Tag: Chet Kanojia

A Look Back at Aereo’s Interesting Final Year

The Source of My Policy Geekdom…

I wrote a couple times this past year about Aereo. This is mostly because I’m a bit of a telecom policy geek. My telecom policy geekdom all started decades ago, thanks to a class I took while studying for my B.A. in Telecommunications.  Telecommunications Law, I think it was called. The key thing I took away from that class, taught by the exceptional Professor Thomas Muth, was that it was often possible to credibly, honestly argue either side of a policy debate simply by interpreting the Communications Act of 1934 differently. I was working for telcos when that was replaced by the Telecommunications Act of 1996. What makes telecom law so interesting is that it is often up to interpretation, with case history sometimes providing a window into expected FCC and court decisions, but the Telecom Act often allows for changes in policy direction, if desired. And in the case of Aereo, there was even case history supporting opposing potential decisions.

…and How It Led to My Aereo Posts

So that’s what made Aereo so interesting to me; that’s what prompted two posts, first on April 8th and again on April 20th.  This was a situation in which both sides could find support in telecom laws and case histories; the main question was how those laws would be interpreted in this particular case.

The Unraveling of Aereo Since June, and the Beginning of Its Final Dismantling

I wasn’t blogging much, and therefore failed to publish any posts about Aereo, during the time period that Aereo was “deemed illegal” by the Supreme Court in June (as noted in this TechCrunch article) or when it lost its appeal to be consider a cable company in August (see this c|net article). Nor did I post in November when Aereo’s Chet Kanojia penned a final farewell to the company’s customers (which, at least for now, can still be seen on Aereo’s website).

Most recently, the company was in the news a couple weeks ago for a court decision allowing it to auction off its equipment (as detailed in this telecompaper article).

This seems to be the end for Aereo, but for the telecom policy geek in me, at least, it was interesting following the ups and downs of this potentially disruptive telecom business.

Retransmission Fees, Antenna Service, and Aereo

Not much grabbing my attention lately in telecom headlines, but going over the last few days of headlines, this FierceCable article about Aereo founder Chet Kanojia’s interview with Katie Couric brings up a few interesting points. To quote an interesting segment of the interview:

“There’s a market imbalance,” Kanojia said. “Nobody loves their cable company.”

While primarily concerned with his company’s rocky relationship with broadcasters and Aereo’s April 22 date with the Supreme Court to justify an over-the-air-for-a-fee TV service model, Kanojia also said that cable companies are “absolutely” pricing themselves out of the market.

For the most part, he said, this is because cable is caught in a web being spun by broadcasters that link their “crown jewel” over-the-air programming with cable channels.

“If you get these people (Aereo customers) an antenna, you would have half the value proposition in front of them–for a lot less money (than a pay TV service),” he told Couric. Broadcasters, he added, only want “to preserve the old business model.”

There are some valid points here, though the establishment of the legaility of retransmission fees as established U.S. law in 1992 cause Aereo’s arguments to be a delicate balancing act.  (Of note, retransmission fees are not legal in Canada, assuming nothing has changed since 2012.  But I digress…)  This is why Aereo must rely on the argument that it is merely an antenna service.  Ironically, that’s what cable TV started out as.  (As I learned in my intro class while getting my BA in Telecommunications, CATV originally stood for “Community Antenna Television.”)

So the first question is whether you can put access to an antenna in the cloud.  But the second question is whether that antenna in the cloud is any different from the cable company’s antenna.  Aereo is arguing that it’s a personal antenna.  (Note the apparent similarities to cable TV I point out in the previous paragraph.)  Balancing act, indeed.

Of course, Kanojia had some thoughts about retransmission fees in general and the extent to which antenna service simply expands a TV station’s local market (both to those who can’t pick up signals due to obstructions and to those who simply find it more convenient to access local stations via an antenna service alongside satellite signals and other aggregating programming [cable TV]).  Though as someone who has worked in the telecom business, I can see the advantages of maintaining that revenue stream for local programmers to continue ensuring the viability of over-the-air television, I can also make a strong philosophical case for siding with the Canadian Supreme Court.

A little digging also brought up this interesting quote in an Adweek article, a snippet from the Wall Street Journal opinion piece written by TV industry veteran Barry Diller, who is current Chairman at one of Aereo’s financial backers.  Diller makes an interesting point about retransmission fees, a battle that, from Diller’s position, may have been lost more than 20 years ago:

“Broadcasters make more money when consumers are steered away from over-the-air program delivery and toward cable and satellite systems that pay the broadcasters retransmission fees. There’s nothing wrong with that. But it seems rich for them to forget the agreement they made to provide television to the consumer in return for the spectrum that enables their business,” wrote Diller in the Wall Street Journal.

But his reminder that broadcasters use the public airwaves is interesting to consider alongside Kanojia’s quote about how broadcast TV derives a significant portion of its revenue from retransmission fees.  Not sure either of those points, however, matters to the decision of this case; they’re more likely to simply good PR that could score points with a public that would like cheaper over-the-air television.  Of course, if Aereo loses this case and has to discontinue its service, public opinion won’t matter.

Though the outcome of this case will certainly impact the general public, the philosophical arguments behind it are likely only of interest to telecom policy geeks.  If you’ve read this far, though, that probably includes you.