Service Marketing Final Project Part 1

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_______________________________________________________________ Report Information from ProQuest October 13 2014 01:32 _______________________________________________________________

13 October 2014 ProQuest

Table of contents

1. DirecTV Cracks Down on Signal Pirates...................................................................................................... 1

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Document 1 of 1 DirecTV Cracks Down on Signal Pirates Author: Friedman, Mark ProQuest document link Links: Check for full text via 360 Link Full text: ON MAY 23, DIRECTV INC. OF EL Segundo, Calif., swooped down on federal court in Little Rock and filed 27 lawsuits against almost 100 people it believed intercepted its satellite television signal. The nation's largest satellite television provider's filing was part of a massive nationwide crackdown against viewers who used illegal devices to watch free programs on DirecTV's system. In the last month, the company estimated it filed hundreds of similar lawsuits in every state across the country. "That's a part of our comprehensive and aggressive effort to stop signal theft, both pursuing individuals on the supply side as well as the demand side," said Robert Mercer, a DirecTV spokesman. One defense attorney said DirecTVs strategy is nothing more than intimidation. "Even in their allegation there's no specific evidence that any of these people actually used (the illegal devices)," said Mark A. Flores of Salt Lake City, who is representing a Utah resident accused of stealing DirecTVs signal. "Threatening to sue somebody, twisting their arm until they cough up $600 or $1,000 or $4,000 it's kind of like a protection racket." Satellite theft is "prevalent" in the industry, said Robert Udowitz, a spokesman for the Satellite Broadcasting and Communications Association. But how much theft is going on is unknown, he said. The industry, however, is booming despite the piracy. Sales of satellite receivers jumped from $726 million in 1997 to an estimated $990 million in 2002. And since December 1994 the number of subscribers has ballooned from 2.7 million to nearly 20 million at the end of 2002. More than half of the subscribers, or 11.4 million, belong to DirecTV. DirecTV's revenue in 2002 was $6.4 billion, up 16 percent from 2001. "We want to protect that business," Mercer said. "That's why we're being so aggressive with these pirates or, as we prefer to call them, thieves." DirecTV said it invested billions of dollars to develop a satellite system capable of transmitting digitized video and audio signals to customers across the country. To prevent unauthorized reception, DirecTV uses encryption technology to scramble the broadcast. Each satellite receiver contains a removable access card the size of a credit card that contains a computer chip that unscrambles the signal. Despite the encryption technology, thousands of people have been able to tap into the DirecTV's signal by spending between $100-$300 to buy illegal programmed access cards on the black market. The cards allow users to watch all of DirecTVs programming - more than 200 channels from pay-per-view events to sport packages - for free. DirecTV said it doesn't know exactly how much it has lost from the pirates, but it estimates it's in the millions of dollars. The Crackdown On May 25, 2001, DirecTV, along with local law enforcement officials, stormed several mail shipping centers that were being used by distributors of pirate access devices. DirecTV scored a virtual gold mine of information: shipping records, emails and credit card receipts to tens of thousands of people who bought the illegal devices. With the information, DirecTV tracked down the consumers. "We sent each of those individuals a demand letter giving them an opportunity to come clean," Mercer said.

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In the letters, DirecTV ordered the pirates to send in their illegal equipment and write a statement saying they won't do it again. The company also asked the viewers to pay an amount, which varied depending on how many devices they bought, Mercer said. Mercer said DirecTV can't determine how much or what a viewer was watching. In his client's case, attorney Flores received a letter from DirectTV threatening to sue for $10,000 and offering to settle for $1,500. Those who ignored the letter more than likely now are finding themselves as defendants in federal court. "We're taking a very aggressive stance against this problem," Mercer said. "These folks have violated several different federal laws." Local Cases One of the nearly 100 people sued in Arkansas on May 23 was Stephen Bradley of Greenbrier. DirecTV alleges in its lawsuit that Bradley bought a "Vector Super Unlooper with X Code." The unlooper is designed to repair access cards that have been rendered useless by DirecTV. In an effort to block unauthorized cards, DirecTV has blasted computer codes through its network to disable illegal cards. "You can be sure they don't get to watch interruption free," Mercer said. "So if these folks think they got a great deal, they have to think again because they forever spend their time trying to maintain the card or getting it repaired." One way to repair the disabled card, though, is with the unlooper. The only use for the unlooper is to watch free programming, DirecTV said. DirecTV alleges Bradley bought two devices, one on Dec. 4, 2000, and one on March 30, 2001. When contacted at home, Bradley said he didn't know about the lawsuit. He also said he never bought a such a device. Bradley said his DirecTV system has been in his closet for the past year and a half. Bradley canceled his service because he had to get cable TV in order to subscribe to cable-modem Internet service. His cable company recently announced that its cable-modem customers didn't have to also subscribe to cable TV, so "I was planning on going back to DirecTV in July," Bradley said. DirecTV said it has documentation to prove the people it sued bought a device to watch free programming. "Whether they used it or not, it's still possession," Mercer said. "And that's a violation of federal law." And having the device shows the person's intent to steal a broadcast, Mercer said. "You don't go down to Radio Shack and get these things or order them on a legitimate online service," he said. A person has to go to a Web site that is clearly identified as a pirate Web site, he said. "It's pretty obvious what these people are after when they go on these Web sites," Mercer said. In its lawsuits, DirecTV is attempting to collect up to $10,000 for each device a person bought. The Lawsuits The way Flores sees it, DirecTV blitzes through a warehouse where a company manufactures the illegal access cards, Jotting down everybody's name and number that's ever done businesses with it. "And (DirecTV) turns around and files these lawsuits asking for tens of thousands of dollars in attorneys' fees," Flores said. "The effect of that is simply this: It's intimidation." He said DirecTV isn't asking for so much money that somebody has the incentive to go out and hire a lawyer. But DirecTV is asking for just enough that somebody who wants the issue to go away will pay the fee. As of last week, only one of the Arkansas defendants had hired a lawyer to respond to DirecTV's lawsuit. Flores said if DirecTV files the complaint because a person didn't respond to the letters, then the company wants to settle the case for about $4,000, up from $1,500 it had specified in the initial warning letter.

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"From what I've seen, once you file an answer in the case and hire an attorney, suddenly they don't want to do (anything)," Flores said. "They won't settle the case, but they don't have a whole lot of incentive to go forward." But coming up with the money to hire an attorney could be difficult. The general underlying accusation a person is facing is that he has dircumvented some trade secrets, Flores said. An attorney who specialized in that type of defense is going to charge more than a general civil attorney, Flores said. "Things add up very, very quickly," he said. "And when you're faced with DirecTV asking you for x-number of dollars or going and hiring an attorney that's going to cost you two or three or four times that amount, It's arm- twisting. These people give in." Flores said if the case lands before a jury, DirecTV will have to show that "these people actually used these cards to intercept their satellite signal." One way to prove the case is to enter into evidence that a person had been receiving the service and then suddenly stopped after he received the equipment, Flores said. "I can understand their side," Flores said. "They're trying to protect their interest. But for working folks that's a hell of a lot of money to be trying to twist out of their pockets especially in a bad economy." Subject: Satellite service providers; Piracy; Litigation; Location: Little Rock Arkansas Company / organization: Name: DirecTV Inc; NAICS: 517510; Classification: 9190: United States; 8330: Broadcasting & telecommunications industry; 4330: Litigation Publication title: Arkansas Business Volume: 20 Issue: 23 Pages: 1 Publication year: 2003 Publication date: Jun 09, 2003 Year: 2003 Publisher: Arkansas Business Place of publication: Little Rock Country of publication: United States Publication subject: Business And Economics ISSN: 10536582 Source type: Trade Journals Language of publication: English Document type: News ProQuest document ID: 220396994 Document URL: http://search.proquest.com/docview/220396994?accountid=87314 Copyright: Copyright Arkansas Business Jun 09, 2003

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Last updated: 2010-06-09 Database: ProQuest Central

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