Few people have likely heard of Aereo, an Internet start-up that deals in television programming. Until now, that is. Recently it has become one of the most widely searched Google words, in part because of its case at the Supreme Court. For broadcasters, Aereo is a nightmare: This little start-up has ingeniously devised a way to use old school technology (yes, antennas) to capture broadcast television programming, which it then resells to consumers in 11 cities nation-wide as streaming video.
Goliath (NAB) pursues David (Aereo)
Why are broadcasters boiling over at such an insignificant little company that they are willing to take their legal case all the way to the Supreme Court? In a word, money. Aereo does not pay any licensing fees to the networks who produce the original programs. Television’s powerhouse industry trade group, the National Association of Broadcasters (NAB), claims, “Aereo takes copyrighted material, profits from it and does so without compensating copyright holders.”
David’s stone (public airways)
For its part, Aereo argues that the material it draws from freely is transmitted over public airwaves (emphasis on public). If that argument finds success, it has the ability to completely rewrite the book on all that overpriced cable programming viewers have been shelling out for over the years. And that’s what broadcasters are really worried about.
According to the Washington Post, a representative from Public Knowledge, a consumer advocacy group, suggests: “Aereo has a shot at changing the TV business model. Behind the technical and legal arguments of the case is a fundamental question of whether consumers will be able to take advantage of new technology to access programming in a convenient and low-cost fashion.”
A win for the consumer if Aereo succeeds
For consumers, there are real cost savings behind this idea (and conversely, for broadcasters, a real revenue loss). The average cable bill runs $100 a month, while a service like Aereo, Hulu or Netflix, which provides programming via video service subscription, can be less than $20. It would also offer viewers the choice to access what they specifically want to see (say, baseball games) without having to pay for endless cable channels they never watch, but are forced to pay for, in their cable bundles.
Public vs. private performances
The nuance before the Supreme Court comes down to the argument about an older law, created during the dawn of the age of cable. According to the Post: “When a cable company rebroadcasts an ABC show, it is offering a ‘public’ performance and therefore must pay the network retransmission fees. But because licensing payments are not required for public performances, people without cable can continue to use antennas to capture and record over-the-air television programs for their personal viewing.”
Aereo notes that it is no more than an antenna rental service, and network advertising (network broadcasters’ source of revenue) is not affected. Thus, networks are still making their money. Noted Aereo’s CEO: “Broadcasters can’t double-dip. They had the same complaints when the VCR came. The sky didn’t fall then…and the sky won’t fall on broadcasters today, either.”