U.S. Piracy on the Upswing

At the core of piracy is the issue of access cards, or smart cards, that are distributed to DBS customers, either together with their receiving equipment, or separately. Smart cards, which must be activated by the DBS providers, contain the software that allows the reception of satellite programming. DirecTV’s access cards are currently made by News Corp.’s subsidiary, NDS. EchoStar is guarding its signals against piracy with the smart card technology developed by Kudelski Group’s NagraStar. Despite all the resources that these two companies devote to protecting their signals from theft, both security systems have been hacked many times. DirecTV’s security system, however, seems to be more often the target of hackers, compared to that of its competitor, prompting DirecTV to terminate its contract with NDS as of the second quarter of 2003, followed by a recent lawsuit between DirecTV and NDS. NDS has also been sued separately by EchoStar.