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The Supreme Court of Canada has decided that the hundreds of thousands of Canadians receiving satellite television from the United States are breaking the law.

The ruling means that if Canadian TV viewers want to sign up for a satellite service -- and the hundreds of channels it can deliver -- they must subscribe through one of two lawful Canadian distributors: Bell ExpressVu LP or Star Choice Communications Inc.

The half-million or so Canadian households that pay a company for a small satellite dish, a decoder and an address in the United States are now receiving illegal television services.

"From my point of view, and I think from the Supreme Court's perspective, anybody who is using or selling or otherwise distributing a device that will decrypt [U.S.]programming in Canada is now doing something [that]is illegal and has to stop," said Ian Gavanagh, vice-president and general counsel for Bell ExpressVu, Canada's largest satellite TV supplier with more than a million subscribers.

The company estimates that the rapid growth of U.S.-based satellite services in Canada has meant $500-million a year and thousands of jobs seeping out of the country.

The 7-0 court decision, which overturns two lower-court decisions, is a clear victory for Bell ExpressVu, which brought the case forward, and for the Canadian government, which backed ExpressVu's case.

"This is a blow to those pirates of the airwaves that are selling or distributing illegal equipment designed to steal satellite TV programming," Industry Minister Allan Rock said yesterday.

He and Heritage Minister Sheila Copps said they are working with police and the Canadian broadcasting industry to put a quick end to the selling of decoders and grey-market satellite dishes, by targeting people who are marketing the U.S.-based services or pirating signals, Mr. Rock said in an interview.

"For the first time, we have clarity with respect to the scope of the law.

"We're now in a position to start aggressively enforcing it."

But the SCOC ruling is not the end of the long-running battle between Canadian direct-to-home satellite service providers and dealers of grey-market services.

The ruling clarifies the law, and tells Canadian courts that only lawful Canadian distributors can deliver direct-to-home services.

But lawyers for the grey market were already back in courts in Ontario and Quebec yesterday, arguing that the law is unconstitutional because it inhibits freedom of information. They're also asking the provincial courts to delay enforcement of the SCOC ruling until the constitutional issue is settled.

"All the Supreme Court decided, for the second half of our football game, is who is going to kick off and who is going to receive," lawyer Alan Gold said. He represents the small British Columbian company Bell ExpressVu targeted in its fight against the U.S.-based services.

At the centre of the case, Richard Rex, owner of Can-Am Satellites in Maple Ridge, B.C., said he was shocked by the ruling.

"I didn't think it was going to happen . . . with the favourable decisions we've had here and across the country for the satellite industry. For it to fly in the face like this, I just didn't expect the courts to come down and say 'Canadians don't have these rights any more.' "

The ruling affects both grey-market and black-market satellite services. grey-market services are paid for by Canadian viewers, but come from the United States. The viewers pay a company, usually in U.S. dollars, to set up a American address and subscribe to a U.S.-based satellite service, often DirecTV.

In black-market services, on the other hand, viewers usually pay only for gadgets to take satellite signals directly out of the air and decrypt them. They don't pay for the television programming itself.

"It's just plain theft," said Elizabeth McDonald, president of the Canadian Film and Television Production Association, part of a coalition of Canadian broadcasting and film groups supporting Bell ExpressVu in the case.

Strangely, U.S.-based DirecTV is also part of the coalition, saying it wants to make sure intellectual property rights on both sides of the border are respected.

Critics of the ruling say it implies more than just a crackdown on people who can't get enough Hollywood movies. They say it also means depriving immigrants of access to cultural programming from their country of origin, programming not carried by Canadian satellite services or cable.

"This is basic. It's about human rights," said Paul Fitzgerald, vice-president of the Congreso Ibero-americano de Canada. "It is going to be illegal from now on to pay someone for a signal that is not available in Canada."