Montreal, March 20, 2004  /  No 140  
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Harry Valentine is a free-marketeer living in Eastern Ontario. He can be reached at
by Harry Valentine
          While Canada's government is presently embroiled in such controversies as the sponsorship scandal, the very sinister Bill C-2 awaits its second reading in Parliament before becoming law. This bill pertains to the Radiocommunications Act; specifically, it will increase the severity of penalties imposed on people who import electronic equipment that can decode encrypted satellite television signals, regardless of whether those signals are of Canadian or foreign origin. An estimated 300,000 to 1-million Canadians own American satellite TV dishes and receive American TV programming, most of them using an American postal address (a PO box) and paying the American satellite TV provider for their services. Bill C-2 may reclassify them as criminals.
New class of criminals 
          Canadian law (section 9(1)c of the Radiocommunications Act) prohibits the decrypting of satellite TV signals unless prior authorization has been received from lawful providers of such signals. Only politically favoured companies such as Star Choice, Bell ExpressVu, and Shaw are considered lawful providers in Canada. American satellite TV signal providers are excluded from this category and since no lawful distributor exists in Canada to authorize decoding of their signals, Canadians who decode these signals may be charged under section 9(1)c of the Radiocommunications Act and be tried in court. But after hearing such a case, Quebec superior court judge Pierre Tessier declared that encrypted satellite TV signals of non-Canadian origins were to be "public domain" in Canada. 
          Judge Tessier's ruling reflected the Government of Canada's signatory status to section 19(2) of the United Nations International Covenant on Civil and Political Rights, which gives citizens of signatory nations the right to "receive information and ideas of all kinds, regardless of frontiers […] through the media of his choice." Most judges who have heard similar cases involving Canadians who had decoded foreign satellite TV signals, interpreted section 9(1)c of Canada's Radiocommunications Act in accordance with this international standard. In several prior cases, other judges concluded that foreign satellite TV providers had no legal status in Canada and that their signals were neither subject to protection nor regulation under Canadian law. In most cases, charges were dismissed against Canadians who had decoded American satellite TV signals, regardless of whether or not they had even paid for the American satellite TV signals.  
          Canadian providers subsequently appealed a lower court ruling to this effect, to the Supreme Court of Canada. The Supreme Court interpreted section 9(1)c to mean that Parliament had intended for a total ban on decoding all encrypted satellite TV signals, regardless of origin, allowing only government-favoured Canadian providers to grant authorization to decode encrypted satellite TV signals in Canada. This implies that foreign satellite TV signals may be off-limits to Canadians. Under Bill C-2, Canadian citizens will face criminal charges for importing or possessing decryption technology or any electrical or electronic component that could be used to build a decryption device. It is quite irrelevant to nationalistic Canadian authorities that American satellite TV dishes and decryption technology can only receive and decrypt American signals, not both American and Canadian satellite TV signals. Bill C-2 aims to protect Canadian satellite providers. 
Politically-favoured suppliers 
          The sheer "fluid" nature of Bill C-2 could result in electronic hobbyists being charged and prosecuted for possessing electrical or electronic component, since under Bill C-2, such component could be used to build a decryption device. There are a limited number of distinct categories of electrical and electronic components (resistors, inductors, capacitors, diodes, transistors, logic gates, etc) yet an infinite number of ways in which these components may be arranged. Each arrangement performs a different task, such as sending or receiving radio waves, converting electricity from AC to DC or DC to AC, producing synthesized music, performing complex mathematical calculations, plus several hundreds of other possibilities yet to be developed.  
     “Prohibiting Canadian citizens from owning electrical or electronic components, as well as prohibiting them from accessing foreign broadcasts, encrypted or otherwise, are acts of blatant tyranny against peaceful citizens.”
          Prohibiting Canadian citizens from owning electrical or electronic components, as well as prohibiting them from accessing foreign broadcasts, encrypted or otherwise, are acts of blatant tyranny against peaceful citizens. Bill C-2 is a result of a regulated industry successfully "capturing" regulators to protect their commercial interest. Economists Sam Peltzman and George Stigler (Nobel laureate 1982) reached such a conclusion after having done extensive research on relations between regulators and the regulated. Not only is telecommunications heavily regulated in Canada, but various levels of government have provided grants and low-interest funding to several telecommunications, high-technology and information sector companies. The article “The Future of Canadian Industrial Competitiveness” (le QL, no 133) revealed a little known sinister side to government transferring funds (profits) from efficient low-profile companies, to high-profile politically-favoured telecommunications companies that were at elevated risk for malinvestment.  
          The most likely customers for equipment and technology produced by politically-favoured telecommunications equipment makers are the regulated telecommunications companies. This situation raises the propensity for government to enact regulations aimed at protecting the commercial interests of both the regulated telecommunications providers as well as their politically-favoured suppliers. One basis for such regulation would be to ensure the Canadian content requirement in domestic broadcasting. Canadian content really means that the program producer and other key creative personnel were Canadian and that Canadians were paid for such services as lab processing and program post production. The Canadian content requirement merely serves to protect the commercial interest of a few favoured people. A segment of the Canadian population has chosen to reject the required Canadian content in the broadcasting they watch, by subscribing to American satellite TV broadcasts instead. 
          The government of Canada refuses to respect this democratic choice by Canadian citizens, as is obvious by the tyranny in Bill C-2. This bill aims to protect the commercial interest of a few politically-favoured service providers against legitimate competition, at the expense of the rights and freedoms of several hundred thousand ordinary, peaceful Canadian citizens who may be reclassified as criminals for rejecting Canada's nationalist agenda in broadcasting. If Canadian providers of encrypted satellite TV signals want to stop unauthorized pirating of their signals, technological improvement can do this. The article entitled “Telecommunications without Economic Regulation” (le QL, no 137) showed that an improved, future satellite TV technology could make decryption of satellite TV signals, as well as Bill C-2, unnecessary. Bill C-2 has more to do with nationalism and state oppression of Canadian citizens, because far more Canadians access American satellite TV signals than the few who pirate encrypted Canadian TV signals. 
In the name of Canadian Nationalism 
          It may be inevitable that advanced future satellite TV technology will need to be developed in either India or China, where lower R&D and production costs exist. Between 2002 and 2003, Indian and Chinese institutions graduated well over 1 million new scientists and engineers whose starting salaries were at 25% to 33% the level of their North American counterparts. A wide variety of electronic components is built in Asia, including TV signal transmitters that emit focused or narrow beams that can be reflected off TV satellites. Small scale versions of these, using coiled antennae surrounded by a shielded reflector, could avoid local detection near the US-Canada border while transmitting narrowly focused TV signal beams over short distances into Canada. Border town American entrepreneurs could transmit decoded American TV programs along vacant UHF TV channels to nearby Canadian customers, whose regular payments would assure continued TV reception on their outdoor TV antennae. Canadians using 24/7 high-speed internet access will be able to view decoded American TV shows on several pay-sites. 
          Economic regulation invariably achieves the opposite of what state officials had originally intended. In the name of Canadian nationalism (i.e. the commercial interest of a few favoured players) they have enacted totalitarian and tyrannical telecommunications laws and regulations to prevent Canadians from accessing encrypted American TV programs. They have evidently learned nothing from historical precedents, that when governments act to restrict a service that is in high demand, its price goes up and more ingenious methods are developed to deliver the banned and restricted services or products to willing customers. These shortsighted officials will invariably create safe, new business opportunities in the trans-border underground economy, in TV signals. Instead of Canadian TV signal providers losing $400-million/year to American competition, they could lose up to $1-billion/year as a direct result of Bill C-2 and the genius of state bureaucrats.  
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