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Aereo v. Broadcasters: Things to Ponder

According to aereo.com, “With Aereo, you can watch real, live TV through a tiny remote antenna you control over the Internet — from home or anywhere in your home coverage area.”

If you’re a TV viewer with a broadband connection to the public Internet, this seems like an awesome idea. For $8 per month, you can “Record & Stream Live TV Online with Aereo Cloud DVR.”

If you’re a Broadcaster with a dual revenue stream (retransmission fees from a cable company or other MVPD plus advertising revenue) this seems like a world-ending technology designed to undermine a well-established business model by exploiting a legal loophole.

If you’re on the Supreme Court of The United States, you’ve got your work cut out for you.

The Debate

My good friend, Gary Shapiro, CEO of the Consumer Electronics Association and Neal Katyla, the former acting solicitor general of the United States and legal adviser to the broadcasters in this case, spoke with Jeffrey Brown on PBS. It was a lively debate, well worth watching.

Mr. Katyla said, “As Justice Ginsburg pointed out in today’s argument, everyone else who wants to grab content has to pay for it. And the broadcast companies spend each year billions of dollars creating content, acquiring content, distributing the content. And if an interloper can come along like Aereo — and Aereo’s business model is essentially grabbing those signals from over the air, bundling them together and then selling them for a profit — well, then the entire model and the entire premise of copyright law is going to be disrupted.”

Mr. Katyla spent quality time describing Aereo as an “interloper” and insisted that Aereo’s technology violates copyright law. Interloper may be harsh, but Mr. Shapiro countered that, “… it’s not known whether or not Aereo broke the law… two courts have said they have not violated the law. And, in fact, the statute as written, which was, interestingly, barely discussed at the case, is pretty clear that they have not violated the law.”

Supporting Case Law

The Cablevision Case: In April 2013, a federal appeals court ruled that Aereo’s service didn’t violate copyright law based on a Second Circuit ruling “that found Cablevision’s remote DVR’s to be legal because they involved one copy of a show being transmitted to one subscriber.” While Aereo says its operation is “one antenna for one subscriber,” broadcasters argue that Aereo’s system is built specifically to get around copyright law and different from the Cablevision case because Aereo offers live TV without a license.

Sony Betamax: As opined by Mr. Shapiro, “… the Sony Betamax case, which said you have the right, as a consumer, to record over-the-air television. So there’s no one questioning that today, but a lot of people are relying on it, because that was a fundamental right.” He said Sony has a right to sell a VCR, and “Aereo has a right to basically sell access to an antenna. And, as Aereo’s attorney pointed out, there’s nothing different between what we’re doing with a centralized antenna that is located, as opposed to going in and installing them at people’s houses.”

Circuit Board

This circuit board is made up of a plurality of miniature antennas.

The Technology

This is where it really gets tricky. The circuit board pictured above shows a plurality of miniature television antennas. According to Aereo’s patent (and its attorney), each of these “antennas” are supposed to be assigned to an individual subscriber. The main argument, from Aereo’s point of view, is that you are renting a television antenna in a remote location and it is technically identical to finding the ideal place to put your regular-sized antenna, but… through the magic of Aereo technology (and it would have to be magic for reasons I shall explain in a moment), this little miniature antenna will tune in all of the broadcast television you would ever want to watch.

Then, also through the magic of Aereo technology, you can use a remote DVR (just like your DVR only in a remote location) and access recorded shows from any device that has access to the public Internet. Aereo argues that this is completely legal because its service is identical to making a deal with your neighbor to place your antenna on his roof (because he had better line of sight to the television transmitters) and paying $8 per month for the privilege.

The problem here is that a single miniature antenna like the ones shown on the circuit card can’t (due to very well understood physics) receive VHF and UHF television signals. It is possible that the entire circuit card may be able to resonate with the wavelengths in question, but not an individual miniature antenna. If you want to do an experiment, take one of these and attach it to your television set – you will most likely see snow on almost every channel. A paperclip-sized antenna would need to have Harry Potter-like powers to tune in the range radio frequencies used for broadcast television.

The Aereo patent claims have other significant issues with naming conventions and industry terms of art. I don’t know what an “antenna system” is. Aereo invented the term. But it clearly contains more technology than a passive television antenna sized to resonate at specific frequencies.

Then there’s the non-trivial issue of transcoding the signal from RF (Radio Frequency) to a streaming video format.

When taken together, the technology does not appear to be a passive television antenna in a remote location. It appears to be an array of antennas and a system for multiplexing transmission, which closely resembles an MVPD or, in other words, a cable operator.

Things to Ponder

Of the lessons learned from Sony Corp. Of Amer. V. Universal City Studios, Inc., 464 U.S. 417 (1984) and MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) one important take-away was, “Technology is neither good nor bad it’s how people use it that makes it so.” To date, the courts have not ruled against technology or innovation. They have ruled against the way people put it to use.

Aereo is innovative and awesome! But is it legal?

This case is reminiscent of the advent of Super Stations. Back in 1976, Ted Turner realized that he could use C-Band Satellite technology to distribute the broadcast signal from WTCG-TV (renamed WTBS-TV in 1978) to cable providers nationwide. This was to the great dismay and chagrin of syndicators and content providers who licensed programming to WTCG/WTBS in Atlanta for use in the Atlanta television market. The contracts did not prohibit this kind of distribution because no one thought of it or had any idea that it would become an issue.

Lawsuits ensued, but… as we all know, WTBS-TV became TBS (Turner Broadcasting System) and the cable business, as we know it, was born.

Is the way Aereo is using Antenna/Internet technology radically different from the way TBS used C-Band Satellite technology? Both had the idea of increasing viewership of free over-the-air content by using available technology. While this example is imperfect for several reasons, the metaphor is a good one – innovators see opportunity where there is a market and brilliant innovators change constantly change the world.

Aereo is good for consumers. Some will argue that it is good for advertiser-supported broadcast television stations because it will increase viewership (local broadcast television ratings have been declining for a decade and the downward trend is accelerating). Make no mistake: Aereo is not good for broadcast television stations in any way. Not only because if Aereo prevails it will not have to pay retransmission fees, but because every cable company will copy the technology and cease to pay them as well. This will financially devastate the local broadcast television business. A win for Aereo is a death knell for local television stations.

Is that a good thing or a bad thing? After all, the FCC wants the spectrum that it loans to local television stations (for free) back so it can sell it or lease it companies that want to use it for wireless broadband.

If free over the air television did not exist, would the content created by local TV stations be valuable enough for cable and satellite providers to carry? Would they pay for it? If the content were only available over a wired MVPD, Aereo would have nothing to sell. Is that future better for the public?

SCOTUS

The implications of the Aereo decision will be far-reaching and it will impact every aspect of the broadcast television business. Is this technology good or bad? It’s not about the technology at all… it’s about people understanding how it is being used. And, as Upton Sinclair used to say, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” Just some things to ponder about Aereo vs. television as we know it.

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More Stories By Shelly Palmer

Shelly Palmer is the host of NBC Universal’s Live Digital with Shelly Palmer, a weekly half-hour television show about living and working in a digital world. He is Fox 5′s (WNYW-TV New York) Tech Expert and the host of United Stations Radio Network’s, MediaBytes, a daily syndicated radio report that features insightful commentary and a unique insiders take on the biggest stories in technology, media, and entertainment.