Scrambled Signals refers to the encryption of satellite data streams by cable television program providers to prevent the unauthorized reception of their signals by home satellite dish owners. Program providers scramble the signals they beam up to satellites which distribute their programming to local or regional cable operators.

With the relaxation of satellite broadcast and reception regulations by the FCC in 1979, and the tremendous reduction in the cost of satellite receiving equipment due to advances in technology, a booming market developed for home satellite dish receivers in the early 1980s. These satellite dishes were known as television receive only satellite earth stations--TVRO. Essentially, TVRO dish owners were able to intercept, free of charge, cable television programming distributed over C-band satellites. Though most early adopters of TVRO dishes were located in rural areas where cable television was unavailable, cable system operators were nevertheless concerned about the actual and potential loss of subscribers who opted to receive cable programming for "free". When Congress passed the Cable Communications Policy Act of 1984, which specified that it was indeed lawful to receive unencrypted satellite signals for private viewing, cable system operators convinced program suppliers to scramble their satellite uplink feeds. Though they sought to protect the system operators (their clients) by scrambling, program suppliers also realized the profit potential in selling programming directly to the TVRO owners.

By early 1985, therefore, most major program suppliers (led by HBO and Showtime) had begun scrambling. As a result, TVRO owners were required to purchase a signal descrambler and pay a monthly fee to receive scrambled programming. Though many TVRO owners worried that they would have to deal with several different encryption systems, the industry adopted M/A-Com's (later purchased by General Instrument Corporation) Videocipher II as the standard for scrambling. Though the industry was confident that the Videocipher II (VC-II) would reduce satellite programming "theft," the system was quickly plagued with problems.

The process of scrambling includes several steps. Program providers scramble their programs on earth and then beam them to a satellite. The maker of the descrambler receives instructions from the programmers as to which subscribers have paid for what programming, information which it too beams to the satellite. The satellite transmits both the program and the subscriber information back to earth where a TVRO owner's dish picks up the signals and sends them to the decoder. The decoder includes various computer chips which contain the information necessary to descramble the programming. Problems arose for Videocipher II when an enormous black market developed for altered descramblers. To receive free programming, dish owners could simply purchase a descrambler with one of the chips in the unit replaced, enabling the unit to descramble all programming. Industry sources estimated that 600-800,000 VC-II units had been illegally altered, and that approximately 5,120 of the 6,404 equipment dealers were somehow involved in the selling of pirated units. And after six years of program scrambling, it was estimated that only 10% of the three million dish owners were paying subscribers.

To correct this flaw (and to protect their near monopoly status), General Instrument released an updated version of the descrambler called Videocipher II Plus in late 1991. Also known as VC-RS (for "renewable security"), the new units replaced the multiple chips in the unit with a single chip. Any effort to copy or replace the chip would disable the unit entirely. More importantly, the units include a renewable encryption system through the use of a "TvPass" smart-card (similar to a credit card). Should a breach in security occur, the encryption information on the cards can be changed quickly and inexpensively. Major programmers switched to the upgraded system with due speed, as HBO became the first programmer to shut off its consumer Videocipher II data stream on 19 October 1992. Other programmers quickly followed suit. Furthermore, HBO's satellite transmissions to Europe, Latin America, and elsewhere use the VC-RS technology.

Though the scrambling of signals has primarily been the concern of cable programmers and operators, the broadcast networks (CBS, NBC, and ABC) also began to scramble the transmission of programs to their affiliates (in 1986, 1988, and 1991 respectively). Defending his network's move to scramble such transmissions, CBS Vice President Robert McConnell contends that network feeds are "private property", and he encourages viewers instead to watch their local affiliates for local news, weather, and commercials. Though obviously directed at protecting the advertising revenues of its affiliates, such justifications ignore the lack of "local" reception for many rural satellite dish owners.

Although VC-RS is currently the de facto industry standard for the scrambling of C-band satellite programming signals, the imminent move to Ku band satellite transmissions (such as SkyPix's EchoSphere system), digital television, and the introduction of digital video encryption and compression technologies (such as GI's DigiCipher) means that scrambling technologies for television transmissions will continue to change as program providers and cable system operators seek to maintain a firm control of any "illegal" reception.

-Jeffrey Jones