Cox moving against cable piracy

Grace Leong

Friday, March 23, 2001 | 11:28 a.m.

Las Vegas cable television operator Cox Communications sued 39 Las Vegas Valley residents, alleging they illegally used "pirate" cable television decoding devices to steal its services.

In a U.S. District Court lawsuit filed Wednesday, Cox alleged the defendants violated the federal Communications Act -- which prohibits the unauthorized reception of cable television programming -- when they used what it called "bootleg 'pirate' converter-decoder devices."

The devices allegedly were obtained from Millennium Enterprises, an Austin, Texas-based maker of such devices, to illegally receive programming without payment.

Cox seeks statutory damages of up to $170,000 against each of the 39 defendants for each violation of the Communications Act as well as punitive damages.

Bob Kijowski, Atlanta-based Cox's director of Las Vegas business operations, said the company, over the past six months, contacted at least 100 Las Vegas Valley individuals it identified as having stolen cable television programs.

Some 60 individuals have since agreed to resolve the matter and pay a $2,500 fine for each illegal device they possess and turn in the device, but 39 people refused to settle, he said.

Cox said it scrambles its signals for specific programs as a security measure to prevent subscribers from receiving programming services without payment.

"It is possible for a dishonest individual to install an unauthorized or 'pirate' converter-decoder (one illegally programmed to descramble all of Cox's programming services without Cox's authorization)," the suit said.

The suit said the defendants modified the converter-decoder devices to descramble "premium" programs from Cinemax, Home Box Office and Showtime as well as pay-per-view programs.

"We do various sting operations to find out who these illegal users are," Kijowski said. "We run certain contests during major boxing fights, and we find out who these illegal users are when they sign up for the contests, but there's no record of them ordering the event.

"Sometimes, the police find out about them in raids when they confiscate the computer system and dataspread sheets of the illegal box distributors, or even (credit card) receipts, which indicate who the distributors' customers are," he said.

"Typically, nobody watches, say, pay-per-view movies 24 hours a day, but these people with illegal devices have been known to videotape movies and sell them at flea markets and swap meets, which breaks copyright laws as well," he said.

"And there's a moral element to this," Kijowski said. "People don't think of it as theft because it's a picture and they justify it by thinking they aren't taking anything tangible."

Cox, which said cable piracy creates an "unfair subsidy to 'freeloaders' that is paid for by honest, paying subscribers," also said cable theft has a negative impact on the various political subdivisions within Clark County that receive franchise fees from Cox's gross revenues.

"Cable theft on a nationwide basis is costing consumers and franchises over $12 billion a year, and Las Vegas, which receives a franchise fee from Cox, is losing over $250,000 that could be used for citywide services," said Cox's legal consultant, Stan McGinnis, who is president and CEO of San Francisco-based Secure Signals International.

The cable operator said the loss of cash flow also adversely affects its ability to maintain programming standards. Cox in Las Vegas loses annual revenues of about $4 million to $5 million to cable theft, Kijowski said.

Wayne Lonstein, Cox's attorney, said the lawsuit at this stage seeks only monetary awards to make Cox whole as well as an injunction to stop the individuals from stealing cable television. But the lawsuit doesn't preclude criminal charges, he said.

"There are no arrests so far. We aren't pressing criminal charges at this time," Kijowski said. "Civil action has more of an impact because it hurts their pocket book."

It's considered a gross misdemeanor in Nevada to steal cable television and individuals caught could be assessed a $1,000 fine or six months in jail or both, he said. "But if you're caught with more than 10 illegal decoder devices, that's considered a felony because it's like you're running a business or distributorship."

The Greenspun family, owner of the Las Vegas Sun, owns a minority interest in the Cox system in Las Vegas.