By Peter J. Brown
The problem of global satellite signal theft looms large. The parties engaged are everywhere and they are highly sophisticated and eager to make money, lots of money. Satellite signal theft is an activity that can spiral out of control in a very short time. In region after region and especially in Asia, this has happened time and again.
The Internet plays a prominent role by providing substantial momentum to the craft and practice of satellite signal theft. And yet, at the same time, satellite signal theft as a phenomenon predates the Internet. It is encountered in all parts of the world today, even where Internet access is not readily available. Still, the Internet is a powerful tool that allows a robust black market to blossom in both products and expertise. The Internet also enables a quick reboot or other response to electronic countermeasures (ECMs), which are designed by Direct Broadcast Service (DBS) companies in particular, to remotely disable clusters of unauthorized satellite receivers.
The steady growth of the Free-to-Air (FTA) Ku-band market today is also complicating the situation. Consumers use FTA units to access satellite signals from numerous satellites. The absence of encryption or conditional access platforms mimics the earlier and now steadily declining C-band TVRO market in North America. Relatively inexpensive, FTA receivers can be purchased easily and for legitimate reasons.
Many observers, however, have a sense that FTA is much more than a vehicle for free satellite television. The FTA is not a huge factor, not yet anyway, as the number of FTA receivers remains relatively small. This situation, however, warrants careful scrutiny.
Satellite signal theft requires an infrastructure often built around complex transborder transactions. This infrastructure is not easily detected, seldom tracked and rarely subjected to intense pressure by law enforcement. In Europe and in North America, thanks to mounting pressure from industry executives based on fears of widespread and growing undermining of intellectual property rights, this situation is changing. Even so, satellite signal theft and its impact remains huge. Although it is impossible to pinpoint an exact figure in terms of lost satellite sector revenue to programmers, service providers and satellite operators alike cite a reasonable estimate of approximately $2 billion-plus worldwide.
Asia Holds Its Breath
Late last year, the Cable and Satellite Broadcasting Association of Asia (CASBAA) completed the region's first independent assessment of the financial impact of pay TV piracy. CASBAA represents some 130 Asian-based corporations, which in turn serve more than 3 billion people. According to the data collected by CASBAA for 2003, gross revenue losses exceeded $1.2 billion alone, increasing at a projected rate of 10 percent per year. For the satellite industry, the cost in Asia was conservatively estimated at $873 million for 2003.
CASBAA has documented the fact that countless households in economically developed markets are pulling down signals from low-cost markets such as the Philippines and Thailand. In addition, domestic subscriptions to satellite are frequently actually used to feed illegal cable systems, often with thousands of subscribers. Furthermore, ad penetration is adversely impacted by an undisclosed substituting at a local level of local ads, and non paid regional advertising.
"We are in the process of assessing the losses for 2004, which will [soon] be released. Unfortunately, early indications suggest that piracy is growing at an even quicker pace than predicted," says Simon Twiston Davies, CEO of CASBAA. "It is quite clear from industry experience in the Asia-Pacific region that major organized crime syndicates are becoming deeply involved in this business." Davies is following a worrying trend involving "magic" boxes, which decode multiple encryption systems and card splitters, which exponentially increase illegal distribution to hundreds of points of contact at minimal cost.
At an international DBS conference in Seoul last March, Don Flournoy of Ohio University touched on the challenges facing one of Asia's major pay TV providers in Thailand. "Its paying subscribers are not growing; rather the numbers are declining. This is due largely to signal theft, and the discounted prices being offered by the illegal operators that rely on (this pay TV operator's) delivered content," says Flournoy, who serves as director of the Institute for Telecommunications Studies at Ohio University.
"We rely on channel growth, either new entities bringing new programming to the market or existing programmers increasing their program lineup. If, because of piracy of the signals, neither group sees growth, the expansion does not happen," adds Peter Jackson, president of Hong Kong-based Asiasat.
According to Davies, CASBAA adopted a multi pronged approach, using a mix of educational activities that includes meeting with regulators, holding seminars and sponsoring an anti piracy television commercial campaign across the region, among other things. Numerous obstacles exist including inadequate and unspecific legislation, a lack of political will with regard to enforcement, and the vast revenue stream that flows to all the players engaged in signal theft.
"Perhaps the biggest obstacle in dealing with this issue is that of cultural misunderstanding of the nature of intellectual property rights," says Davies. He adds that what can be pulled from the sky with little effort is widely seen to be a "gift from the gods" in some markets such as the Philippines and India.
"Many governments within the region remain ambivalent about the enforcement of pay-TV intellectual property rights," Davies adds. "However, the facts of piracy are beginning to be understood by regulators in markets such as Hong Kong, Thailand, Taiwan, Singapore and Malaysia. Economic realities are helping to drive the development of a better environment." Within the Asian region, Davies describes Japan as a market that is largely free of pay-TV piracy.
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