This weekend, Aereo, a cloud-based startup that allows you to watch local TV for a small monthly fee, suspended operations. This expected decision came in the wake of a ruling by the U.S. Supreme Court that Aereo was infringing on a broadcaster’s copyright, which pretty much put the kibosh on the service.
Now it’s widely expected that the company is done, and there will be no coming back, although I suppose it’s possible Aereo might try to reach a retransmission agreement with the TV stations, which would put it in essentially the same boat as a cable or satellite TV service. But its smaller footprint and limited choices would keep it at a competitive disadvantage.
In passing, it’s curious that Aereo was funded by IAC, an Internet company chaired by Barry Diller, who was chairman of Paramount Pictures for a decade. His entertainment industry background would seem to put him in a curious position to be involved in such a venture.
As for Aereo, it’s methodology was carefully crafted, no doubt to attempt to skirt the need to secure rights from the broadcasters. Basically, you leased a tiny TV antenna on their cloud-based network, and you received the stations on an Internet connected device, such as a personal computer, tablet, or smartphone. But not a TV, though you could feed it to a TV with a streaming set top box, such as an Apple TV.
To Aereo, this was all the equivalent of hooking up a TV antenna on your own set, but it wasn’t, since the signal was being sent to you online from a reception point at their datacenter. This is a distinction that the company’s lawyers argued, and the logic was found wanting. Those who supported the Supreme Court’s decision suggested that Aereo’s scheme was finely tuned to avoid having to confront a copyright issue. Regardless, the matter is settled.
This doesn’t stop you, of course, from buying your own TV antenna at the local Best Buy or Radio Shack and coping with the irregularities of over-the-air reception. Having tried it recently, I understand why most people are happy to embrace cable or satellite TV, or one of the streaming services, such as Netflix and iTunes. Unless you are fairly close to the transmitter, and don’t have large buildings getting in the way, getting a crisp digital signal constantly may be hit or mess. From my location, about 20 air miles from the largest local stations in Phoenix, reception was definitely hit or miss, with frequent breakup.
This inconsistent reception, particularly in the fringes, was the main reason the cable TV industry was created in the first place, starting up in small cities that were distant from most or all TV stations. They consisted of building one or large antennas to receive the distant stations, and feeding the signal over a network of cables and amplifiers to your home. Only later were cable TV outfits mandated by the FCC to broadcast local content, and it didn’t take long for cable-only channels, some premium, to rise and flourish.
Indeed, the top-rated cable channels, such as USA Network, TNT, FX, HBO and Showtime, often have shows with ratings that come extremely close to those of broadcast TV. They have strategically scheduled their new shows to be presented during the summer and winter months where broadcast networks are polluted with reruns and silly reality programs that few ought to care about.
Indeed, I find that possibly half of the shows I watch nowadays come from one cable network on another. As a practical matter, there’s little difference, except that cable, particularly premium channels, will offer tolerate explicit language and images.
As to Aereo, whether the signal comes through copper, coax or fiber doesn’t matter. According to the Supreme Court, putting the antenna in the cloud is equivalent to running a cable TV service, which means Aereo should have made retransmission arrangements with the broadcasters. I wouldn’t presume to assess the legalities or whether the court was correct, although those participating in this decision came from both sides of the political spectrum.
At the same time, the current contract situation between entertainment companies and cable/satellite systems is untenable. If they can’t reach an agreement on retransmission fees, channels are blocked out till the matter is settled. This has already happened, and it’s somewhat equivalent to union and management failing to reach an agreement and the workers going out on strike. If the channels are blocked, the customers, who still must pay their bills or be terminated, are inconvenienced. As a result of a new fee arrangement, your price may go up.
In any case, I don’t see the Aereo decision impacting other cloud-based services such as Netflix, which licenses all their content, nor such services as Hulu Plus, which is owned by the networks. Perhaps it will impact the startup who wants to find new ways to deliver TV content, but it seems to me that the effort made to avoid paying copyright fees might be better spent finding new and more efficient methods to present the entertainment and information you want.
As for me, had Aereo come to the Phoenix area, the chances that I’d subscribe are zero. I can get some stations via antenna — with the problems I mentioned — without paying anything. And a basic cable or satellite subscription — the cheapest promotional package — is more more than enough to include all the local stations and dozens or perhaps hundreds of others without much fuss or muss.
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