Satellite piracy costing TV industry billions

But even the threat of legal action doesn't scare off thieves

The modern-day pirate doesn't sport a patch or walk with a limp.

His weapon of choice is an unassuming, pizza-sized satellite dish that can literally harpoon signals from space and provide lucrative and illicit profit.

And it's happening across the country. The Canadian Motion Pictures Distribution Association estimates that the total loss to the industry from satellite piracy in 2001 alone was about $1 billion and that number is likely far higher today.

But lately, satellite companies, including Bell ExpressVu and U.S.-based DISH Network have been fighting back. The companies are switching to a tough new encryption system while using the threat of court action to target end users.

"We take this very seriously and we have taken a number of actions to counter signal theft," Bell spokesperson Julie Smithers said. Satellite companies like to remind users that theft of signal not only means less subscription revenue for providers, but a fall in ratings for stations which translates into lost advertising revenue, and for artists who are given a portion of profits from subscriptions through the Canadian Television Fund.

Los Angeles-based media analysts The Carmel Group estimates there are at least two million illegal television households in the U.S. and Canada, out of a universe of about 15 million legal households. And the number is growing exponentially.

In the digital age, pirates are likely to look a lot like James, a middle- aged Toronto engineer with two children who happens to enjoy watching the Tennis Channel.

"I can't believe I was actually paying for cable before," he enthuses. James has access to a universe of more than 200 channels, including current pay-per-view movies that are only available at the video store for a cost. Last summer he put up a second satellite at his cottage, with a dish and receiver from a computer store in downtown Toronto that he purchased for less than $200.

James is currently watching a live tennis match in his living room which is decorated with trophies from his local club. Flipping through channels on a black set-top box reveals that he has fully unscrambled access to dozens of Hollywood movies (currently playing are The Dark Knight and Milk) for which legitimate subscribers have to pay up to $5.99 each.

At the heart of the problem are "Free To Air" satellite receivers that are widely available throughout Canada. While the possession of the equipment is not a crime, modifying it to access subscription signals is.

Free to Air is a system widely available in Europe, where television and radio broadcasts are typically sent unencrypted. There are some 250 Free to Air channels in North America, typically for ethnic programming.

"The way piracy works in North America is when consumers turn their Free to Air receivers into Free to Air units that steal," says a Carmel Group report.

A USB port on the system allows consumers to change the internal programming of the module after downloading software from the Internet.

"What the manufacturers and retailers are doing may not be illegal, but it is wilful blindness," argues Luc Perrault, co-chair of the Coalition Against Satellite Signal Theft and a vice-president of the Weather Network. "These things are being imported by the container load into Canada and it's a serious issue."

The coalition, which represents Canadian cable and satellite providers is lobbying government to toughen laws against piracy, including harsher sentences for pirates.

There have been some charges, but they aren't coming quickly enough for the industry. Chris Frank, vice-president of programming for Bell ExpressVu, says the company has "done everything to ensure the integrity of our platform. Secret services around the world spend billions of dollars upgrading encryption systems to make sure their data is secure," he told the Star's Chris Sorensen last year. "We are a commercial company, we can't spend billions, but we spend what it takes within reasonable bounds."

Frank would not say how many people steal from Bell only that it was "speculative to try and figure it out. But the illegal reception is well within industry bounds."

So far, Bell's electronic countermeasures with a new encryption route introduced last November, seem to be working, blocking access to many channels. DISH Network is also in the process of migrating to the new system.

But hackers have been here before. Hacker groups are currently working on the new system, and some feel it is only a matter of time before the code is broken.

Meanwhile, one final route that would have a powerful deterrent effect is to go after consumers who steal signal.

In a get-tough policy, Bell has targeted end users by threatening legal action against customers who have been sold FTA receivers and are registered members of websites that promote piracy.

"We are contacting you because the operation or possession of illegal signal theft equipment to access Bell ExpressVu's programming constitutes a violation," says a letter sent to customers of a distributor selling satellite equipment.

The letter states that Bell is willing to drop legal proceedings if the user pays a $1,000 fine and hands over the equipment to Bell.

But the new tactics aren't scaring some pirates.

"They'll have to pry the remote control out of my hands before I give it up," says James.