Black market satellite piracy reached 300,000 to 350,000 people, Bell witness tells court

MONTREAL—Bell ExpressVu, a subsidiary of Bell Canada Enterprises Inc., has always worked to fight the “proliferation” of grey market satellite piracy, Bell witness Michael Newman told the Quebec Superior Court at a hearing Wednesday. “We took great pains to find it, stamp it out, and keep it at the lowest level,” Newman, former CEO of Bell ExpressVu (now Bell Satellite TV), said. He added that the ExpressVu satellite TV service had a repatriation program in place that sought to convert customers who were obtaining illegal signals and collect their grey or black market devices like set top boxes and satellites. “We got hundreds,” he told the court. Newman appeared as a witness as Bell defends itself in a major civil court action from competitor Quebecor Media Inc. Quebecor argues that Bell failed to take necessary steps to prevent piracy on its ExpressVu system and, through four related court actions, is seeking more than $300 million in damages to recover what it says are lost revenues. Quebecor subsidiary Videotron Ltée. is seeking damages of $41 million in losses related to subscriptions between September 2002 and February 2005 and another $248 million in future lost subscribers between March 2005 and December 2015, according to court documents. The company says Bell is also under contract to pay Quebecor 48 cents per subscriber for the carriage of LCN, the French-language news channel owned by Quebecor subsidiary Groupe TVA Inc., and is seeking $1.5 million in compensation for funds it would have received for the channel if piracy had been prevented. In another court action, TVA is seeking damages from Bell for allowing satellite TV customers to receive service at more than one address under one subscription. In the Montreal courtroom Wednesday, Newman said preventing piracy was a priority for ExpressVu at a time when the rest of the industry did not want to acknowledge it. “With respect to piracy, it was hard to get people to talk about it,” Newman said. Between 1996 and 2002, companies did not want to discuss the number of customers lost to piracy. Ian Gavaghan, former vice-president and general counsel at ExpressVu, also testified at the hearing, telling the court that grey market piracy occurs when a subscriber can view a satellite channel operating outside of its geographically designated area. On the grey market, a Canadian could subscribe to a channel that is only available in the United States. Pirate dealers will set up a false American addresses to distribute equipment and services to customers and collect fees. Black market piracy, he said, happens when foreign channels are obtained but fees are not paid for their distribution. Gavaghan estimated that, in Canada during the time in question, 300,000 to 350,000 people were committing black market piracy. Newman told the court that although many companies were interested in the marketing of grey market services and the piracy of American satellite signals, few were willing to fund investigations. “Part of our broad strategy was to constantly monitor, bring legal action, lobby—all while trying to grow a business,” he said. When court judge Joel Avery Silcoff asked why ExpressVu did not seek to combat piracy at the street level by confronting individuals who had pirated equipment visible at their homes, Newman replied that the company sought to go after distributors, not subscribers. At that time, Newman said, “customers thought that these types of products were legal.” Newman said ExpressVu’s strategy was to find the “big guy” behind the piracy. ExpressVu wanted to stop the next 10,000 pirated satellites from going out, he added. Gavaghan told the court that the grey and black satellite market in Canada was made up of 15 to 20 sophisticated dealers. “I think it’s important to understand that the dealer community was very well organized and very well financed,” he said. Gavaghan added that all of them paid money into a “central defence fund” that paid for legal representation and other defensive initiatives. ExpressVu will continue presenting evidence to the court until December. Its witnesses follow on weeks of evidence presented by Quebecor. Legal arguments are expected to begin in January. dgrenier@thewirereport.ca --- CORRECTION: An earlier version of this story incorrectly said black market satellite piracy continues to reach estimated levels of 300,000 to 350,000 people in Canada. The estimated number is from older data covering the period of the lawsuit.

Black market satellite piracy reached 300,000 to 350,000 people, Bell witness tells court

News | 10/20/2011 3:26 pm EDT

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