Alright, so I'll try to unpack this.
I concede that by the strictest interpretation of RAW, not allowing for any contextual information, reference to how operating systems and networks actually function, previous editions, or intent of the developers...
- You CAN NOT hack a device in a closed system and
- that access to the Matrix, whether from the user's device, the target device, or some point in-between, is required.
Normally, I wouldn't reach back on something like this... but if that is how the mechanic is actually meant to work, then I had a terminally deficient understanding of a core thematic element of Shadowrun 5th Edition. So I did. Suffice to say, that the INTENT is not that you cannot operate virtually in a closed system.
The Matrix is the proper name for the largest telecommunications network, shared by the world, with multiple grids, and overseen by GOD. It is THE Matrix. Capital M. At the end of the day, however, the Matrix is a network. Any computer network, especially that can be experienced virtually when accessed via DNI, is also a matrix (a lowercase 'M' matrix, if you will). If you can plug your brain into it and experience the code via your five senses, then you are in a matrix.
RAW allows for 'throwback' items. Any item can be made into a throwback item (Core 421). Your gun. Your datajack. Your commlink. Your deck. We can debate the wisdom of altering your deck into a throwback item, but we cannot argue that you can't do it. In case anyone assumed that making a device into a throwback made it absolutely useless because you have to be connected to the Matrix, the third paragraph in that section discusses how it's immune to being hacked via the wireless Matrix and that you can direct connect, indicating that the device retains functionality.
Common sense tells us that the device can do everything it did before, but without access to the Matrix (functions that would require Matrix access aren't going to work as well, obviously).
Stringing several of these throwbacks together creates a network that is not on the Matrix. You can then connect with a throwback datajack and access this network without also being plugged into the Matrix.
If you follow the strictest interpretation of RAW, then your case is that I cannot, while directly hooked into a network of devices, edit oe encrypt any of the files(Edit File Matrix Action), use any of the functions of any connected devices (Control Device Matrix Action), or turn one of the devices off and then back on (Reboot Device Matrix Action).
So, one of two things is true here:
The rules were written specifically so that you cannot do what I just mentioned above.
OR
The rules were worded in a way to differentiate virtual/computer actions from physical actions with a word that would easily get that point across, but did not take into account the potential for confusion when dealing with closed networks (and ultra-literal gamer geeks).
Since we now know the intent is not the former, the latter must be true. 'Matrix Action' thematically fits and gets the point across, but in practice it's really 'Computer Action'. It's not as sexy to say and most computers default to being on the Matrix anyway, so let's score the style points.
You do NOT need to be on the Matrix to edit files, control devices, or even hack on the fly. You do need to be on a matrix, or computer network. You have to be on a computer to do computer actions.
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Given all of that, GOD cannot see you because you are literally not on their network. GOD cannot converge on you.
The question, though, do you develop an OS? There is precedence for building an OS but not being converged on when it hits 40: When you are in a Host.
If it were up to me, you would not develop an OS. To me, OS represented GOD detecting the tiniest abnormalities and corruptions in code across the Matrix and then honing in on the source as more and more tiny bits were emitted from the same source. A shark following the trail of blood.
Conceding that OS is supposed to be a factor in illegal matrix actions, I'm ok with saying you develop one but you cannot be converged on, unless you somehow connect to the Matrix while your OS is at or above the threshold (much like when you leave a Host with 40+ OS). I understand, Finsterstang, that my explanation is an improbably unwise implementation of software development... but I can't think of another way to represent that mechanic in terms of what is going on in the gameworld (if you can think of one, I'd be happy to hear it).
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So does this break the game? Does it suddenly make everything excessively vulnerable or easier to hack than before? Not at all.
Grids are not obsolete. I fail to understand why the existance of LANs eliminates the concept of Grids anymore than LANs and intranets eliminate separate service providers in today's internet.
The idea of folks building faraday cages INTO their buildings so that they can host internal WIRELESS networks is, in my mind, highly improbable. The expense of making your building a faraday cage coupled with the ability to defeat that security easily, with a myriad of options, would likely force corporations to simply create a WIRED network.
Secret Wireless Networks in various locations not being detectable by GOD is similarly unfeasible. I require a satellite link to connect to wireless with my device because it's small and only pushes so much signal. A network of any significance will be pushing a signal that would likely connect to the greater wireless network. Even if not, just because you can't reach GOD doesn't mean GOD can't reach you (a satellite uplink eliminates noise created by DISTANCE, which none of this is actually about).
Hacking Ownership requires access to the Matrix, not just a matrix. Nothing presented here changes that. We've already discussed, conceptually, the difference between hacking a device you're holding in your hand vs needing to access the servers where the information you registered ownership of that device is stored. Ownership is not simply stored on the device.
We're not talking about 'smaller parts of the matrix' vs larger parts. We're saying that you can create a network that is not connected to the Matrix.
This creates additional difficulty for Deckers who need to access closed networks, because now they have to be physically with the system or find some way to establish a direct connection.
It doesn't change much with devices in your possession. You had to get the item in the first place and once you have it, hacking it wirelessly is not going to present much difficulty for a decker, OS or not.
You could create your own wired network to keep folks out of it, rendering you immune to hacking, but that's already covered by RAW in throwbacks.
You cannot access things that are on the Matrix if you are not on the Matrix. So you can't plug into your closed network and do a Matrix Search. Well... you can, it's just got a threshold of infinity for anything not stored on your network and 1 for anything that is. You obviously wouldn't be able to trace an icon that isn't on your network or edit files that aren't on your network, etc. You want to do that, you need to get on the wireless Matrix.
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Is this a rule that even needs to be clarified?
Nah. Honestly, this is something a GM should make a ruling for at their table. We are putting it into the Missions FAQ, because Missions is pretty much a big table and players expect consistency in how it's run.