The signal's still green for Aereo. Despite several legal
challenges, the company which streams over-the-air TV programs
from the cloud continues to grow its services. The brainchild of
CEO Chaitanya (Chet) Kanojia, Aereo has worked its way around
existing legislation which requires cable and satellite providers
to pay license fees to broadcasters. These laws were enacted by
Congress in 1992 and 1999 and fees are paid in lieu of these
service providers retransmitting signals.
The Walt Disney Company
), Fox - owned by
), NBCUniversal - owned by
) and ABC are seeing red. So are Telemundo, also owned by Comcast
and Univision. Last month, the 2nd Circuit Court of Appeals in
New York ruled in favor of the internet start-up. The court said
the company's transmissions and recordings of major free-to-air
networks were not "public performances" of copyrighted material.
Broadcasters have appealed that ruling in the full 2nd Circuit
Aereo's modus operandi is a unique one. Somewhere in Brooklyn,
the company has a warehouse with several large "antenna arrays"
connected to the requisite hardware. These in turn in are fitted
with thousands of TV antennas, each about the size of an adult
fingernail. The arrays pick up local over-the-air TV broadcasts
and stream it to subscribers through their Aereo accounts.
These broadcasts, live or recorded can then be viewed on iPhone
and iPads from
) and Roku boxes. Next up is support for Kindle Fire devices from
). You can view these broadcasts using popular internet browsers
like Internet Explorer from
)and Chrome from
), since Aereo's interface is simply a HTML5 Web page.
Subscribing to Aereo also gives users several hours of storage,
which varies from 20 to 40 hours from a monthly to yearly
At first glance, the plethora of mini antennas seems to be
unnecessary. However, there is more than meets the eye here. Each
subscriber is assigned an individual mini antenna. Areo's major
backer, Barry Diller of
) describes the situation as "every little antenna having
someone's name on it." Of course, that's not entirely true
because if you decide not to stop using Aereo, the antenna may be
assigned to someone else.
There are several other artificial restrictions which Aereo
imposes on users. Currently, available only in New York, the
service is accessible only within the city's designated market
area. If a user moves out of that zone, the phone's GPS or wi-fi
will be used to ascertain this fact and Aereo will switch off
reception. This ensures that the service mimics normal TV
reception, where it is impossible to view over-the-air signals
beyond a specific distance.
And now Aereo has decided to expand its services beyond New York
to Boston. CBS, one of the litigants in New York, has immediately
said it will sue in Boston as well, leading to Aereo taking
preemptive action. A CBS company spokesman has tweeted saying:
"Stealing our signal will be found to be illegal in Boston, just
as it will be everywhere else". Aereo has responded by filing a
declamatory judgment action in the New York federal court. This
is aimed at preventing CBS from suing Aereo in every jurisdiction
where the company decides to offer its services.
Till now, Aero has successfully circumvented license fees which
the likes of Comcast and
) have to pay free-to-air broadcasters. But the real challenge to
broadcasters comes from the fact that the nature of the TV
industry is possibly in for a change. Currently, Aereo's yearly
subscription is priced at $80. A viewer who subscribes to Aereo
and other Web based video services like
) or Amazon's Instant Video Service would end up paying only
about $20 a month. This is far lower than the $100 or more which
subscribers pay for cable TV services.
This would result in a ruinous situation for the networks, who
receive billions of dollars from cable companies as license fees.
The networks have responded in a variety of ways. CBS boss Les
Moonves said on Monday that the company would focus on content
creation and viewed the likes of Netflix as partners. This was
because such over the top providers paid for content. Moonves
believes that streaming companies would bring in a large amount
of incremental revenue.
Moonves believes Aereo is "not a serious threat." However,
NewsCorp said in April that it may morph into a subscription
service if it loses the legal battle with Aereo. This is the most
radical measure which any broadcaster has threatened to
undertake. Even CBS believes that if the courts do not rule in
favor of the broadcasters, it may have to move over to cable. It
is clear that the television industry is watching this legal
battle with keen interest, since it could threaten its existing
model. Clearly, until a resolution to this legal battle is
reached, the future of free-to-air television remains under a
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