News

Piracy Crackdown Lifts Erie System

1/24/1999 7:00 PM Eastern

After more than two years, Erie Cablevision is reaping the
benefits of a no-nonsense approach to a cable-theft problem run amok in the Pennsylvania
community.

But despite an expanding list of end-users to be pursued
and the recent convictions of several high-profile black-box distributors, officials at
the 24,000-subscriber Time Warner Cable system are aware that there is still work to be
done.

"We believe that we're making inroads into the
problem," said Bill Wright, the system's vice president and general manager.
"But in a black-box environment, you can't be certain how many people are
stealing from you."

If nothing else, however, the system's anti-piracy
efforts have brought the scope of the problem into focus.

Through a series of initiatives -- including undercover
stings, electronic countermeasures, a consumer hot line and raids conducted by systems in
other states -- Erie Cablevision has identified 528 local cable pirates.

"That's 4.2 percent of our subscriber base,"
Wright said. "That's been very troubling to me. But that's also more than
528 people in our sights now."

Wright began addressing the dilemma after arriving at the
system in 1996. One of his first actions was to hire Douglas Hagmann, a local private
investigator, whom he educated, then "turned loose to search out the scope of the
problem."

Among the end-users whom Hagmann identified as stealing
service were local doctors, lawyers, judges and even City Hall, where cable traps had been
removed in order to receive all of the system's premium and pay-per-view services.

After more than two years on the job, Hagmann now estimates
that cable pirates may constitute 20 percent of all Erie cable viewers, or twice the
national average turned up in recent industry surveys.

"We're taking big business," Hagmann said.

Through a series of undercover stings conducted with the
local office of the Federal Bureau of Investigation and the Pennsylvania State Police,
Hagmann has helped to put several significant peddlers of bogus set-top boxes out of
business.

Wright, meanwhile, has been pursuing hundreds of residents
in the community who use illegal devices to steal cable service. Among his first steps was
establishing the system's first audit department, followed by the creation of a hot
line for legitimate customers to call in and report potential cable thieves.

"We've done a lot to educate people," Wright
said, "and attitudes have changed significantly from the early days. Our legitimate
customers are more supportive of what we're trying to do."

Wright agreed with a recent survey by the Anti-Theft Cable
Task Force, which found that theft of service remains prevalent because consumers
mistakenly believe that operators will not pursue an end-user for fear of alienating the
public.

It's an attitude that he plans on changing in his
community.

"We're trying to emphasize that cable theft is a
crime, that there are consequences to that crime and that we're going to have zero
tolerance for it," Wright said. "We're not backing off. We're going to
continue doing what we said we're going to do, and that includes filing civil suits
against individuals who we've identified."

Although the system's anti-theft efforts haven't
resulted in a discernible uptick in PPV units sold, they have padded the bottom line.

In 1997, for example, illegal customers converted to actual
paying subscribers generated another $48,000 in revenue. Last year, a new batch of
converted cable pirates produced an extra $56,000, while the previous year's crop
accounted for another $65,000, not counting $60,000 collected in settlements.

"That has helped us to solidify and improve our
internal procedures, and it has gone a long way toward demonstrating that we're
serious about controlling our signal," Wright said. "But it's been a long,
time-consuming process."

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