Commentary
Cablevision Says Aereo 'Equivalent' To Cable System
- by Wendy Davis , Staff Writer @wendyndavis, December 13, 2013
This week, Cablevision released a 43-page white paper in which it condemns Aereo for transmitting TV programs without a license. The cable giant essentially argues that Aereo is acting like a cable company and therefore should have to pay the same retransmission fees as cable companies.
Cablevision obviously is worried that Aereo -- and any similar companies -- will encourage cord-cutting, which would cut into cable subscription revenue. Whether Aereo turns out to be a real financial threat remains to be seen. After all, Aereo itself isn't free, and the service only allows people to watch programs on the major networks, and not channels like AMC or HBO. Also, some observers have argued that cable companies could themselves profit from replicating Aereo's system, and streaming programs to subscribers without paying retransmission fees.
Regardless, Cablevision is taking an anti-Aereo stance. But that puts the company in an awkward position, because the legality of its remote DVRs is directly tied to Aereo's legality.
Here's why: Cablevision can only offer remote DVRs because a federal appeals court in New York ruled in 2008 that the devices were legal. The court rejected arguments that Cablevision was infringing copyright by “publicly” performing TV shows by transmitting copies from a remote DVR to a user's home. Instead, the judges said, the remote DVRs' transmissions to users were “private,” because users were watching their own individual copies.
That decision paved the way for the emergence of Aereo, which uses tiny antennas to capture over-the-air programs and then streams shows on an antenna-to-user basis. The company says it's legal for the same reason as Cablevision's remote DVRs -- each user receives an individual stream tied to a single antenna.
Given the prior court rulings, Cablevision clearly is worried that any anti-Aereo decision will call into question the legality of remote DVRs. But the company also wants Aereo stopped.
Cablevision's solution? The company says that courts should treat Aereo like a cable carrier because it is “functionally identical” to one. “Aereo offers a service functionally identical to a cable system. It captures over-the-air broadcast signals and retransmits them for subscribers to watch,” Cablevision says in its whitepaper. “In terms of the basic function it performs for subscribers, Aereo is not meaningfully different from cable or satellite providers, services that have long been required to pay statutory royalties and retransmission consent fees.”
Wendy Davis is a Senior Writer at MediaPost. You can reach Wendy at wdavis@mediapost.com
First, since Aereo is sending one signal of one antenna to one customer, it is doing a private performance. A cable system aggregates content it collects, it does not use a dedicated antenna per customer. I do not think Aereo represents a public performance and the courts deciding that way have it wrong. Second, the issue of recording a program by the customer was settled in the BetaMax case, "Universal Studios v. Sony," and Aereo's addition of a DVR is of the same order and exactly the same as Rent-A-Center renting a DVR. Aereo is delivering the signal privately to one consumer, and only one consumer, per device. This is not by any reasonable analysis a broadcast or public performance, it is a single on-demand private performance.
Eventually the Supreme Court will rule on this, because you can't have a situation where a circuit split means that it's legal to do this in the Second Circuit (New York) but not in a different one. It's one thing for states to each have their own laws, but it's ridiculous for the courts to decide that Federal law makes a practice legal in some parts of the country and illegal in other parts.
In terms of the basic function of getting customers from a to b, planes, trains and automobiles are functionally identical too, but they are regulated by different laws. So I think this is a case where the precise details matter.
Broadcasters have precious little time to rethink their business model.
Cablevision's thesis is flawed since it completely omits any analysis of OTA TV, universal access conditions to the Broadcaster spectrum, and the right for the public to receive free OTA signals.
The original deal was a broadcast spectrum license issued in exchange for universal access of OTA TV by the public. Unfortunately, the Broadcasters have forgotten that they are supposed to serve the public (and provide innovation) and serve in our best interest.
Not surprisingly, these entities become quite powerful over time--and not just the entities, but the people working at them. When technology comes along and improves the way we organize, making some of these structures less efficient, or even wholly unnecessary, not surprisingly, they don't go quietly. Because of their power and influence, they also know how to protect themselves through legal and regulatory methods quite well.
The big elephant in the room is a fact the Broadcasters gloss over, and going back to where the signal originates- No where in the Communications ACT is the definition of a "Broadcaster" found or is "Broadcasting" ever defined.
Aereo will win the Supreme Court case. Whether an individual purchases a copy for private viewing (and you are allowed to make private copies) or retrieves the OTA signal (and you are allowed to make private copies) - its LEGAL. The real question is whether I bought the DVR as hardware or simply leased the DVR.
This is not a copyright problem.
This is one of those times where the legal and regulatory business model the Broadcasters have developed forgot the details on OTA TV. Aereo wins, the public wins with innovation.