Advanced Television

Industry reacts to Aereo ruling

June 26, 2014

By Colin Mann

Broadcast industry players, consumer bodies and legislators have lined up to offer their views on the decision by the US Supreme Court’s decision that Aereo’s operation violated broadcasters’ copyright licences.

One of the more trenchant observations came from Alki David, whose FilmOn service also offers live streaming of some TV stations in addition to other programming, which broadcasters sued to stop. In January, an appeals court said it wouldn’t lift an injunction against FilmOn until the Supreme Court made its ruling.

“This huge blow to net neutrality and consumer rights proves my mistrust of the courts is well founded and that the policies and agencies that are supposed to protect the public interest have failed,” said David. “They are indeed mere tools of a handful of corporations intent on keeping the people in a stranglehold of bad cable service at extortionist fees. The effects on values the US supposedly takes pride in – from innovation to free markets to freedom of speech itself – are truly scary. But the ruling against the use of remote antennas to serve consumers the free channels they have a right to will not effect FilmOn’s overall business. Aereo, in their own words, is dead. More roadkill on the long road we’ve been on. My condolences to Barry Diller and Chet Kinojia — you fought a good fight. Call me if you need work,” he advised.

David had said late April that he planned to expand the operation should Aereo be successful in the case . “We’re in 18 cities and our model is free. We’d turn on all over the States and have a far bigger slice of the market than Aereo.” Should Aereo lose, David said that FilmOn would lose “maybe five per cent” of its revenue, representing ad revenue that FilmOn sells against local TV channels.

The service suffered a setback late January following the decision of an appellate panel that it would not rule on the company’s request to lift an injunction against it until after the Supreme Court decided on the legality of Aereo. The order meant that FilmOn X was only able to stream TV shows in three US states: New York, Vermont and Connecticut.

Barry Diller, Aereo’s most prominent investor, said the verdict was not a big financial loss, and expressed his belief that blocking the technology was a big loss for consumers. “Beyond that I only salute Chet Kanojia and his band of Aereo’lers for fighting the good fight,” he declared.

CBS CEO Les Moonves said that justice had been served with the high court’s decision. “We expected to win, but it certainly feels good to win as decisively as we did,” Moonves told Bloomberg TV. “Now, all it means is that we continue to get paid for our content. We will continue to do that. As we look forward, we’ve already said, we’re going to get – we’ll receive $2 billion by 2020 in retransmission fees. And all that’s important here is that broadcasters and cable content companies and everyone who’s involved with the content producing business gets paid appropriately for their content. And that somebody can’t come and take that content, charge for it, and not pay us back for that content.”

21st Century Fox welcomed the ruling, suggesting the a decision was ultimately a win for consumers that affirms important copyright protections and ensures that real innovation in over-the-top video will continue to support what is already a vibrant and growing television landscape.

Paul Clement, attorney for the broadcasters, released this statement following the victory, also described the decision as “a victory for consumers”, adding that the Court had sent a clear message that it will uphold the letter and spirit of the law just as Congress intended.

“We’re gratified the Court upheld important Copyright principles that help ensure that the high-quality creative content consumers expect and demand is protected and incentivised,” Disney said in a statement.

“We are gratified that the Court’s decision adopted a sensible middle ground, holding that unlicensed retransmission services like Aereo violate the copyright law, while protecting consumer-friendly, cloud-based technologies, such as RS-DVR. The real winner today is the consumer who will continue to benefit from future innovation,” said cable MSO Cablevision.

Media holding company Gannett said that like others in the content creating community, it believed that when it provides content, appropriate payment for that content should be made. “We are gratified that the Court refused to sanction Aereo’s attempt to circumvent the law,” it added.

SAG-AFTRA, the performers’ trade body, applauded the decision which it said sent a clear and strong message that the Court will not permit companies such as Aereo to use inconsequential technical workarounds to evade Congress’ intent to protect content creators and owners in the Copyright Act. “By adopting a practical analysis that recognises the extraordinary similarity between Aereo and the cable systems, Congress expressly regulated in the Act, the Court rightly focuses on the use of copyrighted works and refused to be sidetracked by the inconsequential technical details with which Aereo attempted to cloak itself. But in doing so, the Court properly limited the scope of the decision so that cloud services and other technological innovations are neither inhibited nor limited. This decision gives the creative community greater confidence that copyright law cannot be so simply evaded and restores the proper balance to the system,” said the union.

Tim Winter, president of the Parents Television Council, said: “We are greatly disappointed with today’s Aereo ruling and we believe that the majority’s opinion failed to reflect the reality of today’s media landscape. This is a ruling for the status quo that hurts consumers. Aereo had the potential to break up the bundled-channel cable TV model that is forcing Americans to pay higher cable bills year after year for channels they don’t want or don’t watch.”

Gene Kimmelman, president-CEO, of public interest group Public Knowledge, said: “It is very unfortunate for consumers that the Supreme Court has ruled against Aereo, which has provided an innovative service that brings consumers more choices, more control over their programming, and lower prices. We’re concerned that the court’s misreading of the law leaves consumers beholden to dominant entertainment and cable companies that constantly raise prices and gouge consumers. This decision, endangering a competitive choice for consumers, makes it all the more important for the Department of Justice and Federal Communications Commission to guard against anti-competitive consolidation, such as the Comcast/Time Warner Cable merger,” he warned.

Patrick Maines, President of communications policy research body Media Institute expressed great satisfaction with the decision, suggesting that Aereo was using technology, in this case thousands of dime-sized antennas, in a “blatant” attempt to circumvent copyright law and to profit from broadcasters’ content without compensating them. “The Supreme Court has struck a strong blow in support of our copyright system. The Court has affirmed that technological schemes cannot be used as loopholes to avoid paying for copyrighted content,” he noted. The Media Institute had filed an amicus brief in the Supreme Court supporting the broadcasters’ position.

The American Television Alliance said the ruling meant that retransmission consent reform was needed now more than ever. “The decision is a reminder that broadcasters are interested in only one thing – protecting their government-sanctioned monopolies. The broadcasters’ business model, which places blackouts ahead of consumers, is devoid of competition or incentive to innovate. We encourage Congress to take advantage of the opportunity that the Satellite Television Extension and Localism Act (STELA) provides to update our video rules to the 21st Century, starting with retransmission consent,” it stated.

Dr Mark Cooper, Director of Research, Consumer Federation of America,described the decision as bad for video consumers, who had lost an important low-cost option for viewing the programming they want whenever, wherever and on the device they prefer. “However, its full impact may be to unleash a flood of law suits that challenge much content distribution through the Internet cloud,” he warned.

“When a decision says we don’t know how we would rule in other cases, it is an open invitation to litigation. For copyright holders who have little else to cling to, it is red meat. Scalia’s dissent shows the crack through which the flood of lawsuits will flow. Breyer, writing for the majority, tries to reassure us using the transmit clause to plug the leak, but Scalia notes that the Court should never have created the crack in the first place. The failure to recognise the passive nature of Aereo’s service will invite all manner of mischief with copyright holders suing anyone who simply passes signals to consumers of any type of content. In short, a cloud of lawsuits now hangs over cloud computing. This is the first step in the digital age equivalent of the Sony Betmax decision and, unfortunately for consumers and the Internet economy, the Court got it wrong,” he asserted.

US House Commerce Committee Chairman Fred Upton (R-Mich.) said that the ruling “underscores the mounting need to modernise the 80-year-old Communications Act, which serves as an important, yet outdated, framework for the communications industry.” Rep. Greg Walden (R-Ore.), who leads the the panel’s Technology subcommittee, added that the decision “reminds us that the complex communications and technology marketplace is constantly innovating and rapidly changing, and that nuances in the law can have a profound effect on content providers and consumers.”

“Today’s court decision does not deter in any way my desire to carry on a conversation about the future of video,” Senate Commerce Chairman Jay Rockefeller (D-W.Va.) said. “Given the ever-increasing costs of pay television, we must foster innovative online video services, which I believe offer the best way to provide more consumer choice and to lower consumers’ bills. But those services should not violate our copyright laws.”

Rep. Fred Upton (R-Mich.), suggested that while the court ruled that Aereo had overstepped, invention and innovation were at the heart of America’s global leadership in communications and technology development. “This case underscores the mounting need to modernise the 80-year-old Communications Act, which serves as an important, yet outdated, framework for the communications industry.”

Rep. Greg Walden (R-Ore.) said the decision was a reminder that the complex communications and technology marketplace was constantly innovating and rapidly changing, and that nuances in the law could have a profound effect on content providers and consumers. “Providing consumers with a vibrant and innovative content delivery system in the 21st century is an important objective of our [update]. In that effort, we will carefully balance the competing marketplace interests to make sure that this industry continues to innovate, localism is preserved, and consumers ultimately come out on top,” he declared.

Gary Shapiro, president and CEO, Consumer Electronics Association, said the trade body was disappointed that the Supreme Court had ruled against “innovator” Aereo, but was pleased the Court said it favoured future innovation and specifically referred to the Sony Betamax principles of fair use as a safety valve for new services and technologies. “We especially appreciate Justice Scalia’s powerful dissent describing how innovation is often opposed by incumbents who make false, ‘the sky is falling’ predictions about the future. We have concerns that the Court, although welcoming innovation, also declared that to the, ‘extent commercial actors…may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are free to seek action from Congress.’ We believe laws should be clear and favour innovation. Innovators should not have to get ambiguous laws changed to give consumers new products and services,” he stated.

Moreover, said Shapiro, the decision raised issues on the future of broadcasting. “Given that consumers are increasingly choosing to view content ‘anytime/anywhere’ on smart phones and tablets, and only six per cent of Americans rely exclusively on free over-the-air television, we question how much longer broadcasters can claim to justify their use of public spectrum when they oppose innovative services like Aereo which expand their viewing audience.”

On April 4, CEA, in conjunction with the Electronic Frontier Foundation, Engine Advocacy and Public Knowledge, filed an amicus brief with the Supreme Court in support of Aereo.

Matthew M. Polka, American Cable Association president-CEO, said the Association was concerned because it appeared that the Supreme Court’s Aereo ruling negatively affected the rights of small cable operators to utilise individual antenna-based delivery of broadcast services. “Although the court attempts to preserve the ability of consumers to enjoy accessing a range of time-shifted programming in the convenient manner enabled by Aereo, the decision drew lines that are not clear as to what is acceptable and what is not and, as a result, will likely have a chilling effect on technology innovators. Although ACA is disappointed that bold, forward-thinking Aereo lost the direct infringement fight in this case, we are hopeful that the court has not slammed the door entirely on Aereo and other related pioneering technologies that enable online consumers to access freely available content,” it concluded.

SNL Kagan Research Director, Robin Flynn said the decision protects not only the tens of billions of dollars broadcast networks and TV station owners have invested in programming content, but also the transmission of that valuable sports and video content over the air for the foreseeable future. “It does not stifle multichannel operators’ continued strategic imperative to deliver licensed video content to consumers over multiple devices at the time of consumers’ choosing, with the goal of responding to how their subscribers prefer to watch video today. Innovation will no doubt continue in the video space,” she advised.

Alan Wolk, Global Lead Analyst at video specialist Piksel, said that Aereo was a direct and immediate threat to the content industry’s revenue. “Today’s decision hints at the fact that the justices have understood that Aereo was invented to circumvent the retransmission fees that cable and satellite companies pay the TV networks to distribute their content. This may be a setback for Barry Diller and other Aereo investors, but it is certainly a good day for broadcast networks, which will stay assured of their revenue as the TV industrial complex withstands yet another attack on its foundation. It is unlikely, however, that Aereo will be the last initiative to bring broadcast TV to the Internet for free, so this remains a fascinating space to continue watching,” he suggested.

In an era in which content is readily accessible everywhere, Piksel strongly believes in content owners and providers’ right to remain in control of the access to and sharing of content on any screen, whether on or off the air.


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