April 03, 2013

Why Broadcast TV Networks Want Aereo Gone


The top broadcast TV networks are fighting hard to make upstart Aereo, Inc. a fleeting memory, claiming the company’s plan to stream its over-the-air programming without compensation might make its business model history.

The situation portends to redefine pay-TV as we now know it. It could also foster major change in the way an entire established vertical industry – broadcasters – does business. At $8 a month/$80 a year for over 30 channels and no traditional boxes or cables, it’s easy to see why the entire video ecosystem is watching this story unfold.

The high-stakes fight currently underway in the nation’s courts is more about money than streaming, as Aereo maintains it doesn’t have to pay the TV nets license fees. It claims to provide a private viewing opportunity, as gear in Aereo lets consumers use their PCs, Web-enabled tablets and smartphones (plus Apple TV and Roku) equipped with tiny antennas to view the over-the-air programming – much like viewers of CBS, ABC and NBC do today from their TVs.

Live, from New York

Aereo is already offering its service in metropolitan New York with programming from these networks, as well as FOX, CW, PBS, Bloomberg, Home Shopping Network and more – including local channels – for over 30 total. Customers get the programming and a cloud-based DVR capability that can handle up to 40 hours of programming.

Add in a search tool, a programming guide and the ability to interact with other users via Facebook and Twitter in real-time.

The TV network titans claim Aero is providing a public service, not a private performance, and thus must pay them for use of their video programming. Aereo uses its antennas and over-the-air streaming as means to avoid the traditional expense of network infrastructure and business costs already incurred by their far larger competitors.

That’s why CBS, ABC, NBC etc. don’t have much competition in that category. Those aspiring to use/broadcast their content have long paid for that ability. Those that don’t/or don’t plan to have faced copyright violations as a result.

Aereo claims it doesn’t broadcast anything, saying instead that consumers initiate the transmission of the TV network content.

The Price is Right

Last August, Aereo rolled out a pricing structure that included a $1 day pass, $8 and $12 monthly plans and an $80 annual plan. The upstart also announced Aereo Try for Free, which provides consumers a commitment-free opportunity that allows for one hour of free viewing per day.

Customers need only an antenna small enough to fit on the tip of your fingers to receive the live HD TV transmissions. The user interface lets customers control things via the Web, so you don’t need cables or boxes standard with subscription pay-TV services today.

Another Manic Monday?

Aereo received a victory Monday, as The Second Circuit Court of Appeals issued a ruling in favor of the company, affirming in all aspects the District Court’s denial of the motions by the plaintiffs (17 network broadcasters) for a preliminary injunction against Aereo. It ruled the transmissions made by consumers are not public performances under the Copyright Act.

Both sides vow to press forward.

“Today’s decision from the Second Circuit Court of Appeals again validates the Aereo’s technology falls squarely within the law and that’s a great thing for consumers who want more choice and flexibility in how, when and where they can watch television,” said Aereo CEO and founder Chet Kanojia, in prepared comments. “Today’s ruling… sends a powerful message that consumer access to free-to-air broadcast television is still meaningful in this country and that the promise and commitment made by the broadcasters to program in the public interest in exchange for the public’s spectrum, remains an important part of our American fabric.”

ABC and NBC said in a statement, "This case is still in its early stages. We are confident that when the record is fully developed, the rights of content owners will be protected.”

Expect this legal war to intensify markedly as the broadcast giants are claiming a loss could cause them serious financial hardship and could even result in the end of free TV. It’s easily the copyright fight of the century as a clash of the business models.

All About Aereo

Long Island City-based Aereo plans to enable viewers to watch live TV online in 23 cities this year. The over-the-air streaming means no cable is required. The company’s website gives users a feel for the experience and allows them to pre-register for the offering.

In late February, Aereo announced its service is available to over 19 million consumers in the New York City (DMA), which includes 29 counties across New York, New Jersey, Connecticut and Pennsylvania. Previously, Aereo was only available to residents of the city’s five boroughs. It has located its antennas and a huge amount of storage in data centers networked with super high-speed Internet links.

Back in January, Aereo closed a $38-million Series B round of funding. It also provided the list of cities it plans to expand to this year and has landed top industry execs to augment its team. The company has stuck with its multi-plan pricing while lengthening the list of Web-enabled devices that can be used to view the programming.

TBD

Whether change is good – and whether it will be given a chance – will likely be determined in the months ahead. Regardless, any significant change to the current broadcast TV business model will be anything but a fleeting memory or footnote in history for consumers.




Edited by Rachel Ramsey



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