It’s a serious problem bedevilling the industry far too long now. Last year, in Asia alone, the estimated revenue losses were pegged at almost US$2 billion. Operators warn that the plague, if left unchecked, could destroy the whole industry-not just in Asia but the entire global Pay-TV market. So how Asia is grappling with this persistent problem could be instructive for the rest of the world as new markets are opening up in places such as the Middle East, Africa and Latin America.
In Asia, Pay TV piracy affects rich and poor countries alike -- Australia, New Zealand, Taiwan, Hong Kong, China, Vietnam, Thailand, Philippines -- and in fact, there seems to be no country immune to it. There have been many solutions introduced to clamp it down like digitization, law enforcement, etc. But the solutions continue to face many obstacles and challenges and with Internet online services, the problem is made even worse. And so the cat and mouse game continues to rage. The latest solution being dangled: a new international treaty.
The problem of pay-TV content piracy across the Asia Pacific, said Cable & Satellite Broadcasting Association of Asia (CASBAA) executive director Anjan Mitra, is currently the most significant barrier to investment and innovation in the pay-TV industry. During a forum held in July this year in India, Mitra presented case studies in the Philippines, Australia, China and Vietnam where he claimed the pay-TV industry is discouraged to produce premium content for consumers or are reluctant to release premium content because of fear the content will be distributed illegally.
CASBAA, which represents more than 130 channel programmers, pay-TV operators and technology providers, describes pay TV piracy as any of the following: unauthorized redistribution of broadcast content by other broadcast organizations, unauthorized reception and distribution of entire multi-channel bouquets, by cable operators, unauthorized commercial use of satellite broadcasts, facilitated penetration of pay-TV systems to allow unauthorized access, and unauthorized distribution of broadcast content on the Internet. But other types of piracy include under-declaration of subscribers by operators in an attempt to lower licensing fees from channel operators, and ad masking, the practice of operators selling local advertising space over advertising already sold by the channel operator.
CASBAA believes Internet piracy can be kept under control if governments and the industry work together as strategic partners with governments putting in place effective criminal laws and law enforcement. CASBAA says governments and industry together can support by providing consistent messaging: visible endorsement of IP rights, with clear and sustained public statements and actions against piracy. This is the reason why the Hong-Kong based CASBAA is supporting a powerful World Intellectual Property Organization (WIPO) treaty, which it believes can equip broadcasters with the needed tools they need to fight pay-TV piracy. WIPO is a United Nations agency tasked to encourage creative activity and promote the protection of intellectual property throughout the world byeliciting state cooperation.
Lack of Laws Hamper Fight Vs. Piracy
But fighting piracy in many Asian countries today is difficult mainly because of deficient national laws that make it illegal to use or downlink other broadcasters’ contents. CASBAA admits regulations have not kept up. That is why the group’s work now includes educating and persuading individuals, operators and regulators in 15 different Asian governments that today’s digital entertainment industry is different from the TV industry that they have known and worked with for many years.
John Medeiros, CASBAA deputy chief executive officer whooversees the group’s anti-piracy and regulatory activities, says governments’ regulatory paradigm has to shift. “Unfortunately for some of the governments in the region, regulators are still dealing with laws that were passed in a previous generation,” he said in a recent forum.
In the Philippines, for example, broadcasters have few laws that could protect their operations. The country’s old laws have yet to define and penalize the act of stealing satellite signal piracy, hence the difficulty of prosecuting offenders. Under existing Philippine laws, only movable properties that have physical or material existence, and can be carried from the place they are found, are subject of the crime of theft. Thus television signals, being intangible, cannot be the subject of theft! Until more specific laws that seek to curb cable or satellite signal piracy pending in Philippine Congress are passed, channel providers have to invoke the Intellectual Property (IP) Code, which gives them protection as copyright owners. Thus, broadcasting organizations are filing cases for infringement under the IP Code, although the protection leaves much to be desired.
In Australia, according to Mitra, investigators found a shop in West Australia actively promoting ways to penetrate Foxtel’s satellite TV system. When this operation was discovered, such acts carried no criminal penalties, although the Australian law had, since then, been updated and improved. Foxtel, the Australian pay TV operator, was able to sue only because Australian copyright law gave specific rights to broadcaster to protect their encryption devices and their signals.
The problem is worse in China where digital broadcasting signals from Hong Kong can easily be received in South China. For example, Hong Kong TVB Pay Vision’s popular series are routinely pirated and uploaded immediately on Chinese web servers in perfect digital form and on a very timely manner. Some companies have launched numerous court actions against websites hosting their pirated programs but courts in China assess only small fines. Worse,legal costs for each action are even higher than the damages recovered so there is no deterrent effect on the illegal behavior, said Mitra. Unfortunately, these situations are not unique in the Philippines, Australia and China and are also prevalent in other Asian countries in varying degrees. So until national laws are first amended or stricter laws banning and penalizing pay-TV piracy are passed, going after the bandits will remain very difficult. And will remain very difficult indeed, considering the enormously long time it usually takes legislative bodies to pass a law.
The Problem is Manageable
One of the most important new tools being employed to curb pay-TV piracy is digitization and thankfully, the ongoing digitization program in most Asian countries is showing tremendous success. A majority of networks throughout the region are still analog but the digitizationprocess is moving rapidly in several countries, including India and China, which, in the past, have enjoyed the distinction of having the highest piracy rates in the region.
According to a CASBAA report published late last year, there are an estimated 326 million pay-TV homes in the Asia-Pacific region in 2009. This is a growth of 26 million homes, or 8.66 percent growth from 2008 with digital pay-TV subscription households now accounting for over 115 million homes. CASBAA estimates, backed by global data, that subscription television in Asia Pacific now reaches more homes than the rest of the world combined.
Medeiros says Asia has reached the tipping point when it comes to digitization. Industry analysts are encouraged by the report because the Asian pay-TV markets with the lowest level of piracy are generally those with the highest percentages of digital deployment. In Australia, Hong Kong, Malaysia, Japan, Singapore and New Zealand, which are all almost 100 percent digital, piracy levels are at the lowest. This is according to the results of a CASBAA survey in 2008 done in collaboration with the Creative Industries Division of Standard Chartered Bank. In contrast, India, which suffers from heavy government regulations and a lack of digital infrastructure, remained the country with the most revenue leakages linked to piracy in 2008.
Broadcasters Treaty
Despite the successes in the digitization program, CASBAA still believes in pushing for the approval of the WIPO Broadcasting Treaty that would give broadcasters intellectual property rights over their signals, in addition to the copyrights held by the creators of the works. Although the treaty is still in the discussion stage, its framers are billing it as an update of the Rome Convention, a 1961 treaty designed to protect broadcasters from piracy. Proponents say the treaty simply and innocuously applies to technologies that weren’t included in 1961, like cable rebroadcasting, satellite rebroadcasting, and Internet rebroadcasting. But the treaty is in for a rough sailing and is facing legal challenges worldwide. In fact, it is being “exposed” as a power grab by broadcasters. Public Knowledge, a Washington, D.C.-based public interest group working to defend citizens' rights in the emerging digital culture, says the treaty would give broadcasters the ability to prevent even copyright holders from accessing and using broadcasts made of their own works. “The treaty also does not require countries to balance the rights of broadcasters with the rights of users in the same way that copyright laws do (through doctrines like fair use). As such, the treaty will have a number of negative consequences for copyright holders, Internet service providers, technology companies and consumers,” Public Knowledge asserts in its website.
Public Knowledge said signal theft could be addressed simply by signing a treaty that simply prohibits intentional misappropriation and theft of broadcasters’ signals. Such a treaty would be consistent with U.S. law, unlike the treaty’s current creation of a property right never before recognized within domestic copyright law, the group says.The Electronic Frontier Foundation (EFF), another consumer rights advocate, has even more scathing remarks about the proposed treaty calling it “a protection racket for middlemen in the TV and Internet worlds.” EFF said the WIPO treaty would give broadcasters 50 years of copyright-like control over the content of their broadcasts, even when they have no copyright in what they show. It warns that “A TV channel broadcasting your Creative Commons-licensed movie could legally demand that no one record or redistribute it—and sue anyone who does. And TV companies could use their new rights to go after TiVo or MythTV for daring to let you skip advertisements or record programs in DRM-free formats.”
EEF condemned some countries’ support of an expanded version of the treaty to cover the Net, warning that anyone who feeds any combination of "sound and images" through a web server would have a right to meddle with what you do with the webcast simply because they serve as the middleman between you and the creator. “If the material is already under copyright, you would be forced to clear rights with multiple sets of rights holders. Not only would this hurt innovation and threaten citizens' access to information, it would change the nature of the Internet as a communication medium.” Although EFF says it is clearly against signal piracy, the draft broadcasters treaty goes well beyond that and creates rights to control “fixations" of broadcasts that only apply after you've received and recorded a signal.
Asia Pay TV Subscription Soars
Despite the piracy issues, the consumption of pay-TV and broadband is strong in Asia in 2009, even though it was a recessionary year for most segments of Asia media. According to Media Partners Asia (MPA), the pay-TV sector added 26.6 million new subscribers in 2009. Total pay-TV subscribers reached 340 million, up 9 percent year-on-year and representing 46 percent penetration of TV homes. In 2009, pay-TV industry sales increased by 8.6 percent to US$32 billion, a sharp deceleration from 15 percent growth in 2008 with 10 percent subscription revenue growth offset by a modest 3 percent advertising increase amidst the economic downturn.
MPA’s report said the market for digital pay-TV reached a critical mass in 2009 as technology costs fell with scale driven deployments. Total digital pay-TV subscribers reached 116 million, 16 percent of total TV homes and 34 percent of total pay-TV homes. The pace of digital growth was driven by the cable operators in China and Japan; DTH satellite pay-TV in India and Southeast Asia; and IPTV in North Asia. High definition television (HDTV) is growing, reaching 7 million pay-TV homes in 2009 while personal video recorders (PVRs) were installed in 2.4 million pay-TV homes.
Another forecast by Informa Telecoms and Media said theAsia Pacific region will have 784 million TV households by 2015 and Pay TV will increase to more than 400 million subscribers by that time. The analyst company said the 2015 figure would be an increase of more than 94 million compared to 2009. It said that TV households will have an average 1.4 TV sets per home, leading to over 1.1 billion sets across the region by 2015. Of the 784 million total, the company said 43 percent of these would be subscribed to cable. According to the report, Pay TV will have more than 400 million subscribers by 2015, which the company said would generate over $40 billion.
Despite all the solutions being imposed, for sure the pay-TV piracy issue will continue to rage in the coming years. Knowing the sophistication of pirates, it is only a matter of time when they can find ways to beat digitization and other systems being put in place by pay-TV companies. Paraphrashing Uncle Remus: “Pay-TV piracy can’t run away from trouble. There ain’t no place that far.” Thus, the industry might just have to embrace the problem and as much as possible try to limit its effect on it.
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Peter I. Galace is editor for Asia Pacific of Satellite Markets and Research. He writes extensively on telecommunications and satellite developments in Asia for numerous publications and research firms. He can be reached at: peter@satellitemarkets.com
