For the first time since major upgrades in 2003, pirated Pay TV smart cards are circulating in Australia. If left unchecked for any length of time, this will almost certainly have serious consequences for the profitability of the Australian Pay TV sector.

News has been filtering around European satellite forums since February that the Irdeto encryption system used by Austar and a range of smaller Pay TV providers in Australia had been hacked. Speculation has been rife as to whether the source of the hack was hobbyists, organised crime, or even a rival company (an allegation previously made in a famous case against the Rupert Murdoch-owned NDS by rival Mediaguard).

Prior to 2003, piracy was rife and profitability was low within the Australian Pay TV sector. A return to the days when any cluey 14-year-old computer geek could clone a smart card threatens to return the industry to the unprofitable state that it has only very recently climbed out of. The upgrades that largely eradicated the last wave of mass piracy in 2003 were a turning point in the industry’s viability. Tens if not hundreds of thousands of Australian households had illicit Pay TV at the peak of piracy and its elimination coaxed a significant proportion of those towards actually buying subscriptions.

Crikey has confirmed that smart cards are circulating that provide full access to all channels protected by Austar’s Irdeto encryption system. While the problem immediately involves Austar, the consequences for the wider industry are substantial. As both Austar and Foxtel share a common set of channels on one satellite platform their separate encryption systems are effectively two locks to the same safe – whose contents appear to be wide open.

The minnow provider SelectTV (owned by WIN) has occupied a low cost DIY niche that may be highly vulnerable and both they and the ethnic provider UBI World TV also use versions of the Irdeto encryption technology that may be vulnerable.

Austar’s Corporate Affairs Manager Emma Rackley told Crikey this morning that she was not aware of any vulnerability and was confident that the system could be upgraded if one was to arise. Irdeto Australia have not responded to repeated requests for comment over several weeks.

As for any readers thinking of actually purchasing one of these pirated Pay TV cards: caveat emptor. For starters, purchasing one is illegal. And while Crikey can confirm that some of these cards are working for now, as Austar has pointed out, there is certainly no guarantee that they will do so for very long. It’s also an area ripe with scammers, criminals and charlatans. Already, at least one bald man last seen in a pub in Frankston is over a thousand dollars better off for what turned out to be a few totally useless pieces of plastic.

Send your tips to [email protected] or submit them anonymously here.