Aereo, stymied by Supreme Court, seeks lifeline

Los Angeles TimesJuly 11, 2014 

Aereos Next Move

Chet Kanojia, founder and CEO of television-over-the-Internet service Aereo, Inc., shows a tablet displaying his company's technology, in New York, in 2012.

BEBETO MATTHEWS — AP

Aereo is making a last-ditch effort to stay alive after the Supreme Court ruled last month that the startup service, which streams the signals of local TV stations over the Internet via remote antennas, violates the Copyright Act.

Aereo had unsuccessfully argued that it was an antenna service and nothing more, and thus did not have to comply with copyright law. The court said Aereo, which charges its subscribers $8 to $12 a month for the antenna and a cloud-based digital video recorder, was more like a cable service, and so copyright law applies.

Now Aereo is saying it will try to comply with that ruling. It outlined its plans in a letter to U.S. District Judge Alison Nathan of the Southern District of New York, which is where the legal fight between broadcasters and Aereo began.

Aereo said that since the Supreme Court basically declared it a cable system, it is entitled to a compulsory license, which allows cable systems to transmit copyrighted material for a fee through the Copyright Office. It is a one-size-fits-all approach that allows pay-TV distributors to avoid having to get permission from individual copyright holders for every piece of content they telecast.

“The Supreme Court’s holding that Aereo is a cable system under the Copyright Act is significant because, as a cable system, Aereo is now entitled to the benefits of the copyright statutory license, Aereo told Nathan. “Aereo is proceeding to file the necessary statements of account and royalty fees.”

Broadcasters that fought Aereo, including CBS, Fox, NBC and ABC, are not thrilled with Aereo’s latest legal move, noting the company had previously claimed that it was not a cable system. Broadcasters also said that regardless of Aereo’s latest claim, the Southern District should now honor their request for a temporary restraining order forcing Aereo to shut down while it decides whether this latest maneuver passes legal muster.

One reason Aereo is taking this route is that while the Supreme Court may have said it is akin to a cable system, the Federal Communications Commission does not yet view services such as Aereo as cable or satellite systems.

That means Aereo and other so-called over-the-top Internet services are not regulated the same way as are traditional pay-TV systems, which are required to negotiate distribution agreements with local broadcasters to carry their signals. Known as retransmission consent fees, broadcasters now take in billions of dollars annually from cable and satellite operators seeking to distribute their content.

In 2012, the FCC began an inquiry on whether over-the-top services should be regulated like traditional multichannel video program providers (MVPD). However, the inquiry is in limbo. If Aereo is successful with the Southern District, broadcasters will likely push the FCC to jump-start the inquiry.

Cable and satellite operators may also be wary of Aereo getting to play by a different set of rules. In 2012, satellite broadcaster DirecTV told the FCC that if a service is going to act like an MVPD and compete with them, then the same regulations should apply. The FCC, DirecTV said, should “establish a level playing field where competitors operate under a core set of common rights, protections and obligations.”

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