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Hong Kong's Apliu Street flea market was once the hotbed for pirates who openly sold illegal set-top boxes, or STBs, and cards configured to steal cable TV signals. These boxes could generate over 90 premium content channels ranging from sports to news, history to entertainment, and soft porn to the latest Hollywood releases, all for a one-time fee of about US$100, for an infinite length of viewing time.
However, Internet protocol technologies adopted by PCCW, Hong Kong's premier telecommunications provider for its NOW broadband pay-TV service, virtually ended the reign of these illegally "cloned" STBs. In the process, it transited from traditional analog cable to digital TV by using the digital rights management technology, which protects the interests of owners of content and services, such as copyright owners. This kind of technology stipulates that authorized recipients or users must acquire a license in order to consume the protected material like files, music or movies as per the rights or business rules set by the content owner.
The introduction of cheap and flexible channel pricing also attracted subscribers who were willing to pay only for those channels that they wanted instead of higher prices for a bouquet of channels -- many of which were of little of no interest to them.
NOW TV also utilizes a combination of security techniques like network-based conditional access, end-to-end encryption and analog copyright protection in the STB after the signal has been encrypted. The result is that no one seems to be selling the illegal STB's on Apliu Street now -- simply because the pirates have not been able to crack the new technologies.
In 2005, in order to protect intellectual property, the Philippine's National Bureau of Investigation along with the Cable and Satellite Broadcasting Association of Asia, or CASBAA, raided cable companies in Mindanao and Manila. They seized equipment used for illegal distribution of unauthorized pay-TV signals related to various news and entertainment channels such as CNN, Cartoon Network, Discovery, ESPN, HBO and MTV. They found that these cable operators were not paying the original content providers, but obtaining the signals illegally. However, raids such as these only produce short-term results while pirates re-group and start operations elsewhere.
India's piracy woes are rather unique; resolving them would require a complete reformation and restructuring of its national cable TV industry. Here, revenue losses occur in its unique last-mile gray market wherein subscriber fees are collected in cash on the consumer's doorstep. Stealing legitimate pay-TV cables and illegally hooking them into various households for a paltry sum is a neat trick that nets thousand of dollars for pirates as much as it benefits consumers who are unable to afford the cost of genuine cables and hefty channel subscriptions.
Like Hong Kong, the number of pirated pay-TV subscriptions has remained significantly low in Singapore due to its ongoing digitization of cable networks, and has resulted in a 15.8 percent decline in pay-TV piracy costs, making it, along with Hong Kong, a classic example of how to tackle pay-TV piracy.
However, other Asian regions have been slow in adopting similar measures. Despite the growth of legitimate subscribers in Vietnam, piracy there has increased. According to CASBAA, it has 2.5 million unauthorized pay-TV subscribers to cable, satellite, and other digital terrestrial systems, compared to a legitimate subscriber base of only 1 million. Thailand also suffers from rising costs of pay-TV piracy, comprising an alarming 1.27 million unauthorized connections, while Macau has ten pirated connections for every single legal subscriber.
A study conducted by CASBAA in 2006 estimated that the cost of pay-TV piracy in the region had increased from US$1.06 billion in 2005 to US$1.13 billion in 2006. The increase has been consistent for four consecutive years; the number of illegal subscriptions across Asia Pacific increased by 20 percent in 2006 to 5.2 million connections. The report also highlights the fact that pay-TV piracy cost the region's governments estimated tax revenue losses of US$158 million.
Although Asian states view the tax revenue losses as having important repercussions, growing piracy suggests that enforcement of tough measures has not been a high priority. The costs of replacing old equipment, investing in new technologies, and cutting down the recurring transponder and satellite costs for acquiring broadcast signals has been an expensive and slow process.
One can also argue that CASBAA's statistics are based on the assumption that people who acquire pirated content, either by purchasing illegal STBs or through unauthorized operators signals, would have paid for the same content legitimately if piracy didn't exist. If this is untrue then the loss of revenue does not paint a bleak picture that necessitates governments to take punitive action. Estimating the real revenue loss is tough, as it would only factor in people who buy pirated subscriptions and illegal STBs, but would be legitimate subscribers if piracy were to be rooted out.
Industry experts estimate that the future demand for the Asia-Pacific pay-TV market would come from China and India with their huge consumer bases despite their current relatively low pay-TV and digital penetration. However, keeping pirates at bay by plugging the system that is constantly under attack remains a daunting task in most Asian regions. Legitimate and affordable pay-TV, and good marketing strategies, still fall short of consumer expectations of watching channels at little or no cost.
