Legislative Amendments to the Radiocommunication Act Respecting Direct-to-Home Satellite Television — Questions and Answers

Question: 
Why is the government seeking amendments to the Radiocommunication Act?

Answer: 
Satellite piracy undermines the integrity, competitiveness and viability of the Canadian broadcasting system and places Canadian jobs and investment at risk.

Satellite piracy is not a victimless crime. It denies Canadian artists and broadcasters millions of dollars in revenues and contributions to programming production funds. Satellite piracy endangers jobs.

The unauthorized reception of DTH satellite programming denies Canadian broadcasters, distributors, artists, and producers millions of dollars each year. Industry research shows that there could be up to 700,000 users of unauthorized DTH services in Canada and a loss of subscription revenues of about $400 million annually.

Satellite piracy amounts to unfair competition, particularly in small communities across Canada where cable companies and video store rental outlets have a much smaller customer base.

Satellite piracy can also imperil public safety. The use of pirating devices has been found to create signal interference with communications systems used by airline, search and rescue and police services.

Many Canadians who acquire pirated equipment after being misinformed by black market dealers that it is legal, risk losing their investments at any time because satellite companies continually find ways to disrupt or cut off unauthorized users. Duped consumers are at risk of getting stuck with useless equipment. Consumer protection laws do not apply to the purchase of illegal goods.

Industry stakeholders have informed us that black market activity represents significant transactions worth many millions of dollars. In virtually all instances, these sales are not declared, and are therefore, not taxed by the Canada Customs and Revenue Agency, representing a substantial loss in tax revenue to the Government of Canada.

Question:
Who is the main target of these proposed changes to the Act?

Answer: 
The changes to the Radiocommunication Act are aimed at increasing penalties to corporations convicted of manufacturing, modifying, importing, or distributing satellite pirate devices. Other changes to the Act are intended to deter the importation and sale of unauthorized equipment in Canada by dealers. Our intention is to make it more difficult for dealers to import illegal equipment into Canada, and have them face stiffer penalties if found guilty of this activity. We also intend to introduce an additional remedy by prescribing statutory damages in civil proceedings involving signal theft.

Question:
Why is the government proposing these changes?

Answer: 
Theft and fraudulent reception of DTH signals originating from the US is widespread in Canada. A study prepared for a broadcast industry coalition, known as the Coalition Against Satellite Signal Theft (CASST), formed to combat piracy, estimates that there may be as many as 500,000 to 700,000 households receiving DTH signals (most from the US) through piracy and grey markets. It has been estimated by the Canadian Broadcasting Industry Coalition that piracy costs the Canadian broadcasting system $400 million per year.

Question:
What kind of border control mechanism are you establishing? How will it function?

Answer: 
The new provision prohibits the importation of satellite decoding equipment unless an importer has first obtained an import certificate issued by the Minister of Industry.

Those who will be eligible for such an import certificate will include licensed Canadian satellite service providers such as Bell Express Vu, Star Choice and their agents.

Some importers may be issued import certificates where they can demonstrate that these products will be exported after having value added in Canada. This approach allows Canadian companies to continue to service and expand their markets while preserving the integrity of Canada's DTH satellite industry.

Question:
Why are amendments to the penalties necessary?

Answer: 
The penalties need to be increased to provide a more effective deterrent. Current penalties are seen by pirate dealers as an acceptable cost of doing business, and as a result, they are not deterred from engaging in piracy, nor are they likely to stop trafficking in illegal equipment after paying a fine.

Question:
How much will the penalties be raised?

Answer: 
For corporations convicted of manufacturing, modifying, importing, or distributing satellite pirate devices, penalties will be increased from a maximum of $25 000 to a fine not exceeding $200 000. For individuals convicted of the same, penalties will be increased from a maximum of $5 000 and/or a maximum of one year in jail to a fine not exceeding $25 000 and/or a maximum of one year in jail.

For corporations convicted of decoding an encrypted signal, penalties will be increased from a maximum fine of $25 000 to one of $200 000. Individuals convicted of the same will be subject to a fine of $25 000 and/or a maximum of one year in jail, up from a maximum $10 000 fine and/or a maximum of six months in jail.

Corporations convicted of the retransmission of an encrypted subscription programming signal that has been decoded without authorization will be open to a $500 000 fine, up from the current $200 000 penalty. Individuals convicted of the same will be subject to a fine of $50 000 and/or a maximum two year jail sentence, up from a $20 000 fine and/or a one year jail sentence.

Question: 
At what level are the statutory damages being established?

Answer: 
For more serious offences, where pirates are engaged in signal theft for commercial gain, statutory damages will be capped at $100 000. This higher amount better reflects the actual loss suffered by satellite service providers and other rights holders when pirates steal customers away from legitimate services.

Question:
Why are you proposing these changes now when there could be Charter cases on freedom of expression before the Courts?

Answer:
The proposed amendments are not aimed at the sections of the Act which are the subject of Charter challenges. Charter challenges normally take a number of years to resolve as they work their way through the court system. In the mean time, this proposal is necessary to stem the annual erosion of jobs and investment in the Canadian broadcasting system. The constitutionality of the provisions of the Radiocommunication Act will continue to be vigorously defended by the Attorney General.

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