Monday, February 03, 2014

Aereo Versus the TV Broadcasters: Will David Fell Goliath?


Some of my readers are no doubt familiar with the Biblical story of David, the Hebrew shepherd boy, who knocked out the giant Philistine Goliath with a rock shot from a sling.  A relatively small company named Aereo is trying a similar stunt these days with TV broadcasters by using an antenna no larger than a dime to upset the whole broadcast-TV applecart.  What Aereo is doing has been challenged in court by a coalition of broadcast-TV interests including ABC, NBCUniversal, CBS, Fox, and others.  But because Aereo has designed its technology explicitly to comply with copyright law, so far they have been able to fend off legal challenges, although the issue may ultimately be decided by the U. S. Supreme Court.

As a recent article in The New Yorker points out, more and more viewers are watching video online in various ways, through both stationary and mobile devices.  The networks themselves ventured into this business with a service called Hulu.  But Hulu, with its heavy ad content, has not thrived, and is losing subscribers as other options such as Aereo become available. 

It's always a good idea in situations like this to follow the money.  Over-the-air broadcasters, whose content was originally provided for free in the U. S. to anyone owning a television receiver, make their money by sticking ads into their content and charging advertisers for doing so.  When cable TV came along, the broadcasters sued cable networks successfully, because the courts interpreted what the cable systems were doing with the broadcasters' over-the-air signals as constituting a "public performance."  I suppose the way they judged that was by looking at the way a cable system deals with broadcast signals.  Typically, a master antenna at the cable system head-end picks up big chunks of the broadcast spectrum off the air, including multiple TV channels.  The whole spectrum is shipped down the cable, and selection of the program you want to watch occurs at your set-top box.  The fact that more than one person can access the set of signals that the cable system deals with led the courts to decide it was a public performance, electronically speaking, and therefore subject to copyright laws.  In essence, cable companies were stealing copyrighted content and selling it without paying the originators of the programming for it.  Ever since, the cable networks have had to pay retransmission fees to the over-the-air content providers.  Every so often, the two parties get into a fight and one or the other cuts off a particular service, to the disgruntlement of viewers, until the combatants can agree on a new schedule of fees.  Because most people watch over-the-air TV through cable systems nowadays, these retransmission fees are a big deal to the broadcasters, who are seeing their viewership shrink as other options become available.

Then along came Chet Kanojia, who obtained the backing of media mogul Barry Diller to implement a clever idea to adhere to the letter of the copyright laws while bringing broadcast TV to the online masses without paying retransmission fees.  Everyone agrees that the form an individual TV receiver takes is not at issue.  You can use an old-fashioned tube model (with a digital converter), or a little gizmo that plugs into your computer's USB outlet, or even a system strung all the way from your iPhone to an office building in New York City, as long as everything in it is devoted to picking up a signal you individually want to see.  That's not a public performance; it's only an odd kind of TV receiver, against which there is no law.  So Kanojia designed an entire system to preserve that individuality, all the way from the dime-size antenna picking up the publicly-accessible broadcast signal from the air, through a high-tech transcoder that converts it into a form that can be either recorded on a digital video recorder (DVR) or sent directly over the Internet to the individual viewer, to the servers that provide every Aereo subscriber with their individually selected TV program.  You can see photos online of the antenna arrays, which look like hundreds of peculiar paperclips soldered vertically to columns of printed-circuit boards and set in front of a window facing a TV broadcast tower in the distance.  Kanojia gets by with such a small antenna for each viewer by electronically tuning it to the particular channel in use, and then reassigning the antenna to the next viewer when the first one tunes out.  From a strictly technical point of view, it's a silly thing to do, but laws sometimes make people do silly things.

So for as little as eight dollars a month, in certain areas where Aereo is now available (which are designed to imitate the standard broadcast range of the on-air broadcasts) you can watch or record whatever on-air program you want, through almost any Internet-connected device of your choosing.  That's a lot less than monthly cable charges, and you can use DVR systems with Aereo that skip commercials too.  No wonder the broadcasters sued.

This is only the latest of many situations in which technology has outstripped the ability of laws to keep up with it.  Kanojia says that if it weren't for recent advances in transcoding and data storage, his service would be prohibitively expensive, but costs have dropped to the point that it's technically feasible, and such trends will only continue.  Whether the Supreme Court will shut down Aereo or make it change its ways remains to be seen.  But so far, judges have agreed with Aereo's claim that it is not providing a public performance, but simply hooking up thousands of individual subscribers to their own individual TV systems. 

Of course, broadcasters could mount a rear-guard action to change the copyright laws, and from time to time this type of ploy has succeeded.  But it would have to be federal laws that are changed, and Congress is in such disarray right now that making major copyright-law changes would be a challenge, to say the least. 

So for the time being, it looks like the old-style advertisement-supported broadcast TV folks are going to have to look for other ways to make money as their conventional model gets bypassed by technological advances such as Aereo.  Whether the new style of individual online TV viewing is a good thing in itself is an ethical question for another time.  But it looks like if Aereo succeeds in winning its legal challenges, that online viewing will get easier and cheaper, and the old networks and their advertisers will have to find a new way of doing things.

Sources:  The article "Outside the Box" by Ken Auletta appeared in the Feb. 3, 2014 issue of The New Yorker.  I referred to the following articles on Aereo:  CNET, Feb. 14, 2012 at http://reviews.cnet.com/8301-33199_7-57377530-221/aereo-brings-over-the-air-tv-to-the-cloud/, CNNMoney, May 12, 2012 at http://tech.fortune.cnn.com/2012/05/21/aereo/, and a particularly good article on the technology involved on the website Gigaom.com, Feb. 6, 2013, at http://gigaom.com/2013/02/06/inside-aereo-new-photos-of-the-tech-thats-changing-how-we-watch-tv/.  I also referred to the Wikipedia articles on Aereo and Barry Diller.

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