The Toronto Star
Saturday, June 28, 1997

Court rules U.S. TV dishes illegal

Gray market industry in shock

by Robert Brehl, bbrehl@tsnl.com

The Federal Court of Canada says those small American ``gray market'' satellite dishes are illegal.

``This is the most important legal decision to ever come down on the issue'', said Luther Haave, vice-president and general manager of Allarcom Pay Television Ltd., a plaintiff in the civil court case.

The decision yesterday by Mr. Justice Frederick Gibson has sent shock waves through the satellite dealer community.

The community has become so sophisticated it sells dishes to Canadians and sets those customers up with U.S. mailing addresses, where American companies like DirecTV can bill them.

But Canadian government officials, broadcasters and satellite executives were quick to try to ease fears among the 300,000 consumers who have paid up to $1,000 for gray-market dishes.

There are even hints of some sort of amnesty program to turn in U.S. dishes and set-top receiver boxes for licenced Canadian satellite service equivalents, once they're available.

But this case is likely not the end of an issue that has absorbed couch potatoes and plagued Canadian broadcasters and satellite companies.

The federal court is the highest court so far to rule the dishes are illegal. This case was a civil suit brought by Canadian broadcasting and satellite companies against dealers selling such dishes as DirecTV's.

But a criminal court of comparable level in Saskatchewan last month came down squarely on the other side, saying not only are the ``gray market'' dishes legal, but the so-called ``black market'' pirate cards are as well.

That case has been appealed by Ottawa. The satellite TV issue appears targeted for the Supreme Court of Canada, to get a definitive answer.

Gray market refers to paying for DirecTV programming, which is not authorized in Canada, through a U.S. mailing address.

Black market refers to paying $500 for hacked cards that tap into the programming for free.

Still, Gibson's ruling yesterday was greeted with cheers from Canadian broadcasters and satellite companies.

``It's a big win'', said Michael Neuman, president of ExpressVu Inc., the Canadian direct-to-home (DTH) satellite service controlled by BCE Inc. that is expected to launch within weeks.

``We've shut down the organized gray market. Anybody thinking of buying a gray market dish would be crazy now, because they are illegal and a Canadian alternative is right around the corner'', Neuman said.

Though he issued a decision in the year-old case yesterday, Gibson said he would release his written reasons in a month or so.

Andrew Roman, a lawyer for defendant Norsat International Inc., said any decisions on whether to appeal or not would have to wait until at least after that. He agreed consumers should not be overly concerned about losing their dishes, because cumulatively they have spent $300 million - 300,000 purchases, at an average price of $1,000 - buying U.S. dishes while waiting for a Canadian service .

``The minister has said in the past that TV viewers need not worry about police coming to their homes and this decision will not change that'', Industry Minister John Manley's press secretary, Bill Milliken, said.

Allarcom is a wholly-owned subsidiary of WIC Western International Communications Ltd. and also a plaintiff in the case.

``We're exploring ways in which we might help Canadian DTH viewers. We also hope that after reading the judge's decision, the satellite dealer network that has facilitated the sales of gray market subscriptions will be anxious to make things right with Canadian consumers'', Haave said.

DirecTV officials did not return calls.


Copyright © 1997 by The Toronto Star. All Rights Reserved. Reprinted with permission.