Are we beginning to see the unraveling of the television industry in favor of a bright new Internet future of ubiquitous video, free from the contractual obligations and financial underpinnings of a decades-old business model? Is the industry about to become “Napsterized?” (We all know how that turned out.) Although recent events have prompted pundits to declare that the broadcast and pay-TV cabals are on their last legs, I think it’s still a little too early to predict what the outcomes may be.
Exhibit A: Aereo. From iCraveTV.com more than a decade ago, to ivi.tv, broadcasters have been successful in shutting down numerous Internet startups (although ivi.tv has been shut down, the case is still pending in the courts). And while some of the determining factors have evolved over the years (10 years ago, one of the broadcast industry’s arguments was the fact that primitive video streaming diminished the quality of programming), the issue was usually never about the technology but rather over copyright issues and the illegal pirating of broadcast signals. Even though some of these startups had impressive pedigrees (among ivi.tv’s founders was Hal Bringman, who helped launch Napster), none of them had the financial clout (or the legal arguments) to last.
Broadcasters’ string of successes in this arena came to a halt last month when a U.S. District Court judge denied a request by Fox, Univision, PBS, ABC, NBC, CBS, Telemundo and several local New York TV stations to force Aereo to shut down. Aereo, as you know by now, is the New York-based startup financed by media titan Barry Diller that allows its subscribers to use a matrix of dime-sized antennas to access live broadcast signals over wireless broadband delivered via several large antenna arrays in the New York City area. The service, which operates without consent from broadcasters, and offers about 20 channels for $12 a month, is currently only available in New York but the company has plans to expand to 75–100 cities within the next year.
Aereo says it isn’t doing anything more than providing antennas to its customers to access free over-the-air TV, while broadcasters disagree and claim that the service is retransmitting live broadcast TV in direct violation of copyright laws. In her decision allowing Aereo to continue operating, the judge drew parallels to the infamous 2006 Cablevision case in which several cable networks sued the cable provider, claiming that the company’s remote DVR service violated copyright laws. In that case, the judge said that such a service was a private, rather than a public performance and was not in violation. In the Aereo case, broadcasters say there should be no comparison because the programming in question is live transmissions, but the judge disagreed and has allowed Aereo to survive, for now. Broadcasters are appealing the decision.
Aereo claims that its dime-sized antennas receive HD over wireless broadband delivered via
several large “antenna arrays” in the New York City area. Exhibit B: Viacom vs. DirecTV. This one was a bit more familiar to consumers, as it represented one more clash in the decades-old battle over access to pay-TV programming. Viacom wanted DirecTV to pony up increased fees and guarantee placement of a new network in its lineup. When an agreement failed to materialize, Viacom pulled 26 of its cable networks, including Comedy Central, MTV and Nickelodeon from DirecTV, and a very public advertising campaign to win over the hearts and minds of TV watchers nationwide ensued. The standoff lasted a bit longer than similar conflicts in the past, but in the end, an agreement was reached and consumers got their “Daily Show” fix back. But it’s hard to fathom who won in the end: DirecTV, Viacom, or the advertising agencies that produced the attack ads.
Whether the arguments are over how technology can alter consumers’ access to programming or the more banal issue of copyright laws, these latest skirmishes represent how the pace of technological progress continues to slowly advance through a filter of various court decisions. If the argument is over technology, Aereo is not all that compelling; in fact, some have speculated that the tiny antennas behind the company’s technology are not capable of picking up signals and that the arrays are just a ruse to enhance the argument that subscribers are getting the signal over-the-air legally. Whether or not the technology works, however, is just a side issue. Those who hoped that the Internet would dismantle the current television business model should perhaps hold off on any victory parties just yet.
Thirty-five years ago, Steve Dana, a northern Virginia entrepreneur, launched “Broadcast Equipment Exchange,” which he described as “a new magazine serving your total equipment needs.”
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