Management’s Discussion and Analysis Bell ExpressVu Bell ExpressVu currently uses three satellites,  Nimiq 1, Nimiq 2 and Nimiq 3, for its video  services. Telesat operates or directs the operation of  these satellites.  technologies pose health concerns and cause interfer- ence with hearing aids and other medical devices. This could lead to additional government regulation, which could have a material and negative effect on the busi- ness of the Bell Canada companies. In addition, actual or perceived health risks of wireless communications devices could result in fewer new network subscribers, lower network usage per subscriber, higher churn rates, product liability lawsuits or less outside financing being available to the wireless communications indus- try. Any of these would have a negative effect on the business of the Bell Canada companies. While Bell ExpressVu has been successful in increas- ing its share of the satellite television market despite this competition, there is no assurance that it will continue to do so. Bell ExpressVu faces a loss of revenue resulting from the theft of its services. It is taking numerous actions to reduce these losses, including legal action, investiga- tions, implementing electronic countermeasures targeted at illegal devices, leading information campaigns and developing new technology. Bell ExpressVu introduced a smart card swap for its authorized digital receivers beginning in 2004, that is designed to block unautho- rized reception of Bell ExpressVu signals. The smart card swap is being introduced in phases and is expected to be completed in the second half of 2005. As with any technology-based security system, it is not possi- ble to eliminate with absolute certainty the possibility that security may be compromised at some point in the future. In order to restore the backup capacity for Bell ExpressVu, which was diminished by the partial failure of Nimiq 2, Telesat reached an agreement with DirecTV for an existing spare in-orbit satellite (Nimiq 3). Telesat received approval from Industry Canada to relocate this satellite to the orbital slots currently occupied by Nimiq 1 or Nimiq 2. In July 2004, the CRTC granted final approval to the agreement between Bell ExpressVu and Telesat to lease the full capacity of Nimiq 3. On October 28, 2004, the Court of Québec ruled in R. v. D’Argy and Theriault that the provisions in the Radiocommunication Act (Canada) making it a criminal offence to manufacture, offer for sale or sell any device used to decode an encrypted subscription signal relating to the unauthorized reception of satellite signals vio- late the freedom of expression rights enshrined in the Canadian Charter of Rights and Freedoms . The Canadian Department of Justice has launched an appeal of this decision to the Superior Court of Québec. It remains a criminal offence throughout Canada to manufacture, offer for sale or sell any device used to engage in the unauthorized reception of satellite signals. If this deci- sion is ultimately upheld by the courts and Parliament does not enact new provisions criminalizing the unau- thorized reception of satellite signals, Bell ExpressVu may face increasing loss of revenue from the unautho- rized reception of satellite signals. Satellites are subject to significant risks. Any loss, failure, manufacturing defects, damage or destruction of these satellites, of Bell ExpressVu’s terrestrial broad- casting infrastructure or of Telesat’s tracking, teleme- try and control facilities that operate the satellites could have a material and negative effect on Bell ExpressVu’s results of operations and financial condition. Please see Risks that Could Affect Certain BCE Group Companies – Telesat for more information on the risks relating to Telesat’s satellites. Bell ExpressVu is subject to programming and car- riage requirements under CRTC regulations. Changes to the regulations that govern broadcasting could neg- atively affect Bell ExpressVu’s competitive position  or the cost of providing its services. Bell ExpressVu’s DTH satellite television distribution undertaking licence was renewed in March 2004 and expires on August 31, 2010. Bell ExpressVu continues to face competition from unregulated U.S. DTH satellite television services that are illegally sold in Canada. In response, it is partici- pating in legal actions that are challenging the sale of U.S. DTH satellite television equipment in Canada. A large part of Bell Globemedia’s revenue from its tel- evision and print businesses comes from advertising revenues. Bell Globemedia’s advertising revenues are affected by competitive pressures, including its ability to attract and retain viewers and readers. In addition, Dependence on Advertising 76 Bell Canada Enterprises  2004 Annual Report Bell ExpressVu Bell Globemedia