With a major Supreme Court case brought against it by broadcasters looming, and a preliminary injunction that bans the service from operating in Utah and five other states, Aereo
continues to expand its Internet streaming service into new markets across the U.S. The company said it is now in a dozen markets with a 28-channel service, including all major broadcast channels, with plans to expand to 15 or more cities by the end of the year.
However, in the U.S. Supreme Court case entitled “American Broadcasting Companies vs. Aereo,” the nascent over-the-air/Internet Protocol hybrid service is being accused of retransmitting broadcasters’ content without permission (or payment).
Aereo, for its part, says it is not bound by other retransmission rules, as it rents subscribers small antennas and a DVR box with which to record and watch programming on computers, cellphones and tablets. The signals are converted to an Internet-friendly format and streamed live or stored for customers. Consumers can pause and rewind any program that they are watching live.
IP DELIVERY GROWING
Aereo founder and CEO Chet-Kanojia with a bank of dime-sized antennas for receiving broadcasters’ off-air signals.
The latest market for Aereo is Austin, the fourth city in Texas where the service is now available. The company said that as of March 3rd Austin residents (more than 1.25 million of them) would have access to free over-the-air television channels with a cloud-based DVR via supported devices
Aereo founder and CEO Chet Kanojia said that his company’s technology “brings the old-fashioned antenna into the 21st Century, providing consumers access to the over-the-air broadcast signals that belong to them. Aereo makes using an antenna easy again – the way it should be.”
Reflecting the heart of the case before the Supreme Court, the Austin expansion will enable subscribers to the service (membership begins at $8 per month, which includes 20 hours of DVR storage) to watch 19 over-the-air channels—including KVUE (ABC), KXAN (NBC), KEYE (CBS), KTBC (Fox), KNVA (CW) and KLRU (PBS)— as well as special interest channels ThisTV, MOVIES!, GetTV, Create TV and AccuWeather; and Spanish-language channels UniMás, UniVision, Telemundo and Estrella TV.
[For an additional $4, consumers can upgrade their membership and receive 60 hours of DVR storage for a total of $12 per month. Subscribers get their first of month of access for free.]
Aereo uses an HTML5 interface, which works on the Safari browsers for Apple’s iPads, iPhones and Macintosh computers, as well as Apple TV and Roku set top boxes. An Android version is currently in beta testing and will soon be available for download for devices running Android operating system version 4.1 or higher. Aereo is also supported on Chrome, Safari, Internet Explorer 9, Firefox, Opera, and AppleTV (via airplay) platforms.
In court filings with the Supreme Court in anticipation of the milestone legal fight (oral arguments are scheduled for April 22), broadcasters are challenging the legality of Aereo’s activities thus far (cable and satellite carriers pay the broadcasters for the right to distribute their programs) but also warn that a win for the streaming service would be “deeply problematic” and force them to reconsider the quality and quantity of shows on free, over-the-air TV. In fact several network executives have publically stated that they would consider a similar type of subscription service in order to deny Aereo and others like it access to their content if they don’t pay for it.
In a 65-page brief, broadcasters argue that Aereo’s streaming of broadcast signals violates the Copyright Act, as well as Congress’ intent when it was passed in 1976.
READY FOR BATTLE
With the deep pockets of entertainment mogul Barry Diller and others behind it, Aereo looms as a serious challenge to traditional broadcast business models. While several federal judges have already ruled in favor of the start-up (claiming that Aereo’s streams to subscribers were not “public performances" and thus did not constitute copyright infringement), a US District Judge in Utah recently issued a preliminary injunction that bans the service in Utah as well as the rest of the 10th Circuit (which includes Wyoming, New Mexico, Oklahoma, and Colorado.) Aereo is currently operating in two cities in the 10th Circuit, Salt Lake City and Denver.
Judge Kimball ruled that Aereo’s retransmission of Plaintiffs’ copyrighted programs "is indistinguishable a cable company and falls squarely within the language of the Transmit Clause."
However, Aereo adamantly disagrees, contending that its service amounts to a private performance, and is supported by legal victories in federal court in New York and Boston.
“The goal is not to recreate the cable companies but to create an alternative for people who are coming into television from the Net side first,” Aereo’s Kanojia has told the New York Times in the past. “There’s an emerging population of people who have never signed up for traditional cable packages, who are used to customizing their own TV experience.”
Amending his earlier ruling, Judge Kimball later gave Aereo a 14-day stay on the decision, allowing the streaming service to continue operating for two more weeks, while denying Aereo’s request to continue operating until the April Supreme Court case is heard.
CHALLENGING THE TRADITIONAL BUSINESS MODEL
While several federal judges have already ruled in favor of the start-up, a U.S. District Judge recently issued a preliminary injunction that bans the service in Utah and several other states. Image courtesy of Gigaom
It’s clear that Aereo’s IP-based service was carefully crafted to avoid legal challenges that the broadcast industry has traditionally won. On the ninth floor of a former tire factory in Brooklyn, Aereo uses sheets of steel covered with rows of tiny, thumbnail-sized TV antennas. The service picks up local broadcast channels and streams them over the Internet to any device that supports HTML 5 protocol.
The TV networks contend that Aereo’s small-sized remote antennas, assigned to each subscriber, still represent a “public performance,” and require broadcast stations’ approval over the transmission of their signal.
“At bottom, Aereo’s arguments are irreconcilable not just with the transmit clause and Congress’ manifest intent in enacting it, but also with the basic philosophy that copyright protection embodies,” the brief states. “As this Court has had little trouble recognizing in recent years, the Copyright Act does not tolerate business models premised on the unauthorized exploitation of the copyrighted works of others. Aereo’s massive, for-profit scheme for exploiting Petitioners’ public-performance rights is no exception.”
Broadcasters’ say that Congress kept the public performance clause of the Copyright Act “purposefully broad and technology neutral” to account for changes in the marketplace.
In the brief, broadcasters also state that, “It is simply not plausible that a Congress so determined to guard against both existing technical workarounds and the risk that new technology might render the statute obsolete would have viewed the use of thousands of little antennas as making any difference.”
DISRUPTING TV'S FUTURE
Broadcasters say that if Aereo were allowed to continue, cable and satellite companies and others would inevitably develop their own broadcast streaming services without paying retransmission fees. And while Aereo has argued that a win for broadcasters would threaten the growth of an emerging marketplace for streaming services, broadcasters say the big difference is that services like Netflix and Amazon pay for the rights to stream content.
The networks even said that the implications for an Aereo victory are broader than their own business, saying that “what is at stake is the basic right of every copyright holder to determine if, when, and how to make its copyrighted work available to the public.”
Traditionally, repackaging television transmissions without permission or payment is considered illegal. Aereo, however, seems to have worked around that obstacle. It assigns each subscriber two antennas, allowing live viewing and recording at the same time. A subscriber watches only the programming that those antennas pick up. This, argues Aereo, is no different than personally owning an antenna and DVR.
In New York City, its first market launch (in 2012), Aereo has a clear view of the Empire State Building, the transmission antenna location of most of the local TV stations. The service has been so popular there (although Aereo does not release sub numbers) that, just before the Super Bowl, the company said its service hit the limits of its capacity in New York City and is sold out for now. The service will be reopened to new subscribers once it gets more capacity, Aereo’s Kanojia said on his Twitter account.
The outcome of the Supreme Court case looms large indeed.