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CA System Vendors Look To Restore Industry Image

By | April 10, 2002

      The high-profile dispute between NDS and Canal+ Technologies has put the spotlight firmly back on the issue of satellite smart card piracy. But, will this dispute have wider ramifications for the industry as a whole?

      Graham Kill, CEO of Irdeto Access Group, which is one of the main rivals to both NDS and Canal+ Technologies, believes so. He told Interspace: “The problem is if the case was proved to be untrue, people very rarely remember the judgement at the end. They remember all the high-profile hype in the beginning. For them it just sticks in their mind. Their lasting memory will be [about the] industry player allegedly involved in a dirty tricks campaign. That will cause a whole series of questions to be asked when any of us try to do business in this market place. There are going to be reputation and trust issues.”

      The story resembles a plot of a good soap opera, with various intriguing elements and no obvious conclusion. Kill said of his reaction when he found out about the lawsuit, “I think my reaction when I saw this in the press is that wow, this is a bold move to go out with a blaze of publicity with a suit and one of such magnitude. So, the accusing party must be pretty damn sure of its facts. The backlash for getting it wrong could be immense.”

      But, it is a double-edged sword. Kill appears to have little sympathy with NDS if it is found guilty of engaging in illegal activities. He said, “If you were to use that information as is alleged in this case, then you have crossed boundaries and engaging in piracy activities is illegal. It doesn’t matter whether you are a pirate or whether you are a legitimate company using the information that you may have gained to propagate piracy activities. You have crossed the boundaries, full stop.”

      The problem now is that all players have the potential to be tarnished with the same brush. While the demand for CA systems is not going away, the way purchasers go about their business is likely to change. “It will cause them to ask the vendors [about] evidence of some of their processes as well as a statement of ethics in addition to other questions. They may want to conduct certain due diligence perhaps. Some of them do it already. I think it has maybe heightened awareness among purchasers,” Kill said.

      It appears that all players in the industry will have to work much harder to win the hearts and minds of customers. “I think those who are not directly tarnished by this instance are going to have to speak more to assure customers that this is not the kind of activity that they engage in. So, they are going to have to work harder in terms of explanation. Those who are directly involved are going to have to work even harder,” noted Kill.

      A heightened awareness among customers may not be such a bad thing, but it does little to ease operators’ worries when they are losing revenues due to piracy. Satellite operators lose out even when their rivals are being hacked. Certain customers will not pay for television when there are numerous pirate cards on the market, which will enable them to get subscription services for free.

      Working in tandem with rivals is especially important to combat the piracy phenomenon, Kill said. “This case focuses on the more negative side of piracy as opposed to what the industry players are doing positively to combat it and often in a collaborative sense. We often work together to take actions against piracy. We have worked with Canal+ and NDS to counter certain pirate activities. I see that very much as a positive and would like to see that continue,” he added.

      Despite the differences between the two parties, Kill would be surprised if this battle went all the way to the courts. He said, “There is a lot of money at stake. So, I would imagine both parties are going to fight some of the way until there is a feeling that on either side they are not making the ground they had hoped for in the case, so they might come to the table. I would suspect that this case would ultimately get settled in some case, but that is just because all cases do.”

      — Mark Holmes

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