In the endless war of incumbents versus insurgents, Tuesday’s oral arguments at the US supreme court, America’s broadcast TV networks against a video streaming startup called Aereo will ultimately be one small battle. But they remained a useful illustration of the way a supposedly free-market economy has become so beholden to the needs, and whims, of entrenched interests.
And American Broadcasting Companies versus Aereo reminds us how innovators in all sorts of arenas so often skirt the edges of legality indeed, how they regularly skip right over laws and regulations that are designed to protect the business of incumbency as much as, if not more than, to serve the public interest.
The case could have lasting implications for the way we watch TV in the future, especially when it comes to content delivered over the internet. Aereo is a service that lets you watch live network TV over the internet for $8 per month. The company assigns each subscriber an antenna that can access network TV over the air. The signal is then transmitted over the internet to your PC, tablet, smartphone and some internet set-top boxes like Roku.
Aereo also doubles as a virtual DVR, meaning you can record shows on the company’s servers and stream them later to your device. Aereo is only available in a handful of U.S. cities but the company will likely ramp up expansion if it wins the Supreme Court case. It issued three opinions but none on broadcast issues. It means that a decision on Aereo will come either next week or on June 30, the last day the court issues opinions for the current term.
Broadcasters can’t stop Aereo without hurting themselves, Broadcasters have threatened to stop over the air OTA broadcasting. if Aereo prevails before the Supreme Court. Its all bark and no bite because the broadcasters will lose advertising dollars by cutting off OTA viewers.
Aereo and Netflix provides ‘good enough television’ that will convince aspiring cord cutters to finally cut the cord. Why pay $70 per month for cable when $18 provides Netflix, ABC, NBC, CBS, Fox and PBS news, prime-time TV, some sports and reality TV.Broadcasters will lose retransmission fees, but for the bulk of their advertising revenues will follow the the cord cutters from cable and satellite to Aereo. Aereo may be able to deliver better analytics than the cable and satellite providers and Nielsen, and that will help broadcasters in their negotiations with sponsors to increase adverting revenues.”
For Aereo, the stakes in this case are simple: the business lives or dies. It “probably will go out of business,” the broadcasters’ attorney proclaimed outside the court this afternoon, “and nobody should cry here.”
That’s not true for the broadcasters, however much they bleat to the contrary. They are still part of an interlocking cartel that exists entirely because Congress has given a public resource the airwaves to a small collection of commercial interests. Yes, TV’s broadcast spectrum licenses, worth uncountable billions of dollars, were handed over to these robber barons at no charge. Their claim that Aereo is “stealing” is laughable given the heist they pulled off years ago.
So in the event that Aereo wins and Congress unaccountably does the right thing and then the networks threaten to take their programming off the air, we should welcome that result. Because then we’d be closer to a genuinely free market for programming assuming that the cable industry doesn’t simply take control itself.
Better still, we could get the spectrum back and put it to use in productive ways freeing it for digital uses that would generate vast new innovation. Real innovation, the legal way.