Con Air

Gulf states are coming under increasing political pressure from the US to clamp down on theft of satellite TV signals. But can they do anything about it? Richard Agnew reports.

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By  Richard Agnew Published  June 12, 2005

|~|RIFE-200.jpg|~|RIFE: Only 5% of households in Lebanon are reckoned to pay for their satellite TV services.|~|EVERYONE knows that the region’s pay-TV providers are haemorrhaging hundreds of millions of dollars in revenue every year through piracy. But if you ask them exactly how much their losses are, they simply can’t tell you. In Lebanon — hardly the Middle East’s biggest market — it is reckoned that only 5% of households receiving the likes of ART, Star TV, Orbit and Showtime pay the companies for their services — affecting not only them, but also their ability to invest in the best programmes from local and international studios. Regionally, although some countries have made progress in tackling the problem, the likelihood is that illegal TV providers have many more customers than legitimate firms. “In many places, the market is lost to the pirates,” says Scott Butler, who heads up the Arabian Anti-Piracy Alliance (AAA), a pressure group funded by the pay-TV companies and other copyright owners to tackle intellectual property (IP) theft. “It’s not only affecting pay-TV providers, but also the movie industry in a big way. Here in Dubai, you see beautiful cinemas being built, whereas in Lebanon and other countries the market is dead. It’s not only dead for pay-TV, it’s dead for the cinemas and video stores because you can get everything for free. The entire market is dead.” While that picture doesn’t seem particularly rosy, Middle Eastern governments — particularly the Gulf states now in free trade talks with the US — are coming under increasing political pressure to put more onus on all things related to IP. The need to cut down on piracy, not just of TV signals but also of consumers goods such as clothing, CDs and DVDs, is increasing as the region seeks to integrate itself with the world economy and adopt more transparent business practices. And with the US viewing a crackdown as strategically advantageous for its studios, the focus is being placed on countries to comply with international standards on copyright protection, such as the Brussels convention of 1974. “Signal theft is not just an area of significant concern for the private sector right now, but also for governments,” says Justin Connor, an attorney at regional law firm, Al Tamimi & Co. The industry’s efforts to address the problem have largely centred on technical solutions so far, but here, pay-TV companies have faced a myriad of problems and an ongoing game of cat and mouse with their illegal counterparts. One continuing problem is the unauthorised sale of hacked Irdeto smart cards in the region, which are used by Showtime, ART and Star TV. Then there is the illegal redistribution of content over the web, or through cables to entire apartment blocks and compounds – often serving thousands of customers in one go. Pay-TV providers’ woes are also exacerbated by the availability of cheap pirated content that they haven’t produced but which still competes for eyeballs – either pornography accessed illegally from foreign satellite broadcasters, fake DVDs or signals from international satellite providers which spill over into the region. “Any form of movie distribution is competition,” says Magnus Simmons, the regional director of Orbit. “If it’s US$2 to US$3 per movie, [customers] are going to choose to watch that instead of choosing to watch it on whatever platform, whether it’s Orbit or Showtime,” he adds. As the illegal industry seems to be winning the technical battle, the pay-TV providers have increasingly turned to legal and governmental alternatives. The AAA, for example, recently recruited a former FBI agent to help in its bid to gain the upper hand over copyright thieves. It, as well as the individual providers, has also stepped up efforts to persuade governments to crack down on pirates, either by stopping goods such as DVDs and smart cards at borders, or by arresting those providing illegal connections. But getting them to take notice has been difficult, and in several countries legal protections for copyright owners remain patchy. “One has to look at the absence of clearly outlined laws and regulations,” says Joe Khalil, a media consultant for regional TV firms. “In [several] countries, particularly Egypt and Lebanon, the absence of laws or enforcing those that exist has encouraged a lucrative business,” he adds. With incomes remaining low in many countries, attempts to combat piracy also have to overcome historical and economic barriers. “The main source of the problem is economic,” says Khalil. “The business of illegal DVD copies of South Asia is similar to that of signal piracy in the Middle East — people do it because it is cheaper. In addition, there is something about the Arab world broadcasting culture — broadcasting has always been free. It was either a service that the national or international governments provided with no direct fee paid by the viewer,” he adds. Efforts to take on the illegal providers by pricing them out of the market have therefore fallen flat. “In Egypt we challenged the illegal cable operators by dropping the retail prices, but how low can you go? You can’t compete,” says Vinod d’Mello, EVP for marketing and network development at Arab Digital Distribution, ART’s sister company. Although some pay-TV providers have called for a public regional body to be set up to enforce copyright laws, they accept that its effectiveness is likely to be hampered by the fact that individual governments’ anti-piracy policies are at very different levels of development. Broadly, observers say the Gulf stands out from other areas where signal theft is more widespread, such as North Africa and the Levant. They have witnessed a rapid growth in illegal distributors, helped by an absence of regulations, high legal costs and easy access to pirated smart cards. “We could form a forum to support this and get all the programmers on the platform, but the local processes are unclear,” says d’Mello. “It’s not clear who we approach and how we ensure this piracy is restricted — for example, it is not clear what needs to be done if you go to ‘x’ authority in one country. There should be one body that deals with it and takes action but it doesn’t exist and that’s frustrating. But we would rely on local governments’ implementation. Enforcement is local,” he adds. Within the Gulf itself, there is hardly a unified approach towards tackling the problem’s causes — despite the move by most of the GCC countries towards free trade talks with the US. Butler says the most progress is being made in the UAE, partly through clampdowns on fake DVD sellers and redistribution of satellite signals through cables, although signal theft remains prevalent in hotel bars and ‘labour camps’ for workers. The International Intellectual Property Alliance (IIPA), a global body focusing on copyright issues, recently expressed support for the free trade agreement (FTA) now being negotiated by the UAE and US, arguing that it would persuade both the Emirates and its neighbours to modernise. “An FTA with the UAE holds the promise of significantly raising the standards of copyright protection and enforcement in the UAE and then, hopefully, in the rest of the region,” it said in a letter to the Office of US Trade Representative in January this year. Elsewhere, though, other Gulf countries are perceived to have made less headway against the pirates. In Kuwait, d’Mello says illegal cable operators are still serving more than 50,000 homes, but the AAA says that it is yet to see a single person sent to jail over copyright theft in the country. Unlike any other country in the region, it also remains on the IIPA’s ‘priority watchlist’. Bahrain, Butler adds, is no longer the “capital of piracy for the Gulf” that it once was, but pay-TV operators are still far from happy about efforts to clamp down. “Bahrain is a fairly small market and huge in piracy,” says d’Mello. “We have been following 12 sites that have been using illegal cable [redistribution] and they still exist. They are providing [services] to more than 20,000 houses.” In Kuwait, he adds that a raid conducted recently by the police and AAA uncovered an illegal scheme providing TV services to thousands of homes, but as the cables weren’t uprooted, it was back up and running a few days afterwards. Saudi Arabia, though, is essentially where the money is for the pay-TV operators, but much of it is not currently reaching them. According to the IIPA, the prohibition of cinemas in the kingdom makes pay-TV piracy very lucrative, and many residential compounds redistribute signals without authorisation — by purchasing a smart card intended for one subscription but using it to service hundreds of homes through compounds’ internal cabling systems. Almost all of the compounds are believed to be illegally redistributing pay-TV signals in this way. “It’s a black hole in Saudi,” says Butler. “This is the market and it’s the market that is plagued with all the problems. The government did raids on the compounds in 2003, but we have no idea what happened to the case. Saudi just passed a new copyright law last year and that’s fine, but we have never heard about a single person put in prison, nor a single high fine applied. We know of hundreds of thousands of seizures. To make it worse, the Saudi government itself has identified piracy firmly connected with organised crime. And yet we’re yet to see a single person put in prison for copyright theft,” he adds. For the industry, the pessimistic view is that no matter what some countries do to combat piracy and to create a business case for local TV companies, they will still rely on others, such as Saudi, doing the same. Studios and programme developers attracted to Dubai’s clusters for media and internet companies, for example, will still be hamstrung if larger markets don’t make efforts to clamp down. “Copyright has to be addressed on a regional level,” says Butler. “In the Middle East, the creation of copyrights is going to Arabic content-driven. If someone invests in Dubai Internet or Media City, it will be on the basis of copyright in the whole region. A company is not going to set up a million dollar hub for the UAE — they are looking at the whole region. The problem is that once you get outside the UAE the copyrights are pounced on. In Saudi, we have never seen a single determined penalty applied,” he adds. ||**||

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