Forum: Cable Must Step Up Anti-Signal-Theft Effort

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The conventional wisdom about signal theft has been thatevery industry faces the problem of consumer and employee theft: Why should cable be anexception?

In 1997, the National Cable Television Associationestimated that signal theft costs the industry about $6 billion per year, not includinglost pay-per-view revenue. Estimated theft of basic services averaged 11.5 percent ofhomes passed, and premium-service theft averaged 9.23 percent of homes passed.

The question that the industry should be asking itselftoday is: Why isn't more being done to recapture the revenue that is lost due tosignal theft?

Who has forgotten that in 1997, fight promoter Bob Arum --disgusted by the lack of signal security in the PPV industry -- took a major boxing eventback to closed-circuit television?

BUILDING AN INDUSTRY ACCORD

In 1996, responding to growing industry concern, TheAnti-Theft Cable Task Force (originally The Pay-Per-View Anti-Theft Task Force) wasfounded.

Under the leadership of then-chairman Hugh Panero, the TaskForce worked to develop entertainment industrywide support for its efforts to educate boththe public and the industry as to the consequences of signal theft, and to encourageevaluation and implementation of effective ways of reducing the effects of cable piracy.

As a nonprofit corporation, it draws support from all areasof the cable industry, and it is funded by contributions from more than 50 companies.

When I succeeded Panero as chairman of the Task Force inJune 1998, interest in the group's activities had already allowed us to widen ourfocus from strictly PPV services to all cable services (basic, premium and PPV).

A highly successful campaign to end the advertising ofillegal set-top boxes in national magazines was well under way. The results of thatcampaign have been featured prominently in the pages of this magazine and others, and theyinclude an across-the-board agreement with a major publisher to ban such ads from anypublication under its banner.

A series of Task Force-sponsored TV spots (which went on towin a 1998 CTAM Silver Mark Award for Public/Community Relations) appeared regularly onsome networks and local avails, and it has reached an estimated 50 million households.

Important alliances were initiated with an array ofentertainment organizations, including the Motion Picture Association of America, theVideo Software Dealers Association, the Cable and Telecommunications Association forMarketing and the NCTA.

The Task Force had come of age and, with it, the beginningsof an organized, industrywide effort aimed at stopping cable pirates in their tracks.

THE TASK FORCE TODAY

Since then, the Task Force has continued to monitor andlobby publishers whose magazines are found to contain ads for "black boxes"through a letter-writing campaign to convince them that accepting the ads legitimizesproducts with the primary function of unauthorized reception of cable programming.

Partnerships established by the Task Force to buildconsensus and cooperation within the entertainment industry include the MPAA's plansto work with the cable industry to fight piracy. CTAM and the Task Force hope to worktogether on new research. The VSDA is encouraging its members to feature anti-theft spotson in-store video kiosks.

The Task Force is also making its presence felt byparticipating in a number of important industry forums.

Recent examples include a meeting in February sponsored bythe Canadian Cable Television Association/Canadian Motion Picture Distributors Associationin Toronto, as well as two meetings in April. The Cable Television Public AffairsAssociation will sponsor the first, and the Wisconsin Cable Communications Associationwill sponsor the second.

In addition, the Task Force sponsored focus groups inNovember to explore consumer attitudes toward theft of cable service. In Albuquerque,N.M.; Birmingham, Ala.; and Denver, we discovered strikingly similar attitudes across alldemographic lines.

• Consumers are not concerned about cable theft, asthey do not believe that the cable industry is concerned about it.

• While aware that signal theft is against the law,they see no visible efforts at enforcement and no penalty for violators.

• Frequently, participants in the groups citedcable-company employees as the most accessible source of "free" cable.

• The prevailing attitude is that cable theft is avictimless crime.

Soon, the Task Force will make these focus-group studiesmore widely available. We are also planning an anti-theft Web site to address the problemof Internet black-box sales.

EFFECTIVE METHODS TO FIGHT THEFT

Anti-theft initiatives are an opportunity for operators andprogrammers to generate ancillary revenues. But before effective anti-theft efforts becomethe norm, an attitude change is necessary. In addition to educating consumers, we need toeducate ourselves.

• Every employee provides an opportunity to reducetheft. A dedicated security department can be a valuable asset, and it ensures thatanti-theft efforts become "business as usual." Installers particularly need tobe enlisted in the fight. And all employees should be made aware of company policiesregarding theft.

• While efforts to convert unauthorized subscribers topaying customers should be emphasized, criminal prosecutions send a strong message thatthere is a price to be paid for stealing cable.

• Establish an 800-number tip line so that illegalinstallations can be reported. Have these calls directed to your security department.

• Accounts receivable can be trained to reportdowngrades to basic service, and a system can be set up to contact those subscribers andfind out why they changed their service.

• Periodic tap audits are an effective way to monitoryour system for unauthorized users.

• Rigorous inventory-control systems are an integralpart of an aggressive anti-theft campaign. Does your company keep good records ofdisbursement and recovery of converters and installation materials? Do you have a systemto ensure that boxes are returned when service is discontinued, and that service is turnedoff when customers leave?

• Be very careful about selling used equipment. Asubstantial portion of boxes recovered from "pirate" companies were once used bylocal operators. You may make a small profit in the short term, but your company couldsuffer considerable loss in the long run.

• Electronic countermeasures, like the so-calledsilver bullet, have proven to be an effective way to control signal theft. Your box vendorcan provide you with information on using this method.

• Public-service announcements, including thoseproduced by the Task Force, are available through the NCTA's Office of Cable SignalTheft.

• Third-party assistance is invaluable. Localfranchise fees and tax revenues are significantly reduced because of signal theft, andthis is a compelling message to deliver to local authorities. Urge local law-enforcementagencies to deter and/or prosecute illegal "black-box" distributors and toprosecute individuals who are stealing cable services.

• The Task Force's campaign against black-box adsin national publications can be duplicated on a local level. If local newspapers ormagazines carry these ads, lobby them aggressively to discontinue that practice. The TaskForce can supply you with a template for contacting publishers and information on the lawsgoverning sales of black boxes.

• Once you have an aggressive program in place,don't be modest about your efforts. Make sure that the public hears about arrests,prosecutions, amnesty programs and other initiatives through your local media. Cablethieves are counting on the belief that no one is watching: Remind them that the cableindustry is committed to protecting its assets to the fullest extent of the law.

• Systems that do not have the resources for afull-time security department should utilize the services of a signal-theft consultant.There are several very good consulting firms to choose from. Any system can call the TaskForce for a list of these firms.

WORKING TOGETHER

Within this very challenging industry, the most importantthing that we can do is to deliver a consistent and highly visible message to the public:We are standing together to eliminate cable-signal theft with all of the means availableto us.

Visible enforcement of existing laws is the best deterrent,and the industry needs to be seen as coming down hard on signal pirates.

Signal theft should be a strategic priority for allcompanies doing business in the cable industry, and signal security should be part of"business as usual."

If you would like to obtain more information about theAnti-Theft Cable Task Force, please call Maggi Walker at Ruder Finn, (310) 979-4050.

Donovan Gordon is chairman of the Anti-Theft Cable TaskForce and senior vice president, sales and affiliate marketing, sports and eventprogramming and commercial accounts for Showtime Networks Inc.

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