Globe & Mail
November 18, 1996
page B1,B10

Ottawa out on a legal limb over DTH TV

Analysis/ Some say the government is usurping the courts when it says those who buy U.S. grey market service are breaking the law.

by Geoffrey Rowan and Harvey Enchin

The Canadian government has stepped into a legal quagmire by declaring that Canadians who view grey market satellite services might face criminal charges and do time.

It's a quagmire because, despite a brochure approved by Industry Minister John Manley that purports to tell consumers and retailers "facts you should now" about direct-to-home satellite TV, DTH legality remains undetermined.

That legal uncertainty has police agencies confused and frustrated as they try to enforce laws that are under attack in the courts.

On Canada's grey market, viewers use a U.S. mailing address to subscribe to U.S. TV services not authorized for distribution here by the Canadian Radio-television and Telecommunications Commission.

A black market also exists in the form of cards with embedded microprocessors, that enable people to pull in satellite programming without paying anything to anyone in any territory.

Black or grey, legal or not, there is a tremendous demand in Canada for the broadcast services.

It's estimated that more than 200,000 Canadians watch grey market TV programming, with more signing up every day in the absence of a legal Canadian alternative.

RCMP sources say Canada has become an international supplier of the black market access cards, but wouldn't estimate how many Canadians use them.

Indeed, to some DTH supporters, Mr. Manley's announcement appears to be timed to kill the Christmas market for the small satellite dish systems that are springing up across Canada.

To some in the legal community, Mr. Manley's warning to Canadians that they are breaking the law looks like an attempt to usurp the role of the courts, which have several issues before them on various aspects of the legality of Canadian use of U.S. TV services.

"If I'm a trial judge and I have issues before me and I read in the paper that the Industry Minister has made a statement about those issues, I can't help but be influenced by that", said one member of the legal community.

That's not the case here, said Len St. Aubin, telecommunications policy analyst for Industry Canada.

"There's an important distinction to be made here between advising Canadians of what the law says, and on the other hand commenting on a particular case that's working its way through the courts", Mr. St. Aubin said. "The pamphlet does not comment on a particular case that's before the court. The pamphlet describes what the law says."

Perhaps, but ultimately it is the courts that will decide what the law means.

So far, in rulings on issues that have been made, the courts haven't been willing or able to come down hard on grey marketers, or even on seemingly more nefarious black marketers.

A New Brunswick court ruled recently that a search and seizure of satellite equipment by the RCMP this year was a violation of the Charter of Rights and Freedoms. The case was dismissed and the judgement forced the RCMP to return the confiscated equipment to the retailer.

The RCMP executed several search warrants last June in British Columbia, Alberta, Saskatchewan, Manitoba, and in the Maritimes in an effort to shut down the production of access cards.

But the Mounties have not been able to lay any charges as a result of those searches and seizures. The laying of charges has been held up while the courts settle various legal issues relating to the admissibility of the seized material.

If those issues aren't settled quickly, or if the RCMP is not able to get an extension, it will soon have to return all the material it seized.

Last June 26, the RCMP in New Brunswick raided Satellite Services & Programming Inc. in Moncton, and four other satellite equipment dealers in Sussex, Woodstock, Fredericton, and Miramichi. "They walked in and grabbed $30,000 worth of merchandise, our computers and books and essentially put us out of business", said William Mitton, owner and president of the company.

The dealers hired a lawyer and went to court Sept. 3 to reclaim their goods. Mr. Justice H.H. McLellan of the Court of Queen's Bench ruled that the RCMP raid violated the dealers' "right to be secure from unreasonable search and seizure" under the Charter and ordered the RCMP to return the merchandise within seven days.

The RCMP appealed the decision, but the higher court upheld the earlier judgement.

Only then did the RCMP charge the dealers under one section of the Criminal Code and one section of the Radiocommunications Act, which cover the theft of telecommunications services, possession of decryption devices, and protection of the rights of broadcasting service providers.

"I can't break a law", Mr. Mitton said last week. "There's no law to break. I'm prepared to go to trial."

The court date is set for Feb. 10 and the Crown seems apprehensive. It has dropped the Criminal Code charges, which relate to telecommunications theft, and tried to coax Mr. Mitton to plead guilty to charges under the Radiocommunications Act. If he did, Crown attorneys promised, his fine would be $400 to $800 and the company's penalty would be under $1,000. Mr. Mitton told them to forget it.

The plea bargain worked in Woodstock, where a small dealer, anxious to be free of the legal problems, agreed to plead guilty in exchange for a minimal fine of $200.

"We told him not to do it", Mr. Mitton said. "Even the judge asked him if he was sure he wanted to plead guilty."

Across the country, the Crown's legal victories have been negotiated guilty pleas in exchange for reduced fines. There have been no definitive rulings on the merits of the charges.

"They're scared of getting into court with this thing", Mr. Mitton said. "I never ran away from anything I felt I was right on."

A definitive ruling, or at least a step closer to one, may be coming soon.

On Nov. 28, the Federal Court of Canada in Toronto is scheduled to decide a number of issues pertaining to the legality of U.S. DTH service in Canada.

The case is ExpressVu Inc. and others versus NII Norsat International Inc. and others. Mississauga-based ExpressVu filed suit to stop a group of equipment dealers, including Norsat, from selling their DTH products in Canada.

The defendants are asking the court to dismiss the case on the grounds that distributing DTH equipment is not illegal and that whether Canadians can use a U.S. address is not an issue of Canadian law. They also argue in their court filings that Canadian residents have the right to free expression, including the right to receive broadcasting.

A judicial ruling in their favour on any of those issues could torpedo Mr. Manley's efforts to slow the spread of the grey market.

The RCMP in Nova Scotia said they didn't know about Mr. Manley's pamphlet on Wednesday when they executed search warrants at four locations, seizing $250,000 of what they say are illegal satellite systems and access cards.

Constable Mike Furey said he expects four individuals to be charged under the Radiocommunications Act and the Criminal Code. he said he's confident these searches and seizures will stand up. "Our searches were very specific and very limited. We're hoping the charges will be laid [this] week and we'll put it before the court." "The fact is this is probably the first indication we don't have sovereignty of our broadcasting, and we may not have sovereignty of our own broadcasting in the future because there is no way you can put up a wall from here to the moon to keep [U.S. satellite TV] out."

"We've got to have some mechanism to keep it out, otherwise we won't be able to sustain our own broadcast industry."

Copyright © 1996 by The Globe & Mail. All Rights Reserved. Reprinted with permission.