by Jennifer Lee, New York Times
WINDSOR, Ontario - The palm-size cards started appearing last year at
border inspection points. They were stashed in glove compartments and
trunks. Tucked into pockets and wallets. Hidden in brown paper packages.
Drivers tried too hard not to appear nervous, and flubbed explanations
when questioned by American customs inspectors.
A new kind of contraband was trickling across the border from Windsor
into Detroit along with the pseudoephedrine and the Cuban cigars. Initially,
United States customs officials say, they found the cards puzzling. They
looked innocuous enough blue plastic cards imbedded with computer
As the inspectors investigated further, it soon became clear to them
Americans were flocking to Windsor for more than the second-rate casinos
strip clubs. They were crossing the border to satisfy an illicit desire
different sort: one for pirated satellite television.
In the past few years, satellite TV piracy has become a
multimillion-dollar industry in the United States, with as many as one
million households, by some estimates, illegally obtaining programming from
the nation's two big satellite providers, DirecTV and EchoStar. The desire
to tap into satellite channels without paying the monthly fees has spawned
loose distribution network of fly-by-night dealers and Web sites, raids
law enforcement agencies, and an electronic cat-and-mouse game between the
pirates and the satellite companies.
But if piracy has become big business in the United States, it owes a
to Canada, where until recently it was legal to receive pirated satellite
signals. In border cities like Windsor, a mini-industry of pirate providers
flourished, selling the means for Americans, be they individuals or dealers,
to gain access to satellite programming.
For now, that industry is reeling from a Canadian Supreme Court ruling
late April that it was illegal for Canadians to watch American satellite
television. Stores were closed and equipment removed, and several online
stores were shut down.
But dealers say that the demand is too great and the business too
lucrative for the industry to disappear entirely. It will either move
offshore or underground, many dealers predict, ensuring some sort of supply
chain for Americans.
"All they really do is push it below ground," said Adam Dicker, owner
Satan's Playhouse, a chain of three satellite television stores in Toronto.
"It's the dealers they want to put out of business, but we only get more
In satellite piracy, the cards are the keys. Inserted into an inexpensive
receiver, a card unlocks the streams of entertainment to a user who points
small dish antenna in the right direction. Legitimate users pay a monthly
fee to unscramble the signals. But a satellite access card can be
transformed to a free card through reprogramming. What was once available
only by subscription basic channels and premium services like HBO,
pay-per-view movies and sports can be viewed for the one low price
hiring someone to hack the card, anywhere from $20 to $50 a pop.
"It's like heroin," said Joann Kolonelos, a dealer at DSS Pirate, a
satellite piracy store in Windsor whose clientele has been approximately
one-third American. "Once you have access to all those channels, all those
movies, you can't give it up."
The satellite companies and law enforcement agencies call it theft, plain
and simple. The companies, which together have about 18 million paying
subscribers in the United States, hesitate to put a figure on the price
satellite piracy. But cumulatively, the cost of enforcement, legal action
and lost revenue has probably run into the hundreds of millions of dollars,
according to industry experts. In 1997, DirecTV was awarded damages of $33
million as a result of a single lawsuit against 30 dealers in Seattle.
DirecTV, whose encryption system was cracked before EchoStar's, is
pouring money and people into its anti-pirating division, the Office of
Signal Integrity. The office helps law enforcement agencies conduct frequent
raids on satellite dealers across the country. In three raids on a single
day in May 2001, for example, police officers confiscated $4.5 million in
satellite piracy paraphernalia in Orange County in California. Since the
beginning of this year, there have been 33 seizures of satellite access
cards by customs inspectors in Detroit alone.
Satellite piracy is a federal crime punishable by up to five years in
prison for dealers and one year for viewers, in addition to fines. But many
scoff at the idea of getting caught.
"There are so many people doing it, it becomes socially acceptable for
you to do it too," said a hotel manager from Detroit who spoke on the
condition that he not be identified. The manager, who went to Windsor to
obtain cards and satellite equipment, started pirating signals in 2000 when
he became frustrated with his high cable bills.
He crossed the border because Canadians were able to exploit a
discrepancy: government jurisdictions stop at borders, but satellite signals
do not. Piracy of American satellite television could not be challenged
because the companies are not licensed in Canada. And while there are two
Canadian satellite broadcasting providers, the appetite for American
programming is overwhelming.
Today, an estimated one million Canadian households about 10
percent of the population are watching American satellite TV, in
cases without paying DirecTV or Echostar. Satellite dishes have sprung up
Canadian houses like gray mushrooms after a spring shower. Piracy Web sites
flourished, and hundreds of stores opened as legitimate tax-paying
businesses. In Windsor alone, 40 piracy stores emerged from 2000 to 2002.
Classified ads were filled with offers to hack satellite cards.
By serving as wholesalers to dealers in the United States or selling
individuals who crossed the border into Canada, hackers and piracy shops
nurtured the temptation for Americans to steal satellite signals.
How far are people willing to go for television? Windsor dealers say
customers have driven from as far as Oklahoma, West Virginia and Texas.
have bought dozens of cards to sell or give to friends. Some Americans who
could not get to Canada mailed their cards to friends in the Detroit area
with pleas that they be returned before the big game, said the hotel
The access cards are a valuable commodity. One Satan's Playhouse store was
held up at gunpoint last year, said the owner, Mr. Dicker. The thieves made
off not with cash but with hundreds of satellite cards worth tens of
thousands of dollars.
To create the finished product, Canadians have had to look to the United
States for the original cards. Last year the Canadians found a new source
across the border for large volumes of low-priced cards: Wal-Mart, which
like many retailers was selling DirecTV systems, which consist of a
satellite dish and a black-box receiver, for a heavily subsidized $50.
Canadians printed out maps of Wal-Mart locations from the Internet and
headed for the border, said David Fuss, the president of Incredible
Electronics, a major Canadian wholesaler. They bought the systems by the
dozens and the hundreds. What Canadian dealers wanted were the included
satellite cards, which could be hacked and sold for $150, a handsome
DirecTV's accounting showed that hundreds of thousands of cards
disappeared into the vortex of piracy during that period. Last fall the
satellite company started shipping systems to Wal-Mart without the card.
was costing us a lot of money," said Larry Rissler, the head of DirecTV's
Office of Signal Integrity. Now subscribers who buy from Wal-Mart have to
order the card separately from DirecTV.
Last year DirecTV hired five law firms to mail cease-and-desist letters
to American addresses obtained from raids on dealers. To date it has mailed
over 7,500 letters. "We are going after the users," Mr. Rissler said. "We
are trying to teach them a lesson."
The company is also fighting fire with fire, with its engineers hacking
to fight the hackers. The Office of Signal Integrity designs little bits
code with a name that evokes cold war weaponry: Electronic Counter Measures,
or E.C.M.'s. The E.C.M.'s, which travel up to the satellite and down to
cards, are the equivalent of heat-seeking missiles. When they find a card
that has been hacked, they destroy the programming on it.
A few months ago, DirecTV stepped up its E.C.M. attacks to two or three
week. Within minutes of each attack, dealers said, their phones would start
ringing and people would begin lining up in front of the Windsor stores
get their cards reprogrammed.
"It's television," marveled Patrick Reid, manager of Pirate Satellite,
another store in Windsor. "It's supposed to be entertainment. But for some
people it's critical."
Some viewers have found a remedy to the E.C.M. attacks: they are buying
the hardware to program and fix the cards themselves. The devices, called
loaders and unloopers, hook up to a PC. After an attack, hackers devise
software remedy and distribute it on the Internet. Within a day, most people
are up and running again.
With a PC and an Internet connection, anyone can now be a pirate. The
price of hardware has plummeted as competing manufacturers have flooded
market. Equipment that used to cost several thousand dollars has dropped
$100 or $150.
"Everybody and their neighbor has a programmer these days," said Rod
Freire, a satellite installer in Windsor who has five satellite dishes on
Still, the Canadian Supreme Court decision on April 26 changed the
picture. The ruling that it was illegal for Canadians to watch American
satellite television came on a Friday, and over the weekend, satellite
piracy in Canada came to a stumbling halt. Storefronts were shuttered and
Web sites were pulled down. Apologetic signs went up. Customers panicked.
What would they do without their satellite TV? On the Monday after the
ruling, the shelves and tables in one Windsor store were bare. The owner
stripped out all his equipment over the weekend. But customers kept
"I can't talk to you on the phone," the owner said. "You can come here
and we can talk face to face."
Customers wandered into the store one by one. An older man pulled a small
envelope out of his pocket and took out a card. "Do you still . . . ?" he
"We don't program anymore," the proprietor said firmly. Well, at least
not officially. The owner then asked the man to leave his name and number
a piece of paper.
"We'll contact you," the owner said. "We'll work something out." The
owner, who spoke to a reporter on the condition that he not be identified,
said he would probably start making house calls but that his prices would
There is currently an injunction on the enforcement of the ruling. But
matter the outcome, satellite piracy will continue, dealers say, with Web
sites moving to offshore servers and more viewers buying the hardware
themselves. Decoder News (decodernews.com), for example, a site that had
been operating out of Toronto, plans to move its server to the
"If you never give kids candy in the first place, they'll be O.K.," said
Mr. Dicker, the owner of Satan's Playhouse. "But you can't give kids a bunch
of candy and then take it away. The same is true for satellite."