ZDNet says : The best security warning of the week, however, must be a new scientific paper from reputable engineering types, which unveils the threat posed by exposed LEDs -- yes, those inoffensive little red lights that make your computer room look like a Christmas tree when you turn the lights off. The co-author of this masterpiece of deduction has discovered that you can decode the data passing through, say, a modem or router simply by reading the blinking lights on the front of it, much in the same way that Sherlock Holmes was able to follow Watson's exact train of thought by observing his facial expressions and the objects upon which his eyes alighted around the room. The existence of this insidious lapse apparently occurred to the co-author as he was passing the time one day by staring for several hours at the blinking lights on his modem.
There's only one problem with this, of course -- as the paper makes clear, the exploit only works if you're basically standing across the room, in the dark, and your target is a 9600bps modem, which is unlikely these days to be carrying any data of significance. These modems are at risk from up to 10 metres, in the dark, after which the signal quality drops radically; at faster rates, or if the lights are on, you no doubt need to place your spy device right next to the LED. On the other hand, it might just be easier to con somebody into telling you their password, or just read what they're typing on the screen.
If you're interested in this type of stuff look up Van Eck phreaking.
a quick definition from whatis.com :
van Eck phreaking
Van Eck phreaking is a form of eavesdropping in which special equipment is used to pick up telecommunication signals or data within a computer device by monitoring and picking up the electromagnetic fields (EM-fields) that are produced by the signals or movement of the data. This electromagnetic radiation is present in, and with the proper equipment, can be captured from computer displays that use cathode ray tubes (CRTs), from printers, and from other devices.
Here is an example: The image on a CRT is created by electron beams that scan across the screen in a series of horizontal lines from left-to-right and top-to-bottom, in the same way you read a page of text (except much faster). This occurs at a specific frequency for each individual monitor; there are only a few standard frequencies in existence, and every monitor uses one of them. The intensity of the electron beams determines the relative red, blue, and green brightness for each pixel (picture element) on the screen. As a result, the CRT produces a modulated EM field that contains all the information in the image displayed on the screen at any moment. This information looks like a meaningless, irregular waveform if viewed directly on an oscilloscope. But, like a television (TV) signal, it can be demodulated with special equipment, and the image on the screen thereby retrieved, from some distance away.
However, I think that Ck once told me that PGP had a mode that defeated this somehow, never checked and don't remember how though.
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