[an error occurred while processing this directive] ZEPHYR Magazine
 
                              T H E
  
                      E S T A B  - L O I D
                ---------------------------------
                Issue #8                  3-22-86
                ---------------------------------
  
            A weekly electronic magazine for users of 
                The Establishment BBS (894-6526)
                owned and operated by Thane Smith
  
                    Editor - Gene B. Williams 
   
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                            (c) 1986
 
THIS ISSUE:
  
     I've been doing research on satellite television recently. 
In talks with my agent, my publisher and with others, I was 
surprised at the lack of knowledge. Even some of the local stores 
didn't seem to know about some of the new legal advances that 
have been made in the past few months.
     Even if you're not considering satellite television right 
now, chances are good that you will in the next few years. 
     So, that's this week's topic - the legal aspects of 
receiving satellite signals. You should be pleasantly surprised 
at what the laws *really* say.
  
 
                      SATELLITE TELEVISION
 
     Home computing has been considered a craze. Not many years 
ago, only a few people had computers in their homes - and most of 
those who did own computers were computer professionals of one 
kind or another (or they were wealthy). Now take a look at 
things.
     The same situation occurred concerning VTRs (video tape 
recorders). It's happening again with satellite television.
     Just a few years ago, a low-cost satellite receiving station 
could cost $20,000 or more. Today you can find them for under 
$1000. Some predictions say that within the next 5 to 10 years, 
the number of satellite stations sold will be larger than the 
number of VCRs sold.
     A damper was thrown on the sales, though. Cable television 
companies saw competition here - and the kind of competition that 
they couldn't beat. A cable subscriber can pay $40 per month for 
35 or 40 channels - or he can pay the same $40 per month for just 
a few years and then never pay again, and that for 135 channels 
right now, and with new channels being made available almost on a 
daily basis.
     The pay-to-view channels started tacking on notices which 
said that interception of their signals was a violation of 
federal law and could be prosecuted. This was intimidating, and 
is still. After all, who wants to face prosecution for a federal 
felony just to watch some television?
     The problem that the companies faced was that there simply 
weren't any laws to regulate reception of satellite signals. In 
fact, according to the Communications Act of 1934, anything on 
the public air waves could be used by anyone for private use. It 
just couldn't be used for commercial gain without authorization.
     Now, if someone tapped into a cable system you have a 
different case. Actual physical tampering is required, which 
means that plenty of existing laws are in effect. With satellite 
reception, however, no damage is, or can be, done. The reception 
can't even be detected.
     Barry Goldwater, senator from our own state, has been 
involved with ham radio for years. As a ham, he long ago realized 
the value of keeping the air waves open to the public. 
Transmissions have to be regulated since this can affect any 
number of people over great distances. Reception is another 
matter.
     He drafted a bill - Public Law 98-549 - which ammended 
section 705 of the Communications Act. Most of the law dealt with 
the operation of cable systems - another area in which there were 
few, ir any, effective regulations. One subsection concerned 
satellite television and its reception by the general public.
     The law was passed by Congress in October of 1984, and was 
put into effect that same month.
     The following is that subsection:
 
  
     Sec. 5. (a) Section 705 of the Communications Act of 1934 
(as redesignated by section 6) is amended by inserting "(a)" 
after the section designation and by adding at the end thereof 
the following new subsections:
 
     "(b) The provisions of subsection (a) shall not apply to the 
interception or receipt by any individual, or the assisting 
(including the manufacture or sale) of such interception or 
receipt, of any satellite cable programming for private viewing 
if -
     "(1) the programming involved is not encrypted; and
     "(2)(A) a marketing system is not established under which -
          "(i) an agent or agents have been lawfully designated 
for the purpose of authorizing private viewing by individuals, 
and
          "(ii) such authorization is available to the individual 
involved from the appropriate agent or agents; or
     "(B) a marketing system described in subparagraph (A) is 
established and the individuals receiving such programming has 
obtained authorization for private viewing under that system."
     "(c) For purpose of this section -
         "(1) the term `satellite cable programming' means video 
programming which is transmitted via satellite and which is 
primarily intend for the direct receipt by cable operators for 
their retransmission to cable subscribers;
          "(2) the term `agent', with respect to any person, 
includes an employee of such person;
          "(3) the term `encrypt', when used with respect to 
satellite cable programming, means to transmit such programming 
in a form wherby the aural and visual characteristics (or both) 
are modified or altered for the purpose of preventing the 
unauthorized equipment which is designed to eliminate the effects 
of such modification or alteration;
          "(4) the term `private viewing' means the viewing for 
private used in an individual's dwelling, capable of receiving 
satellite cable programming directly from a satellite; and
          "(5) the term `private financial gain' shall not include 
the gain resulting to any individual for the private use in such 
individual's dwelling unit of any programming for which the 
individual has not obtained authorization for that use.
     "(d)(1) Any person who willfully violates subsection (a) 
shall be fined not more than $1,000 or imprisoned for not more 
than 6 months, or both.
     "(2) Any person who violates subsection (a) willfully and for 
purposes of direct or indirect commercial advantage or private 
financial gain shall be fined not more than $25,000 or imprisoned 
for not more than 1 year, or both, for the first such conviction 
and shall be fined not more than $50,000 or imprisoned for not 
more than 2 yers, or both, for any subsequent conviction.
     "(3)(A) Any person aggrieved by any violation of subsection 
(a) may bring a civil action in a United States district court or 
in any other court of competent jurisdiction.
     "(B) The court may -
          "(i) grant temporary and final injunctions on such terms 
as it may deem reasonable to prevent or restrain violations of 
subsection (a);
          "(ii) award damages as described in subparagraph (C); 
and
          "(iii) direct the recovery of full costs, including 
awarding reasonable attorney's fees to an aggrieved party who 
prevails.
     "(C)(i) Damages awarded by any court under this section shall 
be computed, at the election of the aggrieved party, in according 
with either of the following subclauses;
          "(I) the party aggrieved may recover the actual damages 
suffered by him as a result of the violation and any profits of 
the violator that are attributable to the violation which are not 
taken into account in computer the actual damages; in determining 
the violator's profits, the party aggrieved shall be required to 
prove only the violator's gross revenue, and the violator shall 
be required to prove his deductible expenses and the elements of 
profit attributable to factors other than the violation; or
          "(II) the party aggrieved may recover an award of 
statutory damages for each violation involved in the action in a 
sum of not less than $250 or more than $10,000, an the court 
considers just.
     "(ii) In any case in which the court finds that the violation 
was committed willfully and for purposes of direct or indirect 
commercial advantage or private financial gain, the court in its 
discretion may increase the award of damages, whether actual or 
statutory, by an amount of not more than $50,000.
     "(iii) In any case where the court finds that the violator 
was not awaore and had no reason to believe that his acts 
constituted a violation of this section, the court in its 
discretion may reduce the awards of damages to a sum of not less 
than $100.
     "(4) The importation, manufacture, sale, or distribution of 
equipment by any person with the intent of its use to assist in 
any activity prohibited by subsection (a) shall be subject 
to penalties and remedies under this subsection to the same 
extent and in the same manner as a person who has engaged in 
such prohibited activity.
     "(5) The penalties under this subsection shall be in addition 
to those prescribed under any other provisions of this title.
     "(6) Nothing in this subsection shall prevent any State, or 
political subdivision thereof, from enacting or enforcing any 
laws with respect to the importation, sale, manufacture, or 
distribution of equipment by any person with the intent of its 
use to assist in the intereception or receipt of radio 
communications prohibited by subsection (a).
     "(e) Nothing in this section shall affect any right, 
obligation, or liablility under title 17, United States Code, any 
rule, regulation, or order thereunder, or any other applicable 
Federal, State, or local law."
     (b) The amendments made by subsection (a) shall take effect 
on the effective date of this Act.
 
 
                        The Law Explained
 
     As with many laws, it sounds more complicated than it really 
is. Much of it makes little difference to the average person 
anyway. The part that concerns us most is the part before the 
legal definitions.
      
     "(b) The provisions of subsection (a) shall not apply to the 
interception or receipt by any individual, or the assisting 
(including the manufacture or sale) of such interception or 
receipt, of any satellite cable programming for private viewing 
if -
     "(1) the programming involved is not encrypted; and
     "(2)(A) a marketing system is not established under which -
          "(i) an agent or agents have been lawfully designated 
for the purpose of authorizing private viewing by individuals, 
and
          "(ii) such authorization is available to the individual 
involved from the appropriate agent or agents; or
     "(B) a marketing system described in subparagraph (A) is 
established and the individuals receiving such programming has 
obtained authorization for private viewing under that system."
 
     This is the heart of the law. 
     It says, simply, that reception of signals from satellites, 
etc. is perfectly legal as long as that reception is for personal 
use only. (You can't receive those signals and then sell them to 
other people.)
     It goes on to say that viewing of encrypted (scrambled) 
signals *is* illegal, but then goes on to clarify something very 
important.
     It is illegal to view those encrypted signals ONLY if the 
broadcaster  1)has decoders available for the general public, 
and,  2)there is a specific and readily available plan for the 
individual to get the decoder and authorization to use it. 
     What this means, in short, is that the broadcaster - HBO, 
TMC or whoever - is more than welcome to scramble their signals. 
If they *don't* scramble the signals, the individual can use it 
legally in the home. And if they *do* scramble the signal, unless 
they make decoders available to the public, the public can build, 
buy or whatever, decoders on their own, and be legal in doing it. 
     So, the broadcaster can scramble - but if they don't make 
decoders readily available and at a reasonable price (purchase or 
rent), the individual can descramble and still be within the law.
     The next time you hear someone talking about how illegal it 
is to pick up video and audio from a satellite, you'll know 
better. And the next time you see one of the notices on the cable 
channels that says that it is a federal offense to receive the 
signals without authorization, . . . well, you can have a good 
laugh. The federal government, last October, has given that 
authorization to every private citizen.
      
     The new law is a massive step forward. The past few years 
have had several large companies in a number of industries trying 
to get the federal government to help them make profits. The 
broadcasters didn't want to go through the expense or bother of 
scrambling, and tried to get the government to make laws that 
forbade reception of the signals. Various movie companies have 
tried to make video equipment illegal in the same way.
     In one way, maybe big business has overstepped itself once 
too often. This new law basically says, "The private citizen is 
more important than big business," and "You're welcome to make 
profits, but don't expect the government to do your job for you."
 
                         One More Thing
 
     Probably the most famous pay-to-view channel in the world is 
HBO. And why not? They were the first of the kind. All others merely
copied the idea. Some of those others failed; Showtime and The 
Movie Channel merged in an effort to have at least a part of the
power exercised by HBO.
     But it's tough to buck HBO. Their parent company, Time-Life, 
is one of the largest corporations in America (which also means, 
in the world). They have the money, and the clout, to get things
done THEIR way.
     As is so often the case with huge conglomerates, HBO has
forgotten just how they became so big and successful. They seem
to have the idea that they are the best, and that the American
public just can't get along without them. While it's true that
HBO *does* have some good programming, it isn't the programming
that makes HBO one of the most profitable companies in history.
It's the people who sit at home and watch.
     Think of it this way. The programming costs money. It's an
expense - money paid OUT. To generate a profit you have to pull in
more money than you pay. Consequently, the success of HBO isn't
the programming but the viewers.
     They've lost sight of this, and satellite television is a 
perfect example of the result.
     Very few broadcasters are talking about scrambling. Those who
are are once again primarily following the example set by HBO. And
since it's now legal to build a decoder if one is not offered by
the broadcaster, they had to come up with some way to get around
that law, and still have things THEIR way.
     This was done by joining with a company called M/A Com. The
result was the design of a scrambling (and descrambling) system 
that is virtually impossible to crack. If you want to view HBO,
you have no choice but to rent a descrambler from them. 
     Meanwhile, HBO and M/A Com have been pushing the same sort
of system at the few others who are thinking about scrambling. Of
course, the frequency used would be different for each broad-
caster which in turn means that the homeowner would need a decoder
for each channel. (To be fair, this problem is being considered -
although not very hard.)
     The plans so far indicate that the decoder(s) *will* be avail-
able to the general public. The cost will be $395 per unit. But it
doesn't stop there. Not yet.
     Go out and spend $3000 on a satellite system, and another 
$400 on a decoder, and you *still* won't be able to receive HBO.
Not unless you faithfully send HBO a monthly fee of $12.95 (or
$19.95 if you also want their sister channel). Yet, receiving that
signal costs nothing to HBO. It's all pure profit. The signal
already exists and is being beamed into your backyard right now.
Whether you receive it or not, the cost to HBO is exactly the
same.
     If you get HBO over a cable, you're probably paying about
$10 per month. Of that $10, about $3 goes to HBO. The rest goes
to the cable company for their expenses and profits. By collecting
all those $3 per customer kick-ins, HBO has become the single 
most successful and profitable company of its kind in the world.
     Yet over 4 times that is being required from the end user 
who is using a satellite receiver. (Detailed surveys have shown 
that nearly 80% of all STV users are either not serviced by any 
cable company, or are tired of the lousy service if they have
a company available.)
     So, HBO gets rich; the cable company doesn't have to worry 
about providing decent service and is protected. Only the end
consumer gets shafted.
     We're still not done.
     Existing plans also talk about the M/A Com decoders being
available only from authorized M/A Com dealers. And guess what
else M/A Com makes? Satellite TV systems! So, if you want HBO,
you go to a dealer who carries M/A Com STV systems, buy that,
then buy the M/A Com decoder. M/A Com makes out like a bandit -
literally - and is making a BIG move to force other STV manu-
facturers out of business.
     There is a growing movement in the country to show both 
companies that the public is fed up with big companies passing
the buck - or rather *taking* the buck - from the public. It
comes in two parts.
     First, it has been suggested that anyone concerned actively
boycott anything from Time-Life (including HBO). The idea is that
if enough people cancel their subscriptions to Time, Life and 
ignore all those offers they make on TV, it just *might* make them
come up with a more reasonable figure for the service.
     Second is a similar boycott of M/A Com products. From recent
estimates, the decoders costs right about $20 to build. By the
time it gets to the end consumer, the price has gone up by a 
factor of 2000%. NO ONE needs that kind of profit margin.
     There is a third movement afoot - and one I hesitate to mention
(but will because it is so fascinating). That satellite sits up
there, about 25,000 miles above the earth in a stationary orbit.
A satellite carrying scrambled signals in particular is dependent
on programming signals it receives from the ground. Not just the
signals that are relayed back to earth, but also those signals
that tell the satellite which decoders to shut down for lack of
payment.
     The satellite receiving dish can also work as a transmitting
dish. The third movement is presently more of a "joke" than a 
reality, but some day it will happen. Some user on the ground
with sufficient technical knowledge will attach a transmitter
to his (or her) dish instead of a receiver, and beam up the signal
that will cause the satellite's HBO (or whatever) transponder to 
shut down entirely.
     There is presently no way to detect the source. The signal
itself would take less than a second to transmit. HBO could 
recover quickly - but another second of transmission would once
again shut everything down.
     Those in the field think of it as a kind of electronic 
blackmail. And that's just what it is. It's also unfair and
unethical. (It's also highly illegal.) But at the same time, 
there are those who are just fed up enough to pull it off.
     And the chances are very good that they'll get away with
it. So, if you ever see HBO start flicking in and out, or
disappearing entirely, you might guess that someone has decided
that the first two parts of the movement haven't been effective
and that the third part is necessary to get a multi-billion
dollar conglomerate to pay attention.
 
 
UNTIL NEXT TIME
  
     Please excuse me for editorializing. Consider it privilege
of rank, or whatever else you wish. Personally I take greed at
public expense to be a serious matter. This issue is quite similar
to that of the cost of computer software - where the distributor
pays the author (the one who slaved and wrote the program) pennies,
then spends maybe 50c for the disk, and $2 for printing the manual;
and turns around and charges you $450.
     Being in the business, I have a solid idea of what things
cost. Maybe I should let this outrage generate an article on that
topic? So the rest of you know what is involved in creating a
package like WordStar? Or that game you just spent $40 for? Or
that $3000 STV system, plus $400, plus $155 (plus tax) more per 
year.
 
     Next week's issue:
     I'm hoping to present to you a guest article, written by our
own Chris Mitchell. Unless you've been living in a cave, you know
that Chris is one of the DJs on KUPD. He's also the Sysop of the
Silent Side (962-7698).
     Chris has been in radio most of his life. (Just listen to 
him on the air. He might not have the "flash" of some DJs, but 
he's always consistent - a solid professional. In short, he knows
his stuff!) Next week, hopefully, we'll have an article for you
on radio - how to get into broadcasting, how to stay there, and what
it's all about in general.
     Following that, perhaps there are a few of you out there who
have dreams of doing what I do for a living - writing. 
     And then maybe an article on "How to Get a Job."
     With the school year nearing an end, maybe we can do even a 
short series of "career" issues? (Leave me some mail as to your
interest in such a series - good or bad responses are needed. I
could also use your suggestions as to what other careers you think
should be covered.

Zephyr Magazine is © Gene Williams. All rights reserved.