CRTC pledges support on piracy front, as coalition seeks end to black, grey markets

CRTC chair Charles Dalfen has promised the commission’s support to thwart black and grey market satellite TV, signaling a shift in the regulator’s approach to the issue. The CRTC has traditionally watched satellite TV piracy issues unfold from the sidelines, letting law enforcement agencies and the courts take the lead. But new pressure from industry players backed by an official complaint against a particular company allegedly engaged in black and grey market activities has thrust the issue to the forefront. Supreme Court to rule on satellite TV grey marketThe Supreme Court of Canada will release its judgement on the legality of grey market satellite TV services on the morning of April 26. The ruling in Bell ExpressVu LP vs. Richard Rex (Can-Am Satellites) is eagerly anticipated by broadcasting industry players. CCR has followed the grey market issue for years and will provide breaking news on April 26 of the court ruling, including reaction from industry players. Only online subscribers who receive our regular email and online updates will have access to the special edition of this update.During an address at last week’s Canadian Cable Television Association (CCTA) convention in Vancouver, Dalfen said the commission is "continuing to monitor closely the profusion of black and grey market satellite systems as well as the cases that are before the courts…The black market is hurting us all and threatens to draw away money from the Canadian broadcasting system as a whole…" He added that the black market hurts the system because those subscribers are not paying Canadian cable and satellite TV distributors, who contribute a portion of their revenues to the Canadian Television Fund. It was the CCTA – on behalf of an anti-piracy coalition made up of broadcasters, producers, satellite TV distributors, and copyright collectives – that brought what industry players are calling the less threatening grey market issue onto the CRTC’s radar screen by lodging a complaint on March 28 against CTY Telecom. CCTA president and CEO Janet Yale says the complaint was filed because the coalition felt that by selling dishes and access cards, CTY was in effect acting as a broadcast distribution undertaking (BDU) without a licence from the CRTC. CTY, which dubs itself as a DirecTV Canada company, responded to the complaint on April 19, arguing that it didn’t fall under the definition of a BDU. With Canadian operations headquartered in Toronto and a U.S. base in Houston TX, CTY admits that it is in the business of selling home entertainment units, including satellite units and access cards. In its response to the coalition’s complaint filed with the CRTC, CTY says it uses Dish Network’s satellite equipment and EchoStar programming, with no Canadian channels being offered. If a U.S. address is not available, then the company’s Houston address is used. "CTY sells hardware and software (the access card) to receive broadcast programming from the United States. CTY’s operation is restricted to the sale and installation of home entertainment systems. In this regard, CTY is no different than a Future Shop or any other electronic store. CTY does not offer programming within the meaning of the Broadcasting Act." CTY suggests the matter is one that should be dealt with by the courts. The Supreme Court of Canada will rule on the legality of the grey market on April 26 (see box). Members of the anti-piracy coalition are expected to rally for legislative changes if the Supreme Court backs a December 1999 B.C. Court of Appeal ruling that legalized the sale of unauthorized U.S. satellite TV services in Canada (CCR, Nov. 22/01). Yale sees the CTY file as a test case, and indicates that if successful, the coalition would file more complaints against other companies operating within Canada. While the grey market problem has come to the forefront because of the upcoming Supreme Court ruling, the cable industry says the real threat is the black market. Yale says that while the black market is causing the most damage to cable and satellite TV operators due to lost revenues, it’s also important to pay attention to the grey market. She contends that many consumers graduate from participation in the grey market to the black market. In its presentation in February to the Standing Committee on Canadian Heritage studying the Broadcasting Act, the CCTA estimated that there were about 600,000 black market subscribers compared to 1.069 million legal subscribers to Bell ExpressVu LP and 674,129 to Star Choice Communications Inc. Always a controversial figure, Shaw Communications Inc. CEO Jim Shaw caused a stir at the convention by suggesting that he might as well just take more U.S. signals, such as HBO, and offer them to customers so he could compete with the grey and black markets. He also dissed broadcasters for not doing enough to fight piracy. "They (broadcasters) are not doing dick," he told CCR. "Stand up and say there’s a problem...There are pages of these guys stealing stuff, and the government and broadcasters are saying we’re not going to do anything. We’re (the cablecos) just taking it right on the chin. So we’re saying enough. If they don’t want to do anything about their rights, you are going to see us cut back payments, you’re going to see us not support the Canadian production fund, and all that stuff." Yale suggests that piracy could be attacked on three levels: through government implementation and enforcement of laws against signal theft, the CRTC addressing unlicensed competitors, and rights-holders aggressively pursuing civil actions against black market distributors. In an interview with CCR, Yale said that cablecos could not move forward on the third initiative without the broadcasters and other copyright holders. Glenn O’Farrell, president and CEO of the Canadian Association of Broadcasters (CAB), said his organization is taking the piracy issue very seriously. "We are very active in the coalition and, in fact, we have established a task force outside of the coalition to look at issues specific to broadcast interests as they relate to piracy," he told CCR. He added that broadcasters are considering launching civil lawsuits, but that the CAB will not make any moves until the Supreme Court decision is announced. "You always have to be very careful in launching a lawsuit. You have to make sure that your likelihood of success is at least fair if not better," O’Farrell noted. "That is why the Supreme Court decision could change the landscape significantly for that kind of proceeding being launched."

CRTC pledges support on piracy front, as coalition seeks end to black, grey markets

Broadcast | April 25, 2002

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