One classic approach to authentication is to use a secret password. We have PINs to identify ourselves to automatic
teller machines and login passwords for operating systems. The password is a shared secret between the authenticatior
and the person being authenticated.
Since passwords are so widely used, we might suspect that protocol ap3.0 is fairly secure. The security flaw here
is clear. If you eavesdrops on someones communication, then you can learn their password. Someone connected
to the Telnet client or server's LAN can possibly sniff all packets transmitted on the LAN and thus steal the login password.
This is a well-known approach for stealing passwords.