourne IT Ltd. (MLB), which handles the online addresses of nytimes.com and twitter.co.uk, according to Tony Smith, a spokesman for the Melbourne-based company. The Times instructed readers who can’t access its home page to go to an alternate site.

Some users initially reported being redirected to the Syrian group’s sites. Many were simply unable to access the pages at all. The Syrian Electronic Army, which backs the country’s president, Bashar al-Assad, has also claimed responsibility for hacking the Washington Post this month and the Financial Times in early May, redirecting readers to its own websites and videos.

“The credentials of a Melbourne IT reseller (username and password) were used to access a reseller account on Melbourne IT’s systems,” Smith wrote in an e-mail. He said the login information was obtained through phishing, a technique used to obtain private data by imitating legitimate websites.

It may take time before all users can get normal access to the newspaper’s site, Smith said. Times employees have been instructed to use caution when sending sensitive e-mails, the newspaper said.

Caching Quirk

A quirk in the way that domain information is updated across the Internet has meant that the Times website is still inaccessible to many users today even though the site is functioning normally. Many corporations and browsers on personal computers cache domain data for 24 hours to speed up connections, preventing access to the news site until those caches are cleared.

On its website, Twitter said its domain registration provider “experienced an issue in which it appears DNS records for various organizations were modified,” including the twimg.com domain it uses to host images. The original domain record for that site has since been restored, and no user information was affected, it said. While Twitter’s site operated normally, twitter.co.uk was inaccessible for some users.

The Huffington Post, owned by AOL Inc. (AOL), also experienced a hack attempt and “minimal disruption of service,” said Rhoades Alderson, a spokesman for the online publisher. The site was working normally today, he said.

AP Hack

Unidentified hackers hijacked the Associated Press Twitter account in April, sending stock markets down 1 percent in a matter of seconds by posting a false claim of an attack on the White House. The fake message — saying that President Barack Obama had been injured after his residence was bombed — followed repeated attempts by hackers to gain access to AP reporters’ passwords, the news agency said in a report. While the Syrian Electronic Army claimed responsibility for the intrusion, that couldn’t be confirmed, the AP said.

The Times has been increasingly focusing on its website for growth as the industry reels from a print-advertising slump. Digital subscribers to the Times and its international edition increased 35 percent to 699,000 at the end of the last quarter. The company averaged about 14 new paying online readers every hour from the beginning of January to the end of June.

On Aug. 14, the newspaper’s website and e-mail systems crashed for more than two hours because of an internal malfunction with its servers.

New York Times Co. dropped 1.4 percent to $11.42 at 12:52 p.m. in New York. The shares had gained 36 percent this year through yesterday.

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Technology firms to spend $150bn on building new data centres

When Google filed its S-1 form in April 2004 before its stock market flotation, it revealed that not only was it already very profitable – making $105m (£67m) on $1bn revenue in 2003 – but also it had invested hundreds of millions of dollars in building a network of servers around the world.

Onlookers quickly realised there were hundreds of thousands of servers – and Google was making them itself from spare parts. It was at that time the third-largest server manufacturer in the US. But it didn’t sell a single one.

The cost of building a “cloud service” like Google’s has only gone up: in its latest results, it revealed that it invested $1.6bn on data centres just in the three months from April to June. That’s now become Google’s typical spending – $4bn a year – on the systems that it uses to index the web, answer searches, serve adverts, handle email, store photographs and provide maps and Street View photos.

And it’s far from alone. Globally, spending on data centres will hit $143bn this year, according to the research group Gartner, and $149bn next year, continuing a slow but steady growth. The cause? “Big data”, as companies try to cope with a growing flood of information about their business and others’, as well as the rush to enable “cloud computing” – so that data can be accessed from anywhere you have an internet connection.

Handling “big data” for millions of people generally involves billion-dollar cheques. That was the price Apple spent on its third data centre – in Malden, North Carolina – covering 500,000 sq ft (4.65 hectares) and cooled by water from nearby rivers.

It’s not alone: Google, Facebook, US phone company AT&T and services company Wipro also have centres there, attracted by cheap electricity and plenty of space in the rural state; one centre can cover as much space and use as much electricity as a small town. They are power-hungry and data-hungry. The servers needed to process the data have to be arranged in racks, with cooling air forced over them; storage is arranged in racks of hard drives which are set up in the expectation that some will fail, but be replaced. The data enters and exits via thick fibre-optic cables routed through the floor.

Yet two things you’ll rarely find in data centres are people or light. Many operate as “lights-out” systems, because the machines don’t need to be watched; they can be remotely monitored. But that need to make data move quickly means it’s important to build data centres near to their users. Hence Google built one near Dublin covering 4.45 hectares (11 acres) and costing €75m. Unusually, it’s air-cooled.

Even so, building data centres is increasingly becoming a tussle between access to space, and rapidity of connection. Ahead of the 2012 London Olympics, some IT administrators in the financial centres of Canary Wharf in east London fretted that they wouldn’t be able to get enough electricity to power their new centres – which had to be located close to dealing-room floors in order not to give up precious milliseconds of valuable trading time. Some considered briefly moving out of London – but relented and now benefit from the extra power sources installed to deal with them.

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NSA gathered thousands of Americans’ e-mails before court ordered it to revise its tactics

For several years, the National Security Agency unlawfully gathered tens of thousands of e-mails and other electronic communications between Americans as part of a now-revised collection method, according to a 2011 secret court opinion.

The redacted 85-page opinion, which was declassified by U.S. intelligence officials on Wednesday, states that, based on NSA estimates, the spy agency may have been collecting as many as 56,000 “wholly domestic” communications each year.

In a strongly worded opinion, the chief judge of the Foreign Intelligence Surveillance Court expressed consternation at what he saw as a pattern of misleading statements by the government and hinted that the NSA possibly violated a criminal law against spying on Americans.

“For the first time, the government has now advised the court that the volume and nature of the information it has been collecting is fundamentally different from what the court had been led to believe,” John D. Bates, then the surveillance court’s chief judge, wrote in his Oct. 3, 2011, opinion.

The court, which meets in secret, oversees the Foreign Intelligence Surveillance Act, the law authorizing such surveillance in the United States. It has been criticized by some as a “rubber stamp” for the government, but the opinion makes clear the court does not see itself that way.

Bates’s frustration with the government’s lack of candor extended beyond the program at issue to other NSA surveillance efforts.

“The court is troubled that the government’s revelations regarding NSA’s acquisition of Internet transactions mark the third instance in less than three years in which the government has disclosed a substantial misrepresentation regarding the scope of a major collection program,” Bates wrote in a scathing footnote.

The Washington Post reported last week that the court had ruled the collection method unconstitutional. The declassified opinion sheds new light on the volume of Americans’ communications that were obtained by the NSA and the nature of the violations, as well as the FISA court’s interpretation of the program.

The release marks the first time the government has disclosed a FISA court opinion in response to a Freedom of Information Act lawsuit. The lawsuit was brought a year ago by the Electronic Frontier Foundation, a privacy group.

“It’s unfortunate it took a year of litigation and the most significant leak in American history to finally get them to release this opinion,” said foundation staff attorney Mark Rumold, “but I’m happy that the administration is beginning to take this debate seriously.”

The pressure to release the opinion was heightened by a series of recent revelations about government surveillance based on documents leaked to The Washington Post and Britain’s Guardian newspaper by former NSA contractor Edward Snowden.

Over the past 21 / 2 months, those revelations have reignited a national debate on the balance between privacy and security, and President Obama has promised to assuage concerns about government overreach, in part through more transparency.

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Gazing into the crystal ball: Video surveillance in 2020

Like any other industry, it is hard to say what the future holds for video security. Global political developments, economic crises and similar events are influencing factors that can play a key role. Of course, it is possible to draw some conclusions from current developments.

Network without boundaries

You don’t have to be a fortune teller to assume that more and more applications will run over the network in the future. This also applies to video security as the trend toward digital solutions continues to be strong. Users are set to profit from the flexibility, higher image quality and new options digital technology has to offer. It is possible to combine and control many applications over the network in a large system. However, the network then becomes a bottleneck because more and more applications are running over the same network. If you take into account the trend toward higher image qualities in video systems, you then have very large amounts of data that require a well-dimensioned network for rapid data transfer. This should not be reason to refrain from increasing image quality, or modernizing and extending the network. A sound, cost-efficient balance between feasibility, technical concepts and actual requirements will be the best solution in the future. In terms of image quality, I anticipate five- to 10-megapixel resolution will be the standard of the future.

More mobile, more flexible

The mobility trend is likely to continue to increase. Customer and integrator requirements of the future are likely to include the ability to directly control cameras and access camera data, set up the complete system remotely and import updates or make other changes in the system configuration. Providers have to react. However, in doing so, they cannot afford to lose sight of a key factor: User friendliness. One solution is a special app that allows complete video management or the setup of complete systems via mobile end devices, without any restrictions in the data transfer rate or image quality. This requires new codices and streaming methods, as well as a certain degree of product intelligence.

The flexibility of the system is crucial. It has to be flexible in terms of expansion capabilities with new cameras as well as in terms of sustainability. It must be possible to add new functions to old models using updates. Flexibility will mean even more in the future as development efforts move toward the idea of a platform rather than an individual product. In a nutshell, it means that the customer does not have to define unchangeable camera features when choosing a camera. Instead, the user can select the sensor modules from a kind of construction kit. This way, systems can be quickly adapted to new requirements or technical changes.

This creates enormous advantages for systems integrators. On the one hand, it puts them in a position to generate updates and added value for customers without incurring major additional costs. On the other, they can implement future customer requirements into appropriate solutions with lower storage capacity.

What will generate added value?

Future video system requirements are sure to include video analysis, which is set to become more popular. Analytics such as heat maps or counting lines will deliver additional information in many areas. Providers with integrated added value features can score points where users want to pay as little as possible or demand these services in the overall package without additional costs.

Where will data be stored?

Will data be stored within the camera itself, in the cloud or via a DVR? One thing is certain: An increasing amount of data will be stored inside the camera in the not too distant future. It will be stored in HDTV resolution and for up to several weeks. Data storage in the cloud is also set to increase. The advantages are plain to see. DVRs are no longer necessary for data storage and users can look at video from anywhere using Internet-enabled devices. Hosted video is likely to be a growth market, particularly for smaller companies and private individuals. Does this development mark the end of DVR and on-site data storage? Not quite. Large companies in particular will either want to store sensitive data inside the camera on a permanent basis or in the supposedly less secure global data cloud.

Buy or lease?

It will be interesting to see whether users will have to purchase video systems outright, if leasing will be an option or if other remuneration models will come into play. It is likely that we will see a mix based on user requirements. These customized offerings will open up other market segments that did without video surveillance in the past due to the costs involved. Cost-effective leasing models, probably in connection with hosted video, are sure to make video security an attractive option for private users in the future. Where it goes from here heavily depends on manufacturer offerings and prices.

Where will growth come from?

Today, most video security systems are in operation in retail stores. With innovative improvements to network cameras and their range of applications, this technology will be interesting for many other industries and markets. I expect high growth rates in a number of different areas, including public security. Looking at current developments and ongoing discussions, it is safe to assume that video is set to become standard in public areas, airports, train stations and other places where large numbers of people are present. In terms of image quality for video surveillance in public spaces, it is likely that we will see legislation in place by 2020 that will ensure minimum image resolution standards. A minimum resolution of one megapixel would be appropriate in order to guarantee that the images can be used to prosecute offenders. Other growth industries include transportation, healthcare and education. Private users are also increasingly seen as customers.

The most important sales regions

Europe and the U.S. will remain the core markets for video systems. The markets are already saturated, however, the technological conversion from analog to digital systems by 2020 will continue to bring high turnover. India and China with their huge population base and high growth rates will be the key drivers in the Asian market. A high level of demand for digital video systems can also be expected in regions with strong broadband infrastructure growth. Fiber optics is a keyword here. I think research firm RNCOS’ prediction of annual growth of 14 percent through 2017 is absolutely realistic.

Who benefits?

It’s impossible to say, however, it is clear that users will definitely benefit from the technical innovations and new options, be it higher image quality, mobile solutions or other analysis options. From a manufacturer’s point-of-view, one thing is certain: Customer requirements are key. Surveillance solution providers must orient themselves toward customer requirements and not the other way around. Success in the market requires providers to face a number of challenges that need to be taken into account in the company’s corporate strategy. They have to deliver technological solutions that can fulfill current and future requirements, making it necessary to continuously reinvent the company. This requires a balance between the synergies and uniqueness of the products. Manufacturers need a portfolio that has an attractive mix of “bestsellers” for the majority of applications and innovative “high-end” solutions that will gradually develop into bestsellers. At the same time, it is important to strike the right balance between price and product features. Corporate success requires technological developments as well as continuous growth, both in terms of market shares and an international presence. To this end, it is crucial to retain control over all of the key processes and new structures that come hand-in-hand with growth. This is the means to an end: The goal is to be competitive in the future.

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TACKLING THE GREATEST DIGITAL DIVIDE

What’s the most persistent digital divide in America? It isn’t by race, income or educational attainment, studies show, but by age.

Just 56 percent of Americans over 65 are online, according to a May study by the Pew Internet and American Life Project, compared with 83 percent of people aged 50 to 64, 92 percent of people 30 to 49 and 98 percent of 18-to-29 year olds. The 2013 study represented the first time the percentage of America’s online elderly tipped over the 50 percent mark.

The racial divide, by comparison, only runs from 76 percent of Hispanic Americans who are online to 85 percent of blacks and 86 percent of non-Hispanic whites, Pew found.

The divide measured by income is somewhat greater, from 76 percent of households that make less than $30,000 per year to 96 percent of households that make more than $75,000. The education divide comes closest to the age divide. About 59 percent of Americans who didn’t complete high school are online, Pew found, compared with 96 percent of college graduates.

The effects of this divide can be pernicious, said Tony Sarmiento, executive director of Senior Service America, a Washington-area nonprofit that works to increase Internet use among the elderly. Disconnected seniors are more likely to feel isolated and sink into depression, Sarmiento said, especially if they’re housebound by physical ailments or have lost much of their nondigital social circle to death, disease or dementia.

A 2009 report by the Phoenix Center for Advanced Legal and Economic Public Policy Studies found a 20 percent reduction in depression among seniors who are online compared with those who are not.

“We all end up paying for that in terms of older people needing more care because their health deteriorates,” Sarmiento said. “So being able to lessen that isolation online, not just with email but with Skype and things like that could have a tremendous impact.”

Retirees who need to return to the workforce because of reductions to their pensions are also finding it more difficult because job postings are increasingly only online, Sarmiento said. That’s not to mention the struggle of actually competing in the increasingly digital workforce.

This digital divide is even more exaggerated when it comes to mobile.

Only 18 percent of American seniors use smartphones, according to a Pew study released in June, compared with 55 percent of Americans aged 45 to 54, 69 percent of Americans 35 to 44 and about 80 percent of Americans 18 to 34.

A Pew study released Monday showed 43 percent of America’s online seniors use social media now. That’s more than triple the 13 percent who used those sites in 2009 but roughly half the 72 percent of total Americans who use social networking.

Nextgov spoke with Sarmiento Tuesday about why the digital divide persists among seniors, what it means and what government can and should be doing about it. The transcript is edited for length and clarity.

What lessons do you take from studies showing more older Americans are using the Internet, smartphones and Web services such as social networking?

Well, the good news is that last year you had a majority of older Americans online, but that’s a slim majority. That means there are 24 million who are not online and it doesn’t look as if there’s much effort to do anything about that. There are a number of interrelated reasons why the digital divide among those older people persists but in the end I think the current publicly funded efforts and market forces aren’t making much of a dent.

What did you think about the Pew findings released Monday showing a tripling of seniors using social media?

The thing I took away from the latest findings is that once an older person goes online what they use the Internet for is becoming more and more similar to other users. Also, as the kinds of services available on the Internet continue to change, it’s becoming clear that the digital divide isn’t a fixed idea. We used to think the wrong side of the divide meant not having dial up at home. Now the threshold that separates the right and wrong sides of the divide may not be just having broadband at home. Maybe you do need mobile access. Maybe you need to be able to do social media.

What keeps elderly people from getting online?

One of the big hurdles is there are a lot of people who say ‘I’ve lived 65 or 70 or 90 years and I never needed this before so why do I need it now?’ One early report Pew did that stuck with me is they looked at people with less income and less education and then they compared older and younger people with those characteristics. The big change they found in terms of being on the wrong side of the digital divide is that no one had to convince young people they were missing out on something. Their peers were online and they got the sense there was all sorts of stuff they were missing.

Older people too often believe ‘there’s nothing in it for me. Why should I deal with the hassle of a new bill or a new technology or another damn remote,’ let alone the trouble of learning all this stuff. When you don’t know what you’re missing you’re much tougher to reach as a potential market. What we’ve learned when we’ve reached out to older adults is you’re not going to break through this irrelevancy barrier by some kind of mass media campaign. It has to be with a personal touch where one older person helps another older person discover ‘hey, you can really do something here.’

Are there fewer older seniors online because they are less likely to have used the Internet before retirement?

Yes. And that helps to explain why companies that are trying to make money on this segment of the population, often decide it’s just not worth it. It would just cost way too much to convince older customers they should be online and given their age, you know, they might not be customers for that long. So the return on investment just gets weaker and weaker.

On the other side of the coin, what’s causing the overall increase in seniors online?

Well, the other end of the spectrum is people who are entering the group of so-called younger older people or the older baby boomers. Many of them learned this Internet stuff on the job before they retired so they don’t need to get over the digital divide. But there’s also a class difference. If baby boomers aren’t online, it’s because they weren’t in an occupation where being online was important.

Clearly there’s also been a positive effect from older people, particularly those with more income and education, deciding for themselves that ‘maybe there’s something in this for me, my kids are online, my grandkids are online and so if I want to stay in touch with them I’d better get with the program.’

Finally, there’s also the iPad. For a lot of older people, this is a much more user friendly interface where they can much more quickly get to what really interests them and what’s really useful about being online as opposed to the long slog of learning how to use the mouse and the operating system and all that.

Can the government save money in the long run by getting more seniors online?

I think in theory you can, but it’s like the line from Moonstruck where the plumber says you’ve got to spend money to save money.

So what should the government be doing?

That’s a big policy question. Maybe we should try to expand the Lifeline Program, [a Federal Communications Commission initiative to provide low-cost Internet and mobile phone service to poor Americans].

There’s also Connect to Compete, [a partnership between non-profits and telecoms that offers low-cost broadband to poor Americans]. Those providers mostly use the free or reduced school lunch program to verify eligibility, so that’s clearly having no effect on older households, except for older people raising their grandchildren. We’ve proposed that maybe you could use SNAP [the Agriculture Department’s Supplemental Nutrition Assistance Program, commonly known as food stamps] as another way to determine eligibility so households headed by older people with no school-aged kids would be included.

That might address affordability, but if you’re really going to make a dent in the 24 million older adults who aren’t online that’s necessary but not sufficient. You’ve got to deal with the need for instruction designed for older learners. What we’ve found in our experience is if we can mobilize older people to serve as coaches for their peers, that can address the irrelevance problem and a little bit of the skills training.

That’s one reason public libraries are very important, but in too many places funding for public libraries is getting dire. So you come to the conclusion that neither market forces nor the public has the resources to break through that barrier.

Maybe you look at this and say it’s just too overwhelming but I say let’s try.