INDSOR, Ontario -- THE palm-size cards started appearing last year at border inspection points. They were stashed in glove compartments and trunks. Tucked into pockets and wallets. Hidden in brown paper packages.
Drivers tried too hard not to appear nervous, and flubbed explanations when questioned by American customs inspectors.
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A new kind of contraband was trickling across the border from Windsor into Detroit along with the pseudoephedrine and the Cuban cigars. Initially, United States customs officials say, they found the cards puzzling. They looked innocuous enough — blue plastic cards imbedded with computer chips.
As the inspectors investigated further, it soon became clear to them that Americans were flocking to Windsor for more than the second-rate casinos and strip clubs. They were crossing the border to satisfy an illicit desire of a different sort: one for pirated satellite television.
In the past few years, satellite TV piracy has become a multimillion-dollar industry in the United States, with as many as one million households, by some estimates, illegally obtaining programming from the nation's two big satellite providers, DirecTV and EchoStar. The desire to tap into satellite channels without paying the monthly fees has spawned a loose distribution network of fly-by-night dealers and Web sites, raids by law enforcement agencies, and an electronic cat-and-mouse game between the pirates and the satellite companies.
But if piracy has become big business in the United States, it owes a lot to Canada, where until recently it was legal to receive pirated satellite signals. In border cities like Windsor, a mini-industry of pirate providers flourished, selling the means for Americans, be they individuals or dealers, to gain access to satellite programming.
For now, that industry is reeling from a Canadian Supreme Court ruling in late April that it was illegal for Canadians to watch American satellite television. Stores were closed and equipment removed, and several online stores were shut down.
But dealers say that the demand is too great and the business too lucrative for the industry to disappear entirely. It will either move offshore or underground, many dealers predict, ensuring some sort of supply chain for Americans.
"All they really do is push it below ground," said Adam Dicker, owner of Satan's Playhouse, a chain of three satellite television stores in Toronto. "It's the dealers they want to put out of business, but we only get more business."
In satellite piracy, the cards are the keys. Inserted into an inexpensive receiver, a card unlocks the streams of entertainment to a user who points a small dish antenna in the right direction. Legitimate users pay a monthly fee to unscramble the signals. But a satellite access card can be transformed to a free card through reprogramming. What was once available only by subscription — basic channels and premium services like HBO, pay-per-view movies and sports — can be viewed for the one low price of hiring someone to hack the card, anywhere from $20 to $50 a pop.
"It's like heroin," said Joann Kolonelos, a dealer at DSS Pirate, a satellite piracy store in Windsor whose clientele has been approximately one-third American. "Once you have access to all those channels, all those movies, you can't give it up."
The satellite companies and law enforcement agencies call it theft, plain and simple. The companies, which together have about 18 million paying subscribers in the United States, hesitate to put a figure on the price of satellite piracy. But cumulatively, the cost of enforcement, legal action and lost revenue has probably run into the hundreds of millions of dollars, according to industry experts. In 1997, DirecTV was awarded damages of $33 million as a result of a single lawsuit against 30 dealers in Seattle.
DirecTV, whose encryption system was cracked before EchoStar's, is pouring money and people into its anti-pirating division, the Office of Signal Integrity. The office helps law enforcement agencies conduct frequent raids on satellite dealers across the country. In three raids on a single day in May 2001, for example, police officers confiscated $4.5 million in satellite piracy paraphernalia in Orange County in California. Since the beginning of this year, there have been 33 seizures of satellite access cards by customs inspectors in Detroit alone.
Satellite piracy is a federal crime punishable by up to five years in prison for dealers and one year for viewers, in addition to fines. But many scoff at the idea of getting caught.
"There are so many people doing it, it becomes socially acceptable for you to do it too," said a hotel manager from Detroit who spoke on the condition that he not be identified. The manager, who went to Windsor to obtain cards and satellite equipment, started pirating signals in 2000 when he became frustrated with his high cable bills.
He crossed the border because Canadians were able to exploit a discrepancy: government jurisdictions stop at borders, but satellite signals do not. Piracy of American satellite television could not be challenged here because the companies are not licensed in Canada. And while there are two Canadian satellite broadcasting providers, the appetite for American programming is overwhelming.
Today, an estimated one million Canadian households — about 10 percent of the population — are watching American satellite TV, in most cases without paying DirecTV or Echostar. Satellite dishes have sprung up on Canadian houses like gray mushrooms after a spring shower. Piracy Web sites flourished, and hundreds of stores opened as legitimate tax-paying businesses. In Windsor alone, 40 piracy stores emerged from 2000 to 2002. Classified ads were filled with offers to hack satellite cards.
By serving as wholesalers to dealers in the United States or selling to individuals who crossed the border into Canada, hackers and piracy shops nurtured the temptation for Americans to steal satellite signals.
How far are people willing to go for television? Windsor dealers say that customers have driven from as far as Oklahoma, West Virginia and Texas. Some have bought dozens of cards to sell or give to friends. Some Americans who could not get to Canada mailed their cards to friends in the Detroit area with pleas that they be returned before the big game, said the hotel manager.
