When Is a TV Not a TV?

When the U. S. Supreme Court says so, that's when.  Last Wednesday, June 25, the Court issued a split decision (6-3) against Aereo, a provider of over-the-Internet broadcast TV service which used a unique technology to get around the requirement to pay retransmission fees to program originators, as cable TV companies do.  Without such fees, Aereo's service was really cheap—as little as eight bucks a month—and over the last year or two the firm had expanded into several urban U. S. markets.  In response to the ruling, on Sunday June 28 Aereo's CEO Ken Kanojia pulled the plug on the service "temporarily," although it will be surprising if Aereo ever makes a comeback, at least in its present form.

For readers who missed my blog on Aereo last February 3, a little background is in order.  Copyright laws exist so that creators of original content won't starve to death while unscrupulous people copy or retransmit the content without paying for it.  It seems to this non-lawyer that there is a happy medium of copyright law between two extremes.  One extreme is that of no law at all, which stifles originality because nobody can make money doing creative stuff.  The other extreme is copyright control, by the originators, of everything in perpetuity, which leads to permanent monopolies that work against the interests of the consumer.  Copyright law is largely a federal matter, so the U. S. Congress is where it comes from, and the proper job of the courts, including the U. S. Supreme Court, is to interpret the law the way Congress intended.

When cable TV arose in the 1950s as a way of providing TV service for isolated communities beyond the reach of TV signals, the content providers (mostly the big three networks back in those days) were miffed, because here was a bunch of companies taking money from their customers for signals they didn't pay for.  In response, Congress amended the copyright laws in 1976 to make it clear that cable TV was a "public performance," legally speaking.  The basic idea is that if you as a content provider take somebody else's content and make it available to all comers, you are profiting from it and should compensate the parties that you got the content from.  Hence, the big retransmission fees that cable companies pay to content providers.  The only exception to this rule is the end user or consumer, for whom the whole system operates.  If you sit in your own house and watch an over-the-air broadcast on your own TV using your own antenna, then it's not a public performance, and you don't have to pay retransmission fees because you're not retransmitting.

It was Ken Kanojia's dream to take that exact situation, and just stretch it out technically while staying within what he thought was the letter of the law.  An Aereo subscriber was at the end of a long chain of technology that started with a paperclip-looking antenna at an Aereo "head-end."  Each head end had thousands of individual antennas, so that every active subscriber controlled a different antenna.  The signal the consumer selected was picked up by the assigned antenna, converted to digital form, and sent over the Internet to the receiver of choice—a phone or computer or iPad or what have you.  The effect, broadly considered, was not essentially different from what a cable TV company would do:  a lot of hardware delivering someone else's content to a lot of consumers.  But technically, each consumer controlled a virtual TV of his or her own, so Aereo claimed it wasn't like cable TV at all—it was just a whole lot of individual TVs controlled by individual consumers.  And therefore, Aereo didn't have to pay retransmission fees.

Naturally, the service providers hated this into the ground, and quickly got their lawyers to sue Aereo.  Back in February, the lawsuits were working their way up the legal ladder to the Supreme Court, which heard the arguments in April, and finally last week the Court issued its decision.

The basic argument of the Court's majority was what I would call the duck approach:  if it walks like a duck and quacks like a duck, it must be a duck.  If you ignore the technical insides of how Aereo provides its service and just treat it like a black box, it's not that much different from a cable TV provider.  Hence, Aereo has to pay up just like the cable companies.  With his whole business carefully tailored to the assumption that his firm would not have to pay such fees, Kanojia recognized that the jig was up, and shut it down.

Three conservative members of the Court—Alito, Thomas, and Scalia—sided with Aereo, but not because they think Aereo should be left alone to go about its business.  Even the dissenters agreed that what Aereo is doing smacks of copyright infringement, but the dissenters thought that the similarity argument with cable TV was a weak one.  The dissenters are concerned that the adverse decision against Aereo will stifle technological innovation, and wanted to see a more technically savvy argument as to exactly what Aereo was doing wrong besides looking broadly like a cable TV company.

They may be right, but frankly, I'm not sure Aereo's kind of innovation is the sort we need.  Remember, if it weren't for lawyers and copyright laws, Aereo never would have designed their system the way they did in the first place.  It was a brilliant technical dodge designed to evade the retransmission fees by configuring the system to imitate a legal technology.  Unfortunately for Aereo, a majority of the Supreme Court justices didn't think the technical details made that much difference.  And when all is said and done, I tend to agree with them.

It seems to me that we need people like Ken Kanojia engaged in technical challenges that really matter, rather than spending his time devising clever ways to avoid legal obstacles.  I'm sure Kanojia believes that what he was doing was a true service to the consumer, but at least in the U. S., his Aereo venture looks like it has made its final performance—public or otherwise. 

Sources:  I consulted these news items on the Supreme Court Aereo decision: http://www.huffingtonpost.com/2014/06/28/aereo-suspension-operatio_n_5539559.html

and http://www.businessinsider.com/aereo-supreme-court-ruling-2014-6.  As mentioned, I last blogged on Aereo on Feb. 3, 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.