                                  T H E

                          E S T A B  - L O I D
                    ---------------------------------
                    Issue #8                  3-22-86
                    ---------------------------------

                A weekly electronic magazine for users of
                    The Establishment BBS (894-6526)
                    owned and operated by Thane Smith

                        Editor - Gene B. Williams

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                                (c) 1986

    THIS ISSUE:

         I've been doing research on satellite television recently.
    In talks with my agent, my publisher and with others, I was
    surprised at the lack of knowledge. Even some of the local stores
    didn't seem to know about some of the new legal advances that
    have been made in the past few months.
         Even if you're not considering satellite television right
    now, chances are good that you will in the next few years.
         So, that's this week's topic - the legal aspects of
    receiving satellite signals. You should be pleasantly surprised
    at what the laws *really* say.

                          SATELLITE TELEVISION

         Home computing has been considered a craze. Not many years
    ago, only a few people had computers in their homes - and most of
    those who did own computers were computer professionals of one
    kind or another (or they were wealthy). Now take a look at
    things.
         The same situation occurred concerning VTRs (video tape
    recorders). It's happening again with satellite television.
         Just a few years ago, a low-cost satellite receiving station
    could cost $20,000 or more. Today you can find them for under
    $1000. Some predictions say that within the next 5 to 10 years,
    the number of satellite stations sold will be larger than the
    number of VCRs sold.
         A damper was thrown on the sales, though. Cable television
    companies saw competition here - and the kind of competition that
    they couldn't beat. A cable subscriber can pay $40 per month for
    35 or 40 channels - or he can pay the same $40 per month for just
    a few years and then never pay again, and that for 135 channels
    right now, and with new channels being made available almost on a
    daily basis.
         The pay-to-view channels started tacking on notices which
    said that interception of their signals was a violation of
    federal law and could be prosecuted. This was intimidating, and
    is still. After all, who wants to face prosecution for a federal
    felony just to watch some television?
         The problem that the companies faced was that there simply
    weren't any laws to regulate reception of satellite signals. In
    fact, according to the Communications Act of 1934, anything on
    the public air waves could be used by anyone for private use. It
    just couldn't be used for commercial gain without authorization.
         Now, if someone tapped into a cable system you have a
    different case. Actual physical tampering is required, which
    means that plenty of existing laws are in effect. With satellite
    reception, however, no damage is, or can be, done. The reception
    can't even be detected.
         Barry Goldwater, senator from our own state, has been
    involved with ham radio for years. As a ham, he long ago realized
    the value of keeping the air waves open to the public.
    Transmissions have to be regulated since this can affect any
    number of people over great distances. Reception is another
    matter.
         He drafted a bill - Public Law 98-549 - which ammended
    section 705 of the Communications Act. Most of the law dealt with
    the operation of cable systems - another area in which there were
    few, ir any, effective regulations. One subsection concerned
    satellite television and its reception by the general public.
         The law was passed by Congress in October of 1984, and was
    put into effect that same month.
         The following is that subsection:

         Sec. 5. (a) Section 705 of the Communications Act of 1934
    (as redesignated by section 6) is amended by inserting "(a)"
    after the section designation and by adding at the end thereof
    the following new subsections:

         "(b) The provisions of subsection (a) shall not apply to the
    interception or receipt by any individual, or the assisting
    (including the manufacture or sale) of such interception or
    receipt, of any satellite cable programming for private viewing
    if -
         "(1) the programming involved is not encrypted; and
         "(2)(A) a marketing system is not established under which -
              "(i) an agent or agents have been lawfully designated
    for the purpose of authorizing private viewing by individuals,
    and
              "(ii) such authorization is available to the individual
    involved from the appropriate agent or agents; or
         "(B) a marketing system described in subparagraph (A) is
    established and the individuals receiving such programming has
    obtained authorization for private viewing under that system."
         "(c) For purpose of this section -
             "(1) the term `satellite cable programming' means video
    programming which is transmitted via satellite and which is
    primarily intend for the direct receipt by cable operators for
    their retransmission to cable subscribers;
              "(2) the term `agent', with respect to any person,
    includes an employee of such person;
              "(3) the term `encrypt', when used with respect to
    satellite cable programming, means to transmit such programming
    in a form wherby the aural and visual characteristics (or both)
    are modified or altered for the purpose of preventing the
    unauthorized equipment which is designed to eliminate the effects
    of such modification or alteration;
              "(4) the term `private viewing' means the viewing for
    private used in an individual's dwelling, capable of receiving
    satellite cable programming directly from a satellite; and
              "(5) the term `private financial gain' shall not include
    the gain resulting to any individual for the private use in such
    individual's dwelling unit of any programming for which the
    individual has not obtained authorization for that use.
         "(d)(1) Any person who willfully violates subsection (a)
    shall be fined not more than $1,000 or imprisoned for not more
    than 6 months, or both.
         "(2) Any person who violates subsection (a) willfully and for
    purposes of direct or indirect commercial advantage or private
    financial gain shall be fined not more than $25,000 or imprisoned
    for not more than 1 year, or both, for the first such conviction
    and shall be fined not more than $50,000 or imprisoned for not
    more than 2 yers, or both, for any subsequent conviction.
         "(3)(A) Any person aggrieved by any violation of subsection
    (a) may bring a civil action in a United States district court or
    in any other court of competent jurisdiction.
         "(B) The court may -
              "(i) grant temporary and final injunctions on such terms
    as it may deem reasonable to prevent or restrain violations of
    subsection (a);
              "(ii) award damages as described in subparagraph (C);
    and
              "(iii) direct the recovery of full costs, including
    awarding reasonable attorney's fees to an aggrieved party who
    prevails.
         "(C)(i) Damages awarded by any court under this section shall
    be computed, at the election of the aggrieved party, in according
    with either of the following subclauses;
              "(I) the party aggrieved may recover the actual damages
    suffered by him as a result of the violation and any profits of
    the violator that are attributable to the violation which are not
    taken into account in computer the actual damages; in determining
    the violator's profits, the party aggrieved shall be required to
    prove only the violator's gross revenue, and the violator shall
    be required to prove his deductible expenses and the elements of
    profit attributable to factors other than the violation; or
              "(II) the party aggrieved may recover an award of
    statutory damages for each violation involved in the action in a
    sum of not less than $250 or more than $10,000, an the court
    considers just.
         "(ii) In any case in which the court finds that the violation
    was committed willfully and for purposes of direct or indirect
    commercial advantage or private financial gain, the court in its
    discretion may increase the award of damages, whether actual or
    statutory, by an amount of not more than $50,000.
         "(iii) In any case where the court finds that the violator
    was not awaore and had no reason to believe that his acts
    constituted a violation of this section, the court in its
    discretion may reduce the awards of damages to a sum of not less
    than $100.
         "(4) The importation, manufacture, sale, or distribution of
    equipment by any person with the intent of its use to assist in
    any activity prohibited by subsection (a) shall be subject
    to penalties and remedies under this subsection to the same
    extent and in the same manner as a person who has engaged in
    such prohibited activity.
         "(5) The penalties under this subsection shall be in addition
    to those prescribed under any other provisions of this title.
         "(6) Nothing in this subsection shall prevent any State, or
    political subdivision thereof, from enacting or enforcing any
    laws with respect to the importation, sale, manufacture, or
    distribution of equipment by any person with the intent of its
    use to assist in the intereception or receipt of radio
    communications prohibited by subsection (a).
         "(e) Nothing in this section shall affect any right,
    obligation, or liablility under title 17, United States Code, any
    rule, regulation, or order thereunder, or any other applicable
    Federal, State, or local law."
         (b) The amendments made by subsection (a) shall take effect
    on the effective date of this Act.

                            The Law Explained

         As with many laws, it sounds more complicated than it really
    is. Much of it makes little difference to the average person
    anyway. The part that concerns us most is the part before the
    legal definitions.

         "(b) The provisions of subsection (a) shall not apply to the
    interception or receipt by any individual, or the assisting
    (including the manufacture or sale) of such interception or
    receipt, of any satellite cable programming for private viewing
    if -
         "(1) the programming involved is not encrypted; and
         "(2)(A) a marketing system is not established under which -
              "(i) an agent or agents have been lawfully designated
    for the purpose of authorizing private viewing by individuals,
    and
              "(ii) such authorization is available to the individual
    involved from the appropriate agent or agents; or
         "(B) a marketing system described in subparagraph (A) is
    established and the individuals receiving such programming has
    obtained authorization for private viewing under that system."

         This is the heart of the law.
         It says, simply, that reception of signals from satellites,
    etc. is perfectly legal as long as that reception is for personal
    use only. (You can't receive those signals and then sell them to
    other people.)
         It goes on to say that viewing of encrypted (scrambled)
    signals *is* illegal, but then goes on to clarify something very
    important.
         It is illegal to view those encrypted signals ONLY if the
    broadcaster  1)has decoders available for the general public,
    and,  2)there is a specific and readily available plan for the
    individual to get the decoder and authorization to use it.
         What this means, in short, is that the broadcaster - HBO,
    TMC or whoever - is more than welcome to scramble their signals.
    If they *don't* scramble the signals, the individual can use it
    legally in the home. And if they *do* scramble the signal, unless
    they make decoders available to the public, the public can build,
    buy or whatever, decoders on their own, and be legal in doing it.
         So, the broadcaster can scramble - but if they don't make
    decoders readily available and at a reasonable price (purchase or
    rent), the individual can descramble and still be within the law.
         The next time you hear someone talking about how illegal it
    is to pick up video and audio from a satellite, you'll know
    better. And the next time you see one of the notices on the cable
    channels that says that it is a federal offense to receive the
    signals without authorization, . . . well, you can have a good
    laugh. The federal government, last October, has given that
    authorization to every private citizen.

         The new law is a massive step forward. The past few years
    have had several large companies in a number of industries trying
    to get the federal government to help them make profits. The
    broadcasters didn't want to go through the expense or bother of
    scrambling, and tried to get the government to make laws that
    forbade reception of the signals. Various movie companies have
    tried to make video equipment illegal in the same way.
         In one way, maybe big business has overstepped itself once
    too often. This new law basically says, "The private citizen is
    more important than big business," and "You're welcome to make
    profits, but don't expect the government to do your job for you."

                             One More Thing

         Probably the most famous pay-to-view channel in the world is
    HBO. And why not? They were the first of the kind. All others merely
    copied the idea. Some of those others failed; Showtime and The
    Movie Channel merged in an effort to have at least a part of the
    power exercised by HBO.
         But it's tough to buck HBO. Their parent company, Time-Life,
    is one of the largest corporations in America (which also means,
    in the world). They have the money, and the clout, to get things
    done THEIR way.
         As is so often the case with huge conglomerates, HBO has
    forgotten just how they became so big and successful. They seem
    to have the idea that they are the best, and that the American
    public just can't get along without them. While it's true that
    HBO *does* have some good programming, it isn't the programming
    that makes HBO one of the most profitable companies in history.
    It's the people who sit at home and watch.
         Think of it this way. The programming costs money. It's an
    expense - money paid OUT. To generate a profit you have to pull in
    more money than you pay. Consequently, the success of HBO isn't
    the programming but the viewers.
         They've lost sight of this, and satellite television is a
    perfect example of the result.
         Very few broadcasters are talking about scrambling. Those who
    are are once again primarily following the example set by HBO. And
    since it's now legal to build a decoder if one is not offered by
    the broadcaster, they had to come up with some way to get around
    that law, and still have things THEIR way.
         This was done by joining with a company called M/A Com. The
    result was the design of a scrambling (and descrambling) system
    that is virtually impossible to crack. If you want to view HBO,
    you have no choice but to rent a descrambler from them.
         Meanwhile, HBO and M/A Com have been pushing the same sort
    of system at the few others who are thinking about scrambling. Of
    course, the frequency used would be different for each broad-
    caster which in turn means that the homeowner would need a decoder
    for each channel. (To be fair, this problem is being considered -
    although not very hard.)
         The plans so far indicate that the decoder(s) *will* be avail-
    able to the general public. The cost will be $395 per unit. But it
    doesn't stop there. Not yet.
         Go out and spend $3000 on a satellite system, and another
    $400 on a decoder, and you *still* won't be able to receive HBO.
    Not unless you faithfully send HBO a monthly fee of $12.95 (or
    $19.95 if you also want their sister channel). Yet, receiving that
    signal costs nothing to HBO. It's all pure profit. The signal
    already exists and is being beamed into your backyard right now.
    Whether you receive it or not, the cost to HBO is exactly the
    same.
         If you get HBO over a cable, you're probably paying about
    $10 per month. Of that $10, about $3 goes to HBO. The rest goes
    to the cable company for their expenses and profits. By collecting
    all those $3 per customer kick-ins, HBO has become the single
    most successful and profitable company of its kind in the world.
         Yet over 4 times that is being required from the end user
    who is using a satellite receiver. (Detailed surveys have shown
    that nearly 80% of all STV users are either not serviced by any
    cable company, or are tired of the lousy service if they have
    a company available.)
         So, HBO gets rich; the cable company doesn't have to worry
    about providing decent service and is protected. Only the end
    consumer gets shafted.
         We're still not done.
         Existing plans also talk about the M/A Com decoders being
    available only from authorized M/A Com dealers. And guess what
    else M/A Com makes? Satellite TV systems! So, if you want HBO,
    you go to a dealer who carries M/A Com STV systems, buy that,
    then buy the M/A Com decoder. M/A Com makes out like a bandit -
    literally - and is making a BIG move to force other STV manu-
    facturers out of business.
         There is a growing movement in the country to show both
    companies that the public is fed up with big companies passing
    the buck - or rather *taking* the buck - from the public. It
    comes in two parts.
         First, it has been suggested that anyone concerned actively
    boycott anything from Time-Life (including HBO). The idea is that
    if enough people cancel their subscriptions to Time, Life and
    ignore all those offers they make on TV, it just *might* make them
    come up with a more reasonable figure for the service.
         Second is a similar boycott of M/A Com products. From recent
    estimates, the decoders costs right about $20 to build. By the
    time it gets to the end consumer, the price has gone up by a
    factor of 2000%. NO ONE needs that kind of profit margin.
         There is a third movement afoot - and one I hesitate to mention
    (but will because it is so fascinating). That satellite sits up
    there, about 25,000 miles above the earth in a stationary orbit.
    A satellite carrying scrambled signals in particular is dependent
    on programming signals it receives from the ground. Not just the
    signals that are relayed back to earth, but also those signals
    that tell the satellite which decoders to shut down for lack of
    payment.
         The satellite receiving dish can also work as a transmitting
    dish. The third movement is presently more of a "joke" than a
    reality, but some day it will happen. Some user on the ground
    with sufficient technical knowledge will attach a transmitter
    to his (or her) dish instead of a receiver, and beam up the signal
    that will cause the satellite's HBO (or whatever) transponder to
    shut down entirely.
         There is presently no way to detect the source. The signal
    itself would take less than a second to transmit. HBO could
    recover quickly - but another second of transmission would once
    again shut everything down.
         Those in the field think of it as a kind of electronic
    blackmail. And that's just what it is. It's also unfair and
    unethical. (It's also highly illegal.) But at the same time,
    there are those who are just fed up enough to pull it off.
         And the chances are very good that they'll get away with
    it. So, if you ever see HBO start flicking in and out, or
    disappearing entirely, you might guess that someone has decided
    that the first two parts of the movement haven't been effective
    and that the third part is necessary to get a multi-billion
    dollar conglomerate to pay attention.

    UNTIL NEXT TIME

         Please excuse me for editorializing. Consider it privilege
    of rank, or whatever else you wish. Personally I take greed at
    public expense to be a serious matter. This issue is quite similar
    to that of the cost of computer software - where the distributor
    pays the author (the one who slaved and wrote the program) pennies,
    then spends maybe 50c for the disk, and $2 for printing the manual;
    and turns around and charges you $450.
         Being in the business, I have a solid idea of what things
    cost. Maybe I should let this outrage generate an article on that
    topic? So the rest of you know what is involved in creating a
    package like WordStar? Or that game you just spent $40 for? Or
    that $3000 STV system, plus $400, plus $155 (plus tax) more per
    year.

         Next week's issue:
         I'm hoping to present to you a guest article, written by our
    own Chris Mitchell. Unless you've been living in a cave, you know
    that Chris is one of the DJs on KUPD. He's also the Sysop of the
    Silent Side (962-7698).
         Chris has been in radio most of his life. (Just listen to
    him on the air. He might not have the "flash" of some DJs, but
    he's always consistent - a solid professional. In short, he knows
    his stuff!) Next week, hopefully, we'll have an article for you
    on radio - how to get into broadcasting, how to stay there, and what
    it's all about in general.
         Following that, perhaps there are a few of you out there who
    have dreams of doing what I do for a living - writing.
         And then maybe an article on "How to Get a Job."
         With the school year nearing an end, maybe we can do even a
    short series of "career" issues? (Leave me some mail as to your
    interest in such a series - good or bad responses are needed. I
    could also use your suggestions as to what other careers you think
    should be covered.

Zephyr Magazine is © Gene Williams. All rights reserved.