Equipment Seized at Firms Allegedly Altering Decoders

Federal marshals have seized television signal descramblers manufactured by a San Diego company from two Phoenix electronics companies that allegedly modified the devices to illegally receive pay television programming.

Authorities in Arizona on Wednesday seized the equipment from Miller Electronics and Picture Perfect Engineering. The firms allegedly installed “pirate” computer chips that override security measures created by the manufacturer, San Diego-based Cable Home Communications Corp., according to spokeswoman Cheri Hart.

Spokesmen for the two Arizona companies were not available for comment Thursday.

The decoders utilize a computer chip that is activated in San Diego only after viewers pay a programming charge. The two Phoenix companies recently advertised in electronics publications that they could “modify Videocipher IIs to receive all scrambled programming for a ‘modest’ charge,” Hart said.

Cable Home Communications, which recently was acquired by General Instrument Corp., makes the television signal decoders that receive cable programming such as HBO, Showtime and Cable News Network. Twelve programmers now scramble their signal, and 19 more are expected to join them this year, according to Hart.

In the past year, Cable Home Communications has sold more than 100,000 of the Videocipher devices to television viewers who want to receive unscrambled programming, Hart said. Cable Home Communications either manufactures or holds the license to all descramblers manufactured for use in the United States.

During Wednesday’s raid, U.S. marshals seized “customer records” and descrambling devices that had been modified by the installation of the “pirate” computer chips, Hart said.

However, Hart maintained that the pirate chips soon will be rendered ineffective by Cable Home Communications, which has “several (additional) levels of security that we can implement.”

Cable Home Communications on Wednesday won a temporary restraining order from a federal judge in Phoenix that prohibited Miller Electronics and Picture Perfect Engineering from installing the “pirate chips” in Videocipher devices, Hart said.

And U.S. District Judge Charles Hardy authorized U.S. Customs agents to seize overseas deliveries being shipped to Miller and Picture Perfect. Cable Home Communications suspects that the pirate chips are being manufactured overseas, according to Hart.

The chip is known in the electronics industry as the “Three Musketeers Chip” because, after installation, the chip enables viewers who pay for a single scrambled channel to receive all scrambled programming. “It’s all for one and one for all,” Hart explained.

In a civil suit filed Wednesday in Phoenix, Cable Home Communications charged the two companies with violating the federal Cable Communications Policy Act of 1984, which prohibits the manufacturing, sale and use of devices that allow the unauthorized reception of scrambled signals.

The two Phoenix companies “have been blatantly violating federal law,” according to Cable Home Communications Vice President J. Lawrence Dunham. “They have cast a cloud of confusion over the entire satellite TV industry.”

Dunham claimed that the lawsuit is the first legal action “aimed at stopping satellite TV pirates.”