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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . You may share this magazine with your friends under the . . condition that the magazine remain complete and intact, . . with no editing, revisions or modifications of any kind, . . and including this opening section and statement. . . If you like the magazine, the Sysop and I would appre- . . ciate it if you would let your friends know where they . . can log in to find the magazine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (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.