Today is THE DAY. April 22, 2014, the Supreme Court of the United States will hear arguments that could impact almost nothing. Seriously, do you know anyone who has Aereo or Skitter? Regardless of the outcome of this case, broadcasters ought to embrace the technology and the idea behind Aereo and extend their reach beyond the fringe.
So, what is going on here?
Most people do not understand the Aereo proposition. The Supreme Court is not going to rule that Aereo can rebroadcast without paying a retransmission fee. That, as they say, is settled law. The SC is going to rule WHETHER Aereo is rebroadcasting at all. If the court finds that Aereo is rebroadcasting, then Aereo will need to license content just like the cable companies. If the court finds that Aereo is simply leasing an antenna to a customer, there is no law against that. In fact, it was common in the early days of television for communities to erect repeaters to improve reception in a valley or behind a hill and it is common today for people renting apartments or staying at hotels to pay the proprietor to use his antenna.
None of this has any impact on the cable companies’ requirement to pay re-transmission fees. I think a more reasonable comparison would be to satellite companies that erect an antenna for reception of local channels then integrate that signal into their programming. That, of course, was never challenged and no re-transmission fees were ever paid.
In my opinion, that is the basis of the case and the court should rule that it is legal for Aereo to lease antennas and DVRs.
The implications of an Aereo win are not clear. I think there are a three likely outcomes…
1) Aereo branches out and the reach of broadcast tv extends dramatically. This accelerates cable cutting, streaming, and a resurgence of ad supported television
2) Google or Amazon buy Aereo to add local programming to their streaming products.
3) Comcast improves and lowers the cost of basic programming.
I think the third outcome is most probable.
Aereo will not be widely adopted because it’s not inexpensive and it’s not very good. You have to have a good network connection. You need to buy hardware for each television. You end up paying $8 per month for each set. There is no continuous programming. DVR space is too limited.
Cable re-transmission fees are not related to this court case.
Broadcasters will not shut down OTA channels because 1) they are profitable, and 2) there are alternatives to the the Big Four networks. Syndicated programming and clones of network reality programming would be less expensive and nearly as popular as what airs now. Look at the top ten programs…
1 CBS NCAA BSKBL CHAMPSHIPS(S) CBS 12.4 21,196
2 NCIS CBS 11.1 17,392
3 THE BIG BANG THEORY CBS 10.0 16,288
4 NCIS: LOS ANGELES CBS 9.3 14,560
5 DANCING WITH THE STARS ABC 9.3 14,467
6 CBS NCAA BSKBL CHMP-PRE-2(S) CBS 7.3 12,015
7 VOICE NBC 7.2 11,966
8 BLUE BLOODS CBS 7.1 11,051
9 VOICE-TUE NBC 6.9 11,085
10 60 MINUTES CBS 6.8 10,987
Syndicated programming is not much worse…
1 JUDGE JUDY (AT) CTD 7.2 9,908
2 WHEEL OF FORTUNE CTD 6.8 10,611
3 JEOPARDY (AT) CTD 6.7 10,435
4 BIG BANG-SYN (AT) WB 6.0 9,119
5 FAMILY FEUD (AT) 2/T 4.9 7,306
6 LAW & ORDER:CI-WKL (AT) NBU 4.3 5,632
7 MODERN FAMILY-MF-SYN (AT) 2/T 4.2 6,060
8 BIG BANG WKND (AT) WB 4.1 6,457
9 MODERN FAMILY-WK-SYN (AT) 2/T 3.6 5,461
10 ENTERTAINMENT TONIGHT(AT) CTD 3.5 5,112
Cable trails far behind…
1 GAME OF THRONES HBOM 3.5 6,310
2 WWE ENTERTAINMENT (WWE RAW) USA 3.3 5,313
3 WWE ENTERTAINMENT (WWE RAW) USA 3.2 5,094
4 WWE ENTERTAINMENT (WWE RAW) USA 3.1 5,032
5 WMNS NCAA BKBL CHAMP L (ND/CT) ESPN 2.8 4,271
6 REAL HOUSEWIVES ATLANTA BRVO 2.6 3,816
7 PAWN STARS HIST 2.5 3,692
8 WATCH WHAT HAPPENS LIVE BRVO 2.4 3,506
9 AMERICAN PICKERS HIST 2.3 3,543
10 BREAK HBOM 2.1 4,018
It’s easy to imagine broadcast television without ABC, CBS, Fox, and NBC.
I think there are some significant barriers to market entry. I’m not sure Aereo is very profitable. I don’t expect to see their hardware cloned and even Aereo has not had a lot of success with the software. I think they well may be a national niche.
There is lots of precedent for people paying to receive broadcast television via equipment owned by others.
– If I rent an apartment and there is an antenna on the roof and a cable in my living room, the landlord is renting an apartment with an antenna not re-transmitting programming.
– DirecTV leases a box that takes a signal from the air and integrates it into your DirecTV program guide. You pay a premium for that equipment and do not own it.
– TiVo streams broadcast television over ethernet to other televisions. TiVo charges a monthly fee for this service — one fee for the transmitter and another fee for the receiver.
If you read the FCC FAQ on Must Carry, it’s clear it does not apply to Aereo…
Note that 1) the requirement for cable carriers is specifically documented, and 2) that this was added to the fcc rules as a matter of fairness to broadcasters who were singularly required to abide by the rule until 1992.
The fcc would have to amend their rules again for them to apply to re-transmitters who are neither broadcasters not cable carriers. The problem with changing the law to include Aereo without specifically naming the company is in the use cases I cited above. Any law would be unenforceable and Aereo could say they are being targeted.
Here are a couple more articulate presentations on the matter…
I don’t expect the media to get this right. I hope the court does. Either way, you should cut your cable. Put up an antenna and enjoy high quality ad supported television. It’s completely free and works when the internet is down!