As many as 150,000 Canadian households are illegally watching satellite television originating in the United States. The law they're breaking is Canadian - part of the nation's heavy regulation of the TV industry.
As a new breed of pizza-sized digital satellite dishes take off in the US market, their rise in Canada has been slowed, but not stopped, by regulators in Ottawa. The goal of the regulators is to ensure that some Canadian-produced shows are available in Canada. The result is that not only the hardware, but a 500-channel universe of programming, is stuck in slow motion.
Although use of the dishes is at present illegal in Canada, small satellite dishes are readily available from unauthorized distributors.
"The low-end estimate in the industry is 50,000 dishes are installed in Canada, but it could be as high as 150,000," says a satellite-TV executive. "Until there's a working alternative, the 'gray market' will continue to grow."
"Say Goodbye to Cable," the advertising pitch in Montreal newspapers, promises dish prices as low as $899 (Canadian; US$654). Canadians can sign up for programming for the dishes through agents, who pretend Canadian customers are located in the US.
Watching the market gather steam, US-based RCA says it is tired of being forced to sit on the sidelines while competitors sell 18-inch dishes in Canada. Now, RCA's Canadian subsidiary is going to enter the Canadian market whether Ottawa likes it or not.
"In view of the expanding availability of digital satellite systems in Canada, which has put Thomson dealers at a severe competitive disadvantage, [the company] plans to begin selling RCA and GE systems directly to its Canadian dealers," said Robert Girard, an attorney at RCA Thomson Consumer Electronics Canada Inc., in a recent statement.
On the programming front, federal regulators have given the go-ahead to one service provider, which is stuck in the starting gate.
The Canadian Radio-Television and Telecommunications Commission (CRTC) awarded a license to ExpressVu, a satellite-TV group headed by the telephone company Bell Canada Enterprises. ExpressVu promised to provide most of the movie and specialty channels that Americans receive and, to keep regulators happy, also to offer Canadian channels.
But so far, ExpressVu hasn't been able to broadcast its signals because the partner company, Tee-Comm Electronics Inc. in Milton, Ontario, that provides it with satellite dishes couldn't come up with a product that worked. It won't be beaming programs to Canadian televisions before September, at the earliest.
"The issue is entirely technical," says a senior executive at one ExpressVu partner, who asked not to be named. "Everyone underestimated how difficult this was going to be."
The theoretical loser in a contest for Canada's satellite-TV service was Power DirecTv, 80 percent owned by Power Corp. of Montreal, a Canadian media conglomerate. Power DirecTv is 20 percent owned by DirecTv in Denver. But the Canadian Cabinet in Ottawa overturned the negative CRTC ruling, thereby allowing Power DirecTv to operate.
Power DirecTv then said, however, that it could go ahead only if it had a subsidy for Canadian programming so it could compete with subsidized Canadian cable operators. It didn't get the subsidy and thus is not broadcasting for a Canadian audience, but is supplying a Canadian news and movie channel to the US. And the satellite dishes in Canada are picking up American direct TV signals contributed to by Power DirecTv.
IN addition to buying dishes from black-market suppliers here, some Canadians buy them in the US. One dish, made by RCA, sits on the side of a brick cottage in the Toronto neighborhood of North York. The dish points southwest to pick up a signal from the satellite parked over the US.
"I go through a service provider in Waterloo [Ontario] to make sure I don't have any problems with the service," the owner says. "You can't use my name. The people in the States would cut me off." His bill for programming is $33 a month, paid in US dollars.
DirecTv in the US cuts off service to anyone who calls to order a movie or a sports event, if the call identifier shows a Canadian area code. To get around that problem, the service provider in Waterloo, Ontario, has a telephone number in the US.