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Microsoft and the state of Mississippi said Thursday that they have reached a settlement in a class-action suit over the pricing of Windows and Office. Under the terms of the deal, Microsoft will pay $40 million to the state and up to $60 million in vouchers to consumers, businesses, schools, and local governments.

The deal is similar to the many settlements that Microsoft struck with states in years past.

Those in Mississippi who purchased Microsoft products or computers containing Microsoft products between January 1, 1996, and Thursday will be eligible to receive a voucher of $12 or $5, depending on which products were purchased. The vouchers can be used toward the purchase of any software or hardware product.

Products eligible for the $12 vouchers include three older Windows versions–Windows 95, Windows 98, and Windows ME. Among those that qualify for the $5 vouchers are Office (or components such as Word and Excel), MS-DOS, Windows 1.xx-3.xx Windows for Workgroups, Windows NT Workstation, Windows 2000 and Windows XP.

If not all the vouchers are claimed, Microsoft will pay up to an additional $8 million to the state.

“Microsoft is pleased to reach this resolution with the State of Mississippi and with our customers in Mississippi,” said Steve Aeschbacher, Microsoft associate general counsel. “We look forward to working with the state on issues of mutual concern going forward.”

The abstract concepts of “botnet” and “Trojan” just became a lot more concrete for me.

In less than an hour on Thursday, I was able to use programs readily available on the Internet underground for as little as $300 to infect several Windows clients and take complete control of them in a test environment.

In contrast to the real world, the McAfee Malware Experience event, which was akin to a Malware 101 class (or, in my case, Malware for Dummies), served up printed step-by-step instructions for us nonhacker journalists. But McAfee researchers said the programs used–real samples of malicious code from the wild–were not particularly sophisticated and any script kiddie could manage them easily.

First, I used a tool to infect a PC with a Sub Seven Trojan. With a few clicks it was on the client and I had remote access to everything on that machine via a so-called “back door.” A management console provided an easy-to-use interface, including drop down menus with names like “Fun Manager.”

Feeling mischievous I used the “flip screen” feature so that everything on the victim’s PC was upside down and I changed the colors for the desktop and background to Hello Kitty hues of pink and orange. If I wanted to be nastier I could have directed the victim’s browser to a URL of my choosing, turned on the client’s Web cam, taken control of a chat session, printed out obscenities on the networked printer, or hidden the desktop or mouse from sight.

McAfee didn’t let us save screen shots so I found this one on the Internet. It shows the interface of the Sub Seven Trojan and the “fun” things that can be done to a victim’s computer with it.

(Credit: All-Interenet-Security.com)

I tested out the keystroke logger and found it to be particularly empowering and scary. It was thrilling to have so much control at my fingertips. It felt a bit like the electronic equivalent to pranks we did as kids, such as shorting the sheets and drawing on someone while the victim was sleeping. But these digital shenanigans have much more dire consequences.

Next up was creating a botnet, which would give me control over multiple zombies to do things like shut Web sites down with a denial of service attack and blanket e-mail inboxes with spam. I infected the two clients with the bot software and then created a command-and-control center on an IRC room. I then ordered up the system information from the bots, scanned their ports, and downloaded a malicious file onto the computers, as well as a keystroke logger. As they say in hacker lingo, I “p0wned” the machines.

Finally, I used a program called “Shark” (also known as “Backdoor-DKG”) to create a Trojan and install it on the victim clients by sending it through a Microsoft Outlook e-mail. Using a spreadsheet interface, I was able to set the functions of the Trojan, activate a keystroke logger and could have disabled antivirus software or set it to shut the system down based on certain conditions.

Following the tutorial, McAfee provided some bleak statistics to put my actions into perspective. For instance, the company’s Avert Labs sees more than 400,000 new zombies a day, 4,000 new pieces of malware a day and 1.5 million malicious sites a month. There were 1.5 million pieces of unique malware last year and McAfee predicts that number will rise to 2.4 million this year.

The numbers aren’t all that surprising to me now that I’ve seen firsthand how easy the malware is to create and use. All in all, I’d say it was a very sobering experience.

Virgin Mobile USA is launching a new pay-as-you-go mobile broadband service called Broadband2Go.

Novatel USB broadband modem

(Credit: Virgin Mobile USA )

The service, which uses Sprint’s EV-DO Rev. A network, will not require a monthly subscription nor will it require an activation fee. To use the service, people need to buy a Novatel USB broadband modem that costs about $149 from Best Buy.

The device and service will be available in late June, the company said. The service is sold in megabyte and gigabyte packages. For $10 a month users can get 100 MB of data usage. For $20 they can get 250 MB of data, and for $60 they get 600 MB. The most expensive pack costs $60 and provides 1GB of data usage. These buckets of data usage are available for 30 days before they expire.

Users will be able to monitor their data usage when they connect to the wireless network, and they’ll be reminded to top up their account as they near their data limit. And Users can add more data to their account as often as they’d like by using a credit card or a Virgin Mobile Top-Up card.

Prepaid services for cell phones have long been popular in Europe and other parts of the world, but in the U.S. these services have traditionally served only niche markets. But now with the economy in a deep recession, prepaid is gaining steam in the U.S. And consumers of all stripes looking for good deals with no service contracts.

Regional prepaid provider Cricket, which is a subsidiary or Leap Wireless, also offers a pay-as-you-go wireless broadband service. Like the Virgin Mobile wireless broadband service, Cricket’s service also doesn’t require a contract. And users can get unlimited wireless broadband for $40 a month using the company’s 3G wireless network.

The big nationwide wireless carriers, such as AT&T, Verizon Wireless, and Sprint Nextel, have traditionally gone after business users with their broadband wireless services. As a result, the pricing of their service is usually pretty high–around $60 to $65 a month for an unlimited plan that typically offers up to 5GB of data per month.

But the wireless data services offered with pay-as-you-go plans and no contract seem to be geared more toward consumers.

“We have seen a big opportunity to provide this service to our consumer customers who can’t afford a similar service from Verizon and AT&T,” said Greg Lund, senior manager of corporate communications for Cricket Communications. “A lot of these customers were on dial-up, who want broadband service. And because they’re very mobile, the wireless broadband service is good fit for them.”

The shuttle Endeavour is poised for blastoff Saturday on one of the most complex space station assembly missions yet attempted, a grueling 16-day flight to attach a Japanese experiment platform, deliver critical spare parts, replace massive solar array batteries, and swap out a station crew member.

Five spacewalks by four astronauts will be required, along with carefully choreographed, near daily use of three robot arms, two on the station and one aboard the space shuttle, to move equipment, spare parts, experiments and spacewalkers from one work site to another.

Complicating the choreography, the station must host a combined crew of 13–six full-time station astronauts and seven shuttle visitors–for the first time, putting the lab’s life support systems, including its new water recycling system, toilets, oxygen generators, and carbon dioxide scrubbers, to the test.

The International Space Station.

(Credit: NASA)

“It’s like having your family descend on you for the holidays, right? And they’re going to stay for a very long time. And they come, and they’re bringing all their stuff,” said Mike Moses, chairman of NASA’s Mission Management Team at the Kennedy Space Center.

But he said the combined crews are “more than ready” for the challenge, adding that with six full-time station astronauts on board, “I think what we’re going to see is probably some unprecedented efficiencies” because “they know where to go, they know what the procedures are, they know how to get things done.”

For the Endeavour astronauts, shuttle mission STS-127 is the equivalent of a “heavy duty construction mission,” said flight engineer Julie Payette, a Canadian astronaut, jet pilot, and robot arm operator. “It is about as complex a mission as we’ve put together so far in the joint shuttle-space station program.”

“With the shuttle program ending in 2010, we had to pack the mission as much as we could. So our mission is probably reaching the limits of what one crew can do on a 16-day mission: five different spacewalks, we’re basically operating at least two (robot) arms every day of the mission except for one, it is extremely intensive in the choreography that we do.

“But it is a construction mission,” said Payette, making her second shuttle flight. “We are crane operators, we’re construction workers, we’re going to replace elements of the station, install new elements on the station, transfer equipment inside the station, we’re going to disturb life for two weeks, and then we’re going to go home.”

Endeavour is scheduled for liftoff on the 127th shuttle mission at 7:17:15 a.m. EDT Saturday, roughly the moment Earth’s rotation carries launch pad 39A into the plane of the space station’s orbit.

Joining Payette on the shuttle’s upper flight deck will be veteran commander Mark Polansky, making his third flight, rookie pilot Douglas Hurley, and first-time flier Christopher Cassidy, a Navy SEAL with combat experience in the caves of Afghanistan. Based on seat positions, Hurley will be the 499th individual to reach orbit and Cassidy will be the 500th.

Strapped in on the lower deck will be David Wolf, a doctor making his fourth flight, physician-astronaut Thomas Marshburn, and space station flight engineer Timothy Kopra, both making their first flights.

The shuttle Endeavour’s crew (from left to right): Thomas Marshburn, Christopher Cassidy, Timothy Kopra, Julie Payette, Douglas Hurley, commander Mark Polansky, and David Wolf.

(Credit: NASA)

Kopra, an Army helicopter pilot, will trade places with Japanese astronaut Koichi Wakata as a member of the Expedition 20 crew, remaining behind aboard the International Space Station when Endeavour departs. Wakata, launched to the station in March aboard the shuttle Discovery, will take Kopra’s place aboard the shuttle for the trip back to Earth.

Along with the crew swap, the primary goals of the mission are to attach a porch-like external experiment platform to the Japanese Kibo laboratory module, to equip it with three experiment packages, and to hook up TV cameras, data and electrical connections. Attachment of the Japanese Exposed Facility, or JEF, will complete the assembly of the station’s most sophisticated laboratory suite.

The main Japanese lab module is equipped with its own airlock and its own robot arm to move experiments out to the exposed facility and back inside as needed.

“The Japanese Exposed Facility, or JEF as we tend to call it, is very impressive,” Wolf said in a NASA interview. “It’s a large external porch to the space station where high quality experiments can be conducted in the high vacuum of space. It’s really an exceptionally valuable piece of real estate. It has its own robotic arm, the ability to do observations of the Earth and of the sky, astrophysics experiments, a very wide range of abilities.”

Protecting against failures down the road, the astronauts also plan to mount a spare S-band antenna assembly on an external storage platform, along with a spare cooling system pump module and a replacement drive unit for the station’s robot arm transporter.

In one of the more challenging tasks faced by the spacewalkers, six 375-pound batteries will be replaced in the station’s oldest set of solar arrays on the far left end of the lab’s main power truss. The battery replacement will be spread over two spacewalks.

“The P6 batteries have been up there since December of 2000,” said Kirk Shireman, deputy director of the space station program at the Johnson Space Center. “They’re reaching the end of their life (and) we need to swap them out. We’ll be doing that for the first time, it’s very challenging.”

The spacewalkers also will attempt to rewire a gyroscope circuit, install another television camera to provide additional external views, and deploy a jammed external storage mount on the left side of the power truss. The crew plans to deploy two others on the right side of the station that are needed to hold spare parts and equipment being stockpiled as the shuttle program winds down toward retirement in 2010.

Finally, the astronauts will make preparations for the debut flight of a Japanese cargo ship in September. The HTV spacecraft is designed to be plucked out of open space by the station’s robot arm for docking to the Harmony module’s upper port.

Wolf and Kopra will carry out the mission’s first spacewalk, followed by EVAs with Wolf and Marshburn, Wolf and Cassidy and then a final two excursions by Cassidy and Marshburn. Polansky, Hurley and Payette will operate the shuttle and station robot arms, moving from the orbiter to the station and back as needed, assisted by Wakata.

“It’s an extremely challenging, complex mission,” Polansky told CBS News. “The robotics that are interlaced with the spacewalks are complicated, we do complicated robotics every single day of the mission, starting with the first full day in orbit all the way through. We just never get to come up for air. It’s something I think about a lot.”

The Expedition 20 crew (from left to right): Robert Thirsk, Frank De Winne, commander Gennady Padalka, Roman Romanenko, Koichi Wakata, and Michael Barratt.

(Credit: NASA)

And with a combined crew of 13 aboard the space station, the pace will be hectic to say the least.

“It’ll be very interesting to see how we’re going to adapt to that many people inside a relatively small vehicle,” Payette said. “I mean, it’s very roomy compared to the comfort of the space shuttle, but it’s still a very confined environment. There will be growing pains, how to adapt to one another, not to step on one another, not to all speak on the communications loops at the same time.

“But I think it’ll be awesome for the first time to have that many people in space. It will really be the beginning of a permanent settlement in space, because that’s what it will be in the future and we’re trying it out for the first time. It’ll be very interesting, the social aspects of having that many people on board from different nationalities.”

Assuming an on-time launch, Endeavour will dock with the space station around 3:55 a.m. on Monday. The mission will be conducted during the deep overnight hours in the United States, with the five spacewalks beginning between 1:42 a.m. and 10:12 p.m. on June 16, 18, 20, 21 and 24. Undocking is expected around 8:11 p.m. on June 26 with landing back at the Kennedy Space Center scheduled for 12:18 a.m. on June 29.

“I sum it up this way,” Payette said. “Six people, five EVAs, three (robot) arms, seven (payload) handoffs, 16 days. It is going to be an action-packed flight. So if you’re bored, please tune in.”

Yahoo has found a new chief financial officer, naming Tim Morse to replace the recently departed Blake Jorgensen.

New Yahoo CFO Tim Morse

(Credit: Altera)

Morse, 40, comes to Yahoo from Altera, the Silicon Valley chip company, where he was senior vice president and chief financial officer. He’s perhaps the most high-profile hire to date for new CEO Carol Bartz, who asked Jorgensen to leave in February but has kept him on the job while she searched for his replacement.

Jorgensen will remain as Yahoo’s CFO until June 30th, a Yahoo representative said. Morse, also a veteran of General Electric, will start working at Yahoo on June 17 and formally take over the CFO job on July 1.

Bartz is slowly filling out her roster of lieutenants, having brought chief marketing officer Elisa Steele into the fold in February amid a significant reorganization. Yahoo is still looking a head of international operations after hiring Jeff Russakow in April as the head of a new customer advocacy group created by Bartz.

It’s unclear whether Morse’s arrival will cause further changes to a Yahoo that has been suffering from “reorg fatigue,” as Bartz noted in February when announcing yet another reorg. In recent comments to analysts and the press, Bartz has called for Yahoo to cut costs in discretionary areas and simplify its processes, both areas likely to fall under Morse’s watch.

Corrected at 3:07 p.m.: The story was updated with the correct spelling of Blake Jorgensen’s name, and the hiring of Jeff Russakow as Yahoo’s head of customer advocacy.

Jammie Thomas will be much more restricted in arguing her defense after Thursday’s court decision.

(Credit: Jammie Thomas)

A federal judge dealt a serious blow to Jammie Thomas’ defense on Thursday.

U.S. District Court Judge Michael Davis will allow evidence gathered by MediaSentry, a security firm that once investigated illegal file sharing on behalf of the music industry, to be heard by a jury in Thomas’ retrial, scheduled for Monday. Thomas is the first person sued by the recording industry for copyright violations to have her case argued before a jury. She was found guilty in October 2007 of illegally sharing 24 digital-music files. The judge in the case declared a mistrial after acknowledging he erred in giving jury instructions.

Her new attorneys recently accused MediaSentry of violating federal and Minnesota wiretapping statutes and asked the judge to throw out its findings.

The decision is significant for the music industry. Had the judge granted Thomas’ motion, “it would have been nearly impossible” for the Recording Industry Association of America to prevail, according to Ben Sheffner, a former entertainment industry attorney and copyright expert.

Davis also won’t let Thomas raise a fair-use defense because she waited too long to make the argument.

“This litigation has gone on for years, yet Plaintiffs had no inkling of this defense until the eve of trial,” Davis wrote in his decision. “The record in this case, with which this Court is intimately familiar, gave no hint that a fair use defense would be forthcoming. It would be highly prejudicial to Plaintiffs to allow Defendant to assert this new affirmative defense on the eve of retrial.”

What all this means is that Thomas’ legal team is running out of ways to prove she’s innocent. At her first trial, her defense offered little more than her telling the jury she was innocent of illegally sharing music.

That didn’t work out so well. One member of the jury called her a liar following the trial.

In less than 24 hours all full-power broadcast TV stations in the U.S. will flip a switch to stop broadcasting their analog TV signals and will only broadcast TV signals in digital. And for millions who are unprepared, it could mean lights out on their favorite TV shows.

I know what you’re thinking. “We’ve heard this before.” In fact, you’ve probably been hearing about the transition to digital television for the last decade. You likely started seeing public service commercials last year encouraging you to buy a digital converter box to turn your old analog TV into one that could receive digital signals.

In early February another supposed deadline loomed. And then it didn’t happen. Congress, fearing that too many people weren’t prepared, postponed the switch, and more than 6 million procrastinators were saved.

But now the new deadline of June 12 is upon us once again. And this time it’s for real. President Obama himself issued a statement last week:

“We have worked hand in hand with state and local officials, broadcasters and community groups to educate and assist millions of Americans with the transition…I want to be clear: there will not be another delay.”

So here we are, less than a day away from the final transition. And despite months of public service announcements and more than $2 billion spent by the U.S. government to help people prepare, millions will still face a blank screen when they hit that little power button on their TV remotes starting Friday at 12:01 a.m.

The good news is that delaying the switch from February to June has given the Federal Communications Commission some time to ramp up efforts to get the public prepared. The agency has enlisted the help of dozens of groups including volunteers from AmeriCorps, civil rights groups, and even firefighters to help people purchase and install their converter boxes and antennas.

Congress also kicked in additional cash, about $650 million on top of the $1.5 billion that had already been allocated for DTV readiness. The bulk of the $650 million was given to the Commerce Department to fund its voucher program. And Congress authorized $90 million of the $650 million to be used by the FCC for outreach programs. So far, the FCC has received $65.7 million of that money, and the Commerce Department has authorized another $9.65 million to help pay for call centers that are in place to address consumers’ questions and concerns.

The Commerce Department has been issuing $40 vouchers to help people pay for the new equipment necessary to turn their older analog TVs into ones that can receive digital TV signals. But just before the February deadline, money for the program ran dry and more than 2.5 million people were left on a waiting list for vouchers.

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In its most recent report to the FCC, representatives from the Commerce Department said that the program is in good shape, and there is enough money in the program to provide vouchers to all households that still need them until the final deadline of July 31.

It looks as though these last ditch efforts to prepare Americans for the DTV switch have made a big difference. The number of households that are unprepared for the June 12 transition has been cut in half from what it was in February, according to the Nielsen Co., which has been tracking the number of households prepared for the transition

But even though most people are prepared, millions will still not have access to TV on June 12. In its final update before the June 12 deadline, Nielsen reported that 2.8 million American households, or 2.5 percent of the television market, are completely unready for the transition. As of the end of May, another 9 million homes that subscribe to cable or satellite services but that have spare television sets, in bedrooms or kitchens and that are not connected to a paid TV service, are expected to lose reception.

Vulnerable markets
The FCC has targeted 49 markets that it considers particularly vulnerable. These markets include New York, Los Angeles, Chicago, Philadelphia, Miami, Boston, and Dallas-Fort Worth. Aside from inner cities where many low-income people live, people living in rural areas, particularly in the West where fewer subscribe to cable and satellite services, are the least prepared for the transition, according to Nielsen’s latest report.

Acting Federal Communications Chairman Michael Copps has said that he is pleased and impressed by the cross-agency and volunteer group collaboration and cooperation over the past few months.

“In January I feared where we were headed with this transition,” he said during a recent public meeting. “But it has turned into an inspiring and enjoyable experience to see how these different agencies can work together. ”

He also acknowledged that many people will still face problems during the transition.

“Even though we are better prepared this time,” he said. “There will still be disruptions for some consumers. And candor compels us to inform viewers of these issues.”

Not only are some households completely unprepared, but officials also say that millions of people who have already bought converter boxes and/or antennas will still experience problems, such as poor reception. These problems may occur from improperly installed antennas or people using the wrong kind of antenna for their region. But it may also be due to the fact that digital signals travel differently through the air than analog signals. So some TV viewers who may have been able to tune in analog channels may not be able to receive digital channels.

Because many TV broadcasters have already been transmitting some or all of their channels already in digital, some viewers who made the switch early and are watching digital TV should rescan their boxes. And they may need to readjust their antennas to get signals after June 12. The reason for this is because some stations will have to move some digital channels when spectrum is vacated. And some broadcasters may also be broadcasting the signals at different power levels to avoid interference.

To help answer questions and deal with confused and frustrated TV viewers before and after the transition, the FCC has staffed nearly 4,000 call centers at a cost of more than $40 million. The voucher program, which provides up to two $40 coupons per household to help defray the cost of digital converter boxes, will also be extended to July 31.

The switch to broadcasting in digital instead of in analog was mandated to free up wireless spectrum so that it could be used for other purposes. Digital signals use up far less spectrum than analog signals. The FCC has already auctioned off the spare spectrum in its 700MHz auction, which raised $19.6 billion for the government.

This auction generated more revenue for the government than any other wireless auction the FCC has ever held. Not a bad tradeoff considering that the government spent a total of about $2 billion to help get people ready for the transition. The Bush administration spent about $1.5 billion on DTV transition preparation, and Congress allocated another $650 million when it delayed the transition in February.

The move to digital TV has also proved to be a big boon for retailers, TV makers, and other consumer electronics makers. Millions of consumers have bought digital TVs, converter boxes, and antennas to prepare for the switch. The Consumer Electronics Association says that TV sales are up about 32 percent in 2009 compared to the same period in 2008, and this is despite the fact that the U.S. is in a recession. But some experts attribute the uptick in new digital TV sales to lower prices and more digital programming.

Even though buying a new TV, an antenna, or a digital converter box for an older TV is a hassle and an expense, consumers also benefit from the transition to digital TV. These signals provide better picture quality. And because digital consumes less wireless spectrum when it transmits, broadcasters can offer viewers several more channels of programming. Many stations throughout the country that have already been broadcasting some or all of their signals in digital have already added channels.

The FCC has also been emphasizing to consumers that if they’re already subscribed to a paid TV service, they will not have to worry about the transition at all. The DTV transition applies only to full-power broadcast television stations. These are stations that use the public airwaves to transmit their programming to viewers through a broadcast antenna. That said, satellite customers who receive local stations through an antenna, rather than by satellite, may be affected. The FCC recommends checking with the provider.

“Analog nightlight” services
So in short, the vast majority of Americans are already prepared for the digital TV transition. But for the small percentage of people who are still unready, all hope is not lost.

About a hundred TV stations around the country serving nearly 70 percent of all households are providing “analog nightlight” services. The “nightlight” program is a voluntary program in which TV stations agree to keep an analog signal turned on in addition to their digital signals to provide information about the DTV transition and to notify unprepared TV viewers of emergencies, such as hurricanes. More than half the stations broadcasting the “analog nightlight” service will remain on air for 30 days. And the rest will be on for at least two weeks. In total, these stations will reach 69 percent of TV households.

And only high-power broadcasters are required to switch to digital, a few low-power analog stations and rural relay stations known as “translators” will still be available in some areas.

The FCC and the Commerce Department also won’t leave DTV laggards in the lurch after the June 12 deadline. Converter box coupons will still be available, while supplies last, until July 31. But consumers must keep in mind that the coupons expire 90 days after they are mailed, so they are urged to act quickly to redeem them. The FCC also recommends calling retailers ahead to confirm availability of coupon-eligible converter boxes on the day people go shopping.

And if you’re still confused and frustrated and you don’ t know what to do, the FCC is also planning to provide assistance to TV viewers after June 12. In some areas the FCC will continue to offer free in-home installation services and walk-in centers to consumers who need technical assistance. These programs will be available until the end of June, and in some locations, through July. And the FCC will keep its call center available to consumers at least through the end of July for anyone who has questions.

If you still need help upgrading your TV or you have questions about the availability of digital signals in your area, go to www.dtv.gov or call the government hot line on the transition at 1-888-CALLFCC ( 1-888-225-5322). You can also check out CNET’s updated FAQ on the DTV transition for help.