One of the biggest threats that satellite pay-TV operators face is the threat of piracy. People accessing content through an illegal smart card and not paying the operator for the service is a billion dollar industry, according to industry analysts. Smart card piracy is big business and conditional access (CA) vendors who provide security systems are one of the first lines of defense for program operators in the fight against piracy.

Other key organizations in this battle against piracy are industry groups such as the European Association for the Protection of Encrypted Works and Services (AEPOC) and the Cable and Satellite Broadcasting Association of Asia (CASBAA), both of which count satellite pay-TV operators among their members. AEPOC members include BSkyB (U.K.), TPS (France), DigiTurk (Turkey), Premiere (Germany), Sky Italia (Italy) and Sogecable (Spain).

Here, we talk to the President of AEPOC, Jean Grenier and the CEO of CASBAA, Simon Twiston Davies about the piracy problem facing satellite pay-TV operators in Europe and Asia.

Europe

Grenier believes that satellite pay-TV operators remain pretty much the number one target for the piracy industry across Europe. "Historically pay-TV and encrypted services are more broadly available via satellite," he told Satellite News. "For this reason it can be said that satellite reception delivers generally more attractive targets for pirates than cable or terrestrial systems – also because direct-to-home (DTH) satellite reception can provide pay services originating from many different countries. Nevertheless any platform is threatened by piracy and all of these types of platforms have seen illegal access to their systems in Europe."

One of the main jobs of the AEPOC is to improve the job of tackling the piracy problem from a regulatory perspective. When asked what three regulatory steps he would like to bring in across Europe to tackle the piracy problem, Grenier said, "Firstly, we want to see the personal use and possession of illegal decoding devices punished. Secondly, we want to see an update of the conditional access Directive [EU Legislation], which takes into consideration the most recent innovations in terms of piracy. There also needs to be a more precise formulation in terms of CA-services concerning the upcoming Directive on Counterfeiting and Piracy. Thirdly, I would like to see stiffer penalties for convicted pirates, especially for those running commercial activities."

Critically, Grenier believes that Europe’s regulators underestimate the problem of piracy, and believes that the media and general public need to be more aware about the negative effects of piracy. "Piracy destroys not only existing developed markets but also the emerging ones. More piracy means less new market opportunities, ultimately also reducing the numbers of personnel employed with companies active in pay-TV and the many businesses involved in this value chain, from television and movie production up to subscription and reception device resellers. The protection of intellectual property is the key to future prosperity, cultural diversity and democratic plurality – not only in Europe, but everywhere. For long enough piracy has been seen as an isolated problem of pay-TV operators – and not as a severe crime that puts the creative industry, economy and culture at stake," he said.

For satellite pay-TV operators staying on top of the piracy problem is key. Pay-TV markets are becoming more competitive. Most telcos are beginning to offer pay-TV services and with new ways of accessing video content, the last thing satellite pay-TV operators need is problems with people illegally accessing their services.

In 2006, AEPOC will once again be at the forefront of leading the battle against piracy across Europe. Grenier said the organization plans to "work intensively on the finalization of the EU Commission Report on the Status of Implementation of the conditional access Directive." This is expected for the second half of the year.

A larger European Union (EU) also is creating new opportunities for pirates, Grenier said. "In view of the recent enlargement of the EU, our concern is now to make the EU new member states aware of the risks and the overall negative effects of piracy," he said. "We are therefore continuing to focus on the approval of new anti-piracy laws and the implementation of the conditional access Directive, especially in those countries which have just implemented the acquis communautaire."

Grenier also said that AEPOC plans to support any European Commission legislative initiative addressed at enabling a coherent pan-European legal framework to combat Internet enabled piracy and to strengthen cooperation with the EU Commission in general with regard to public awareness.

Asia

In Asia, CASBAA plays an important role in the fight against piracy throughout the region. In some markets in Asia, piracy is a major problem. Davies believes Singapore is pretty much a benchmark for the rest of the region in terms of fighting piracy. "Singapore has created a highly structured, highly controlled environment where piracy in all of its forms is illegal, including individual taps into the cable system, or even pulling down satellite signals of any kind," he said. "This is a high value market where the regulator and the government and the industry have a very good rapport."

However, in other markets, the problem is not being dealt with so well. Davies calls the telecoms regulator (National Telecommunications Commission) in the Philippines "weak" and believes satellite and cable operators are struggling there. "The pay-TV market is largely analogue and there are many totally illegal cable operators and many operators who are operating in what can be best described as a grey market environment. There is also a DTH platform in the Philippines with a security system, which is widely believed to have been compromised. So, we have big problems in the Philippines," he said.

Asia as a digital landscape is likely to develop fast with the launch of a new digital platform across the region. DTH will be a factor here. "We will see the digitization of networks and systems in markets such as the Philippines," Davies said. "China already has made a significant investment in digital platforms and India is moving quickly to digitize its DTH market, creating new competition with the now analog cable market. This will drive the cable market to go digital in India. Meanwhile, the cost of digital [set- top boxes] is dropping."

The challenge will be to wage a successful war against the piracy industry in the region. This will be vital for new DTH operators in the region. When asked what three regulatory steps he would like to see implemented across the region, transparency appeared the number one issue, Davies said. "There is not enough transparency within many regulatory environments," he said. "We don’t even know who is quite regulating or pulling the regulation strings and why some of the decisions are being made."

The second biggest issue is "when there is a relatively strong regulatory regime in place and reasonable copyright protection in the law, even when the broadcasting laws are relatively even handed, unfortunately the implementation of the regulations of the law is often uneven and can be slanted in the interests of one or two interested parties," Davies said. "If we could have a more even-handed approach across the board, the industry would benefit greatly."

Like his European counterpart, Davies also wants to see tougher punishments to those involved in the piracy industry across Asia. This is an area where CASBAA has been trying to get much tougher. "CASBAA has been leading on raids on pirate operators in the Philippines over the last few weeks," he said. "It is very important to demonstrate that the industry is working with the Police and National Bureau of Investigation. This shows that industry is willing to stand up and be counted. In Hong Kong, CASBAA has undertaken civil proceedings against traders in unauthorised equipment. Hong Kong is seen as a shop window for the industry and that is why it is very important in terms of the fight against piracy.

"We are committed to expanding our activities in China and India," he said. "We have opened a chapter in India to deal with such issues as the encouragement of digitization. We see that as a key technical solution to piracy there. We want to encourage the deployment of digital cable, digital DTH, the deployment of video broadband services and mobile services. We see this as the future of our business."

Contact, Carmen Schembri, AEPOC, e-mail, [email protected] Rebecca Kennedy, CASBAA, e-mail, [email protected]