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A company that makes dime-sized antennas faced off against the country’s largest TV broadcasters last week in a Supreme Court case that could have far-ranging implications for broadcast TV, Internet cloud storage and cable television. Tech Tuesday explores how the Supreme Court’s ruling could change the way we record and stream TV shows and whether it will lower costs or push higher prices onto consumers.
- Cecilia Kang Washington Post Technology Reporter
- David Sohn General Counsel, Center for Democracy and Technology
- David Oxenford Partner, Wilkinson, Barker and Knauer
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MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. It's "Tech Tuesday." Television broadcasters say it's a blatant case of copyright infringement. A company called Aereo is hijacking their live TV signals and then storing and selling shows to subscribers without paying a licensing fee for the content. The two year old company begs to differ. It says it's simply renting out individual dime sized antennas that work like old fashioned rabbit ears to pull in free network broadcasts.
MR. KOJO NNAMDIThe broadcasters have sued the company and the final decision now rests with the US Supreme Court, which heard oral arguments last week, and is expected to rule in June. In the meantime, the case has sparked a wide ranging debate about the future of broadcast television, cable television and cloud storage and streaming. Joining me to look at how this case could change the way we watch TV is Cecilia Kang, Washington Post Technology Reporter. Cecilia, good to see you again.
MS. CECILIA KANGThank you.
NNAMDIAlso in studio with us is David Sohn, General Counsel at the Center for Democracy and Technology. David, thank you for joining us.
MR. DAVID SOHNThanks for having me.
NNAMDIAnd David Oxenford, who represents broadcasters as a partner in the law firm of Wilkinson, Barker and Knauer. David Oxenford, thank you for joining us.
MR. DAVID OXENFORDThank you.
NNAMDIIf you'd like to join the conversation, give us a call. 800-433-8850. Do you have antenna on your TV to watch live television shows, or do you get them through a cable package? How often do you watch TV shows that are streamed through the internet? 800-433-8850. You can send email to firstname.lastname@example.org. Send us a tweet @kojoshow. Cecilia, can we start with the big picture here? This case rests on the idea that anyone can put rabbit ears on his or her television set and watch network TV shows or record them on a DV-R for free.
NNAMDIIt's true in theory, but it's not the way most people watch television anymore. How have cable and the internet changed the way we consume entertainment?
KANGWell, the internet has certainly changed the way we consume video entertainment and news. And what Aereo does is it allows what you just described is pulling programs off the public airwaves, through these antennas, but then what it does is it converts those shows into internet streams. And that's the way people want to watch TV these days. They want to watch video. Is conveniently over whatever device they have on them, on the go, or at home, and in many ways, they want more control over this experience, is sort of the big picture, Kojo.
NNAMDIDavid Sohn, explain the technology and the business model of the company at the heart of this dispute, Aereo. What does Aereo do with its half inch antennas and how does it charge subscribers?
SOHNSo, what Aereo does is it charges a monthly fee for subscribers. And what subscribers get is access to Aereo's system, and that system consists of many, many very small dime size antennas. And each time a user wants to watch broadcast TV, the user logs in to Aereo, turns it on, and Aereo essentially assigns the user one of those antennas for the period while the user is watching. That antenna, that little mini dime size antenna...
NNAMDIWhich is not in your home, but is in a major center that Aereo has in somewhere in your general location.
SOHNThat's correct. They've got some remote location that has a whole range of these antennas, a whole large number of them. They pull the signal off the air from the broadcast station that you want to watch, makes a personal copy for that user, and then the user can either stream the copy back to themselves now to watch, or can record it for later viewing.
NNAMDIAnd Aereo charges you for that service.
SOHNAereo charges a monthly subscription fee for that service.
NNAMDIAereo justifies its business by using a part of the Copyright Act that separates public and private performances. Can you please explain that distinction?
SOHNSure. So, a lot of the debate here is is Aereo a publicly performing the television programs that are streamed to users, or is it doing a series of private performances, since in fact, each user has their own copy and their own antenna that gets streamed privately to them? And that's really at the heart of this case, because what the copyright law says is that publicly performing copyrighted works requires the permission of the copyright holder. Private performances do not. So, what's being debated in the Supreme Court is is the way Aereo has set up its system -- does that consist of public performances or private ones?
NNAMDIDavid Oxenford, we're talking about applying existing law to new technology.
NNAMDIOr different use of old technology.
OXENFORDSure. Although, actually, this case is not all that different, I think, from the broadcasters' perspective. They look at it as really no different than a cable system or Direct TV or Dish Network, where basically someone is paying a subscription fee to get a bunch of programming sent to them for -- to their homes. It's not like hanging an antenna outside your roof. It's not like you're doing something individually. It's paying a subscription fee to get a set number of television programs sent to your home.
NNAMDIBut Aereo says its business model complies with the Supreme Court's 2008 ruling in the Cable Vision case, involving DV-R technology. How so, Cecilia?
KANGWell, part of the process of Aereo's system is to make copies of the shows that you choose to pull from these airwaves. And they do that through -- they assign, along with an antenna to each subscriber, they assign a little bit of storage. Remote storage online. And by doing that, they say that they're no different than, say, a remote DV-R, and that comes back to that 2008 case you're referring to, Kojo, where Cable Vision was told that, actually, it's OK. They won their case to actually record remotely shows, because they relied on the same sort of interpretation of copyright law.
KANGThe public versus the private, saying, you know, it's the individual, our customers, that are choosing to make these copies. It's one on one, in other words. It's the individual. It's not us, Cable Vision, streaming these shows or saving these shows for many people. And so that's why Aereo's actually resting much of its arguments on that Cable Vision case.
NNAMDIDavid Oxenford, as a result, some of the country's biggest TV broadcasters are suing Aereo for copyright infringement. Explain why they think Aereo should be paying for the right to resell their content. You explained that, in part, already.
OXENFORDYeah, you know, one of the big differences with the Cable Vision case is that in Cable Vision, the subscribers were already paying for the content. They were paying Cable Vision and Cable Vision was getting the rights by paying all the cable services and the network television stations and all the other television stations for the rights to put their signals through to the consumer. So, essentially, if Cable Vision had had to pay again for their service, they'd be paying twice for the same thing, getting the television program down to the consumer.
OXENFORDHere, Aereo is not paying at all, nor are their consumers paying to the television stations or any of the other content providers, who are providing the content.
NNAMDICare to comment on that at all, David Sohn?
SOHNSure. Well, so, the idea that Cable Vision was different because it was paying a license for the content in the first instance doesn't really answer all the questions that come up in this case. One of the things that my organization's been concerned about is what the potential implications are here for cloud computing.
NNAMDIWe'll get to that.
SOHNSo, it may be that Cable Vision, in that earlier case, was paying for the original access to the content, but lots of cloud services allow users to store things where the company providing the storage doesn't actually have a license. So, my sense is that the license that was granted in the Cable Vision case was for the initial delivery of the program, and this legal question of what about the subsequent recording -- it's really outside the scope of that license. And I'm not sure that the distinction between licensed or non-licensed gets you the right answer in the current case.
KANGWell, the arguments by the broadcast networks on how this -- how Aereo fits in copyright laws, very important to the broadcast networks. Because they rely so much right now on what's known as retransmission fees.
NNAMDII was about to ask you to explain that relationship between broadcasters and cable companies. They have that symbiotic arrangement that depends on retransmission freeze.
KANGFees. Retransmission fees are really at the heart of what is actually probably one of the most disliked things for consumers, which is the cable bundle. It is the hundreds of channels that many people do not want to have forced on them. But the reason why this has worked so well is because the broadcast networks charge the cable companies, the cable systems, these fees to rebroadcast their shows. And what they're essentially saying about Aereo is that Aereo, you look and feel just like a cable company, so you should be paying us those same fees.
KANGThese are a lot of -- this is a lot of money, too. It's about three billion dollars last year, expected to grow five fold in the next five years, that amount of money. Retransmission fees. So, as the broadcast industry sees so much of its viewership actually either plateau or in some cases, decline, and they're seeing their advertising revenues go down in certain years, they're really grasping onto retransmission fees as their future. And the continued growth for their industry. So, when they see Aereo come and potentially take away subscribers and take away viewers, I should say, then there's a real fear.
KANGWhy isn't this company paying, that looks and feels like a cable company, the same kinds of fees?
NNAMDICecilia Kang, she's a Washington Post Technology Reporter, joining us in studio on this "Tech Tuesday," to talk about the battle over broadcast TV, Aereo at the Supreme Court. Also in studio with us is David Oxenford. He represents broadcasters as a partner in the law firm of Wilkinson, Barker and Knauer. And David Sohn, who's General Counsel at the Center for Democracy and Technology. You can call us at 800-433-8850. What changes would you like to see in the rules for streaming television shows? 800-433-8850.
NNAMDIYou can send us email to email@example.com. How could a ruling in favor of Aereo blow up the current relationship between television networks and cable companies, and what will it mean for consumers? I'm gonna ask all of you, starting with David Oxenford.
OXENFORDWell, that assumes that Aereo is gonna get the ruling.
NNAMDIYes, it does.
OXENFORDAnd certainly, broadcasters don't feel that the ruling will go that way. But if it does, you know, then I think the broadcasters are gonna concentrate more on their streaming efforts. Already, they're streaming themselves, CBS has just recently purchased a company that does a lot of streaming services. Much in some of the same ways that Aereo does, but they feel that it's better controlled, better access than provided by Aereo. Better able to attract the viewers. The companies may be getting into those services more themselves.
OXENFORDYou know, on the extreme level, some of the broadcast networks have talked about taking their signals off the air entirely. And I think that is sort of the extreme position. You know, there may be legislative fixes that would be undertaken as well, should the Aereo decision come out against the broadcasters.
KANGWell, there really could be a domino effect, and that's what consumers are -- that's why consumers are watching this, and that's why actually the high tech industry and the whole media industry's watching this case very closely, in that the cable companies also are in a very transitional period, as well. Cable companies are seeing the number of their subscribers for paid television either be flat or decline, depending on the company over the last several years. And they are also seeing more people view their video online. And so, they don't want to pay these retransmission fees, of course.
KANGSo why not copy Aereo's model if they see Aereo succeed in the Supreme Court. So, there is, maybe not tomorrow, maybe not even a few months away, but eventually, you could potentially see the unraveling of that cable bundle of channels that I just described.
SOHNI agree with Cecilia. Lots of potentially big implications down the road would be a pretty disruptive event for the current structure of the industry. I think, for consumers, one of the things it would mean is another competitive option in the marketplace for getting video. For some consumers, they might feel that they don't need to buy access to the cable bundle if they can get their broadcast stations through a cheaper service like Aereo. And then supplement that with online video from Netflix or other online services. So, I think it would be an additional option for users and encouragement for some to cut the cord of their cable systems' subscriptions entirely.
SOHNAs David mentioned, and the broadcasters say, they might respond to that by moving some of their quality program off the air and just on to cable. So, there's a lot of moves and countermoves that might follow a decision here.
NNAMDIHere is Marco in Greenbelt, Maryland. Marco, you're on the air. Go ahead, please.
MARCOYes, hello, so yeah, I've -- I do have a technical background, not necessarily in broadcasting, but I do have a technical background. I think that, first of all, the idea that Aereo is not a cable company because it has these antennas that then deliver these streams to individual customers...
NNAMDIThere's no cable coming into your home.
NNAMDIThere's no cable coming into your home.
MARCOWell, sure there is. The internet's coming in somehow. So, but it is delivering that through an aggregated system. In other words, OK, so each antenna goes to each subscriber, but it's still delivered through an aggregated system. The other thing is that I think that the -- one of the fundamental purposes of broadcasting is to deliver communications during emergencies and all of that, and so if we start to take apart the viability of broadcasting, cause I think that's what this does, you can find yourself in a situation where, you know, the internet's pretty fragile.
MARCOYou know, you get a hurricane or something knocks out the internet. You got nothing unless you got broadcasting.
NNAMDIThat's why we have a radio. But here's Cecilia Kang.
KANGWell, to the first point about, you know, this technology and how it fits into this debate at Supreme Court. The justices at the Supreme Court last week really displayed some, you know, some difficulty in trying to view this company as, and review this company without sweeping in too much other technology into whatever their final opinion would be, and specifically cloud computing. And Aereo itself, the justices, many of them expressed skepticism toward Aereo, even Chief Justice John Roberts said, your technology model is based solely on circumventing legal prohibitions.
KANGAnd, you know, other justices had similar remarks, and then the Justice Stephen Bryer said, what disturbs me is I don't understand what -- how the decision for you, or against you, is going -- what it's gonna do for all kinds of other technologies. So, it's a really fine line that the Supreme Court has to tread in this case, because the company itself really is challenging four decades old copyright law, that really came about before the popularity of the internet. And that's a big challenge.
NNAMDIGotta take a short break. When we come back, we'll continue this conversation on Aereo at the Supreme Court with a focus on what this decision can do to the cloud. But you can still call us at 800-433-8850 or send email to firstname.lastname@example.org. Shoot us a tweet @kojoshow or you can go to our website, kojoshow.org. Join the conversation there. I'm Kojo Nnamdi.
NNAMDIIt's "Tech Tuesday." We're talking about the battle over broadcast TV at the Supreme Court involving the company Aereo. We're talking with David Oxenford. He represents broadcasters as a partner in the law firm of Wilkinson, Barker and Knauer. Cecilia Kang is a Washington Post Technology Reporter and David Sohn is General Counsel at the Center for Democracy and Technology. David, the Center wrote a brief in this case warning that this ruling could have a big impact on cloud storage, which you made a reference to earlier. How do you think a decision against Aereo would affect Google Drive or iCloud or other cloud storage services?
SOHNIt would depend a lot on exactly how the ruling was pitched, exactly what its rationale was, and so that's really what we were warning the court. We were saying, however the court rules in this case, it needs to be very aware that heading off in the wrong direction here could have a big negative impact on those kinds of, of...
SOHNServices. So, here's why. Because these kinds of services are getting increasingly popular today. They're of great use to users. Users use remote computers to store their content, and then access it back on demand. And in this Aereo case, the broadcasters have made some arguments that both challenge the key precedents that have supported the growth of cloud computing, the key legal precedents, specifically the Cable Vision case that you mentioned before. But also, they seem to be suggesting in some of their arguments that it may be a copyright violation for a service to enable users to stream back to themselves, individually, their own individual copies of content.
SOHNAnd that sounds a lot like what cloud services do. They let users store their own copies, and then transmit it back to themselves on demand. So, the worry here is that if public performance is interpreted too broadly, it could sweep in not just what Aereo does, but what a lot of the cloud services do, as well.
NNAMDIIs there a way for the court to distinguish between entertainment we buy and store in the cloud ourselves and entertainment that a business like Aereo assembles and stores and then sells us access to? David Oxenford, and then you Cecilia.
OXENFORDYeah, I think, in fact, exactly that's the way the case is gonna come out. I think the court's gonna look at this case as saying, hey, this is really Aereo picking a bunch of channels, processing those channels, sending them to the subscribers for a fee. It's not like Dropbox. It's not like any of the cloud storage systems at Amazon, Apple, Microsoft, whatever, provide, because there, it's not the company that's deciding what goes into the cloud. It's the individual. I'm deciding whether to put my pictures up there. I'm deciding whether to put the music that I've got on my computer up into the cloud.
OXENFORDI'm deciding whether to put a bunch of documents up into the cloud, and then I'm deciding to pull them out. That's not Aereo. Aereo is picking a couple of channels, giving you a program guide, as one of the justices said in the Supreme Court argument, and letting you pick from that program guide where they've already decided what's going into their storage system.
KANGIt will be hard, because the justice -- because Aereo, a key part of their service is hard to unravel this recording on remote storage. Portion of Aereo's business, from its antenna business. I mean, they're both key portions of the business, and clearly, the justices were having some difficulty with that, and the broadcasters lawyer, during the case, he said, I mean, they really want the justices to try to put aside the cloud storage issue. And he said, I don't think the court has to decide on the cloud issue today. That's what he kept saying over and over and over.
KANGBut the justices were saying in response, well actually, we need to understand this. So, it's definitely a challenge. They signaled that in the court, the session last week.
NNAMDIHere, now, is Mark in Arlington, Virginia. Mark, your turn.
MARKThanks, Kojo. Let me just start. I've known David for a long time. He may or may not recognize my voice.
NNAMDIWe have two Davids here.
MARKBut, how are you? Hi, David.
NNAMDIThat's David Oxenford he's referring to.
MARKRight. David and I go way back in the Federal Communications Bar Association and elsewhere. Question. During the oral argument, the first question asked from Justice Sotomayor was why does Aereo not qualify as a cable system. She went through the various aspects in the statutory definition, and Aereo seemed to fit each one of them. The attorney for the broadcasters sort of hemmed and hawed and didn't really give a particular answer. Justice Bryer followed up, asking why is it not?
MARKAnd there never really was a good explanation. I'm curious, particularly from the broadcaster perspective, why they are not arguing that Aereo is not a cable system for these purposes?
OXENFORDYeah, you know, in fact, I think that whether or not it's a cable system is irrelevant to the ultimate decision, because ultimately, if it is a cable system, they pay public performance rights. If it's not a cable system, they still pay public performance rights. There's a whole copyright issue that Cecilia talked about, the fact that the law is four decades old, was settled when cable made exactly the same arguments that Aereo is making right now, in the 1970s. And the Supreme Court actually agreed with them.
OXENFORDAnd said hey, cable is not a public performance. What did Congress do? Congress changed the law to make it absolutely clear that anybody who retransmits a television signal has to -- it is a public performance for which they need the rights to do so.
NNAMDIThank you very much for your call, Mark. You wanted to comment on that, David? David Sohn?
SOHNSure. So, on the question to what David was just saying about Congress having spoken to that issue in the 1970s, I do think there remains a debate here about exactly who is doing the transmitting, right? So, is -- when Aereo has built a system of antennas, is it users who are making the choices and choosing what to record and choosing what to stream, or is it Aereo, because after all, this is free, over the air programming that is supposed to be available to the public for free.
SOHNAnd I think that is an important factor in this case that Aereo looks to rely on.
OXENFORDWhen I watch the television program on my cable system, I'm making the determination I want to watch that TV station on my cable box at home. Yet, the cable system is paying the television broadcasters. It's really no different.
NNAMDIWell, we got an email from Brian who said, I have not heard much about the fact that these broadcast companies use the public spectrum for their broadcast. If the companies are so concerned about receiving their money, why don't they just go cable only, as I've heard them threaten to do? Cecilia?
KANGYeah. CBS's CEO, Les Moonves has threatened to do that, as pertaining to this particular case. It's an important point. These are public airwaves, and much of the revenue that broadcasters have received, in return for licensing public airwaves, has been from advertising. Aereo argues, hey, we're not taking away that source of revenue, because we're broadcasting, we're displaying the ads. We're not taking away the ads or canceling them or just hopping over them, by any means. So, broadcasters, you should just consider us another conduit for your -- the transmission of what you do on an individual basis in complying with copyright law.
KANGThat's what they argue, but it's an important question about how -- what's fueling all of this is the business models going forward. If advertising, as you go online, and as Les Moonves has threatened to go either online or become a cable company, the advertising dollars online just simply do not stack up to the advertising dollars...
NNAMDIJust ask your employer.
KANGAbsolutely. In the content business, I can vouch for that. Exactly. And it's just that famous saying, analogue dollars for digital pennies in advertising is absolutely true. So that is actually why when, you know, when we talked a little bit about the broadcasters going online and potentially doing that. The reason why they haven't put all their content online -- you cannot, you could not watch all of the Olympics, for example, online. It's because the money isn't there in advertising anymore, so that's why the broadcasters are so careful about what they put online, and it's very fragmented what they put online.
NNAMDIDavid Sohn, talk about where the interests of the consumer lie in this case. One tech writer says the best outcome would be for Aereo to win, to preserve the cloud industry, and then for television networks to start, as has been suggested here, streaming their own content over the air for less than Aereo charges. What do you think?
SOHNSure. Well, for starters, I think it is very important to consumers that whichever way the decision comes out, that it carefully navigate this question of how not to negatively impact cloud computing, because cloud computing is of great benefit to everyone. It lets people access computing resources that they're never gonna have at home in their own computer, but lots of storage, lots of processing capability. So, the decision needs to carefully navigate that point.
SOHNOn TV, in particular, I do think that users benefit from a broader range of choices. And for some subset of consumers, it might be very attractive to be able to use a service like Aereo, if in fact that's permitted. And to bundle that, perhaps, with a Netflix. Now, you know, if broadcasters were actually to carry through on the threat of moving a lot of their programming off the free over the air television and onto strictly cable, then some of those benefits might go away. On the other hand, there's a -- it's pretty common in these kind of debates that you see some bluffing and people paining out some pretty extreme scenarios.
SOHNSo, I'm not sure how much weight to give that one.
NNAMDIThat's to be expected. Here is John in Arlington, Virginia. John, you're on the air. Go ahead, please.
JOHNYeah, hi, I am somewhat perplexed about this discussion, as someone who lives in an area with a lot of high rise apartments and whose previously lived in a rural area where it's fairly hard to pick up signals. I mean, for me, I don't have cable right now, and I'm just relying on rabbit ears, and it's quite hard to get a signal. I don't understand what the functional difference is between having a company that sets up an array of antennas and then routes them through the computers compared to somebody who I hire to set up the right can of antennas so that I can get access to public, over the air, television in my apartment.
JOHNSo, from my standpoint, as a consumer, it seems like, you know, whatever the copyright implications are, whatever the implications of cloud computing, I would like to get access to content that is ostensibly free and public, and it's pretty hard to do that right now with the available technology.
NNAMDIWhat kind of picture are you getting with the antenna you currently have on broadcast television? What kind of reception?
JOHNIt's better than it used to be when it was analogue only, but it, quite often, it will just work and then stop working and I'll get a bunch of pixilation.
NNAMDIYou know, I saw a demonstration of the Aereo system in New York, in which a guy was doing it on what looked to be a mobile device, like an iPad, and he said, you know, he's getting a very good picture, better than the picture he got when he had simply rabbit ears on his television, but I don't know. David Sohn?
SOHNSo, that's right. There may be a large number of consumers for whom this improves TV reception and enables them to rely on free, over the air broadcasting that actually, if they put up the antenna on their own house, they might not get a good picture. It's one interesting feature of the way Aereo has set up its system, that it actually only streams local stations to people. That is, it streams people to stations that they, in theory...
NNAMDIYou're getting the local CBS affiliate, you can't get the L.A. CBS affiliates programming.
SOHNCorrect. Correct. So, it's trying to give people access to the over the air stations that they're supposed to have access to anyway, if the rabbit ears worked as intended.
NNAMDIThank you very much for your call, John. David Oxenford, how have broadcasters already adapted to the internet and streaming capabilities in recent years?
OXENFORDWell, broadcasters are already putting a lot of their content online. You'll see all of the network programs pretty much online on the network sites the day after the program has broadcast. Many of the local stations have their own news program available on demand on their websites, so that you can get weather at any time of the day. You can get the sports report at any time of the day. You can get the headlines at any time of the day on the internet, and I think that's more and more a part of the broadcasters' business plans.
OXENFORDIn fact, in response to that caller's last question, one of the things that's coming along in the next three or four years is the next generation of digital television. Broadcasters are already working for the next generation of digital television that will allow for better reception. It'll provide for mobile access. It will provide for multiple channels to mobile devices. And we'll be seeing that in the next three or four years, probably, roll out, and hopefully we'll resolve some of the reception problems that this caller seemed to be having.
NNAMDIWe got this email from Don in D.C., who writes, who asks, isn't the difference between Direct TV and Aereo that fact that Direct TV pays the providers, such as ESPN, for their content, and Aereo does not? Cecilia?
KANGYes. It is. It's -- well, one of the -- well, one of the many differences is that it is what's known as a paid television provider, and it pays retransmission fees, which is at the heart of this. And, you know, one thing I wanted to mention about, you know, what Aereo does that's different than say what's already available online, and yes, there is more broadcasting content that's coming on, but very slowly, is it provides live TV, Particularly sports. That's really valuable programming that, you know, that has, well, frankly, stopped a lot of people from cutting the cord. What's known as cutting the cord.
KANGYou can't get all the games you want to watch. You certainly can't get all the Nats games that you want to watch or what have you on broadcast, but it may be just enough. Again, if you cobble together a package of Netflix, Hulu and Aereo to watch the Academy Awards, to watch the Olympics, to watch all the stuff online that, currently over broadcast, that you can't get online, with just a broadband connection, you may still -- that might be just enough to get people, consumers, to cut the cord and save money compared to their cable bill.
NNAMDISpeaking of cutting the cord, it's my understanding that what Greg in Fairfax, Virginia might be getting ready to do. Greg, you're on the air. Go ahead, please.
GREGYeah, I scheduled it last week, to have my cord cut tomorrow.
GREGI am paying through the nose just to get those local, over the air signals, regulated heavily by Congress and the FCC. And we've got 20-some stations or more here in the Baltimore-Washington area. And I'm furious that I can't get the Baltimore channels. The channel 9 is allowed to block channel 13 by something called an exclusivity right. It's ridiculous. These are all local signals. These are all Baltimore-Washington signals. I'm paying a $100 a month just for television and I can't get the Baltimore channels anymore because the digital signal doesn't travel far enough.
KANGWell, what I -- what I enjoy, actually, and I hate to use the word, enjoy, I'm sorry, but from your voice, is the frustration. And the reason why I say, I enjoy it is because you're seeing really this moment where consumers are feeling very fed-up. And the reason why consumers feel fed-up is -- they can see what technology promises but they feel like they don't have control over their video experience in the way that they would like to. Now, of course, they're business models that prevent that for good and bad reasons, potentially.
KANGBut this -- what this consumer and what this listener is articulating may actually in itself move the market and the businesses in themselves, to make more choices, like, to put more content online and to provide better experiences over mobile devices. And that might be the experience but right now, there is not a lot of incentive for the broadcast networks and the cable companies to disrupt what has been a mutually beneficial model, the cable bundle.
NNAMDIGotta take a short break. Greg, thank you very much for your call. If you'd like to call, the number's 800-433-8850. What do you think about Aereo's business model, should it be legal, 800-433-8850? Or send email to email@example.com. You can send us a tweet @kojoshow using the hashtag, #techtuesday, I'm Kojo Nnamdi.
NNAMDIWelcome back, it's Tech Tuesday, we're discussing Aereo at the Supreme Court, the battle over broadcast TV with Cecilia Kang. She is Washington Post Technology Reporter. David Sohn is General Counsel at the Center for Democracy and Technology. And David Oxenford represents broadcasters. He's a partner in the law firm of Wilkinson, Barker and Knauer. David Sohn, who is siding with whom in this case? The Obama Administration has weighed in on the side of the broadcasters.
SOHNThe -- well, there's actually lots of parties on both sides of this case. You know, by-and-large, the broadcasters and other producers of copyrighted content side with the broadcasters, both sides have some academics. There are quite a few people on the technology side of industry who are concerned with the implications for cloud computing and who therefore want to see the court walk a very careful line there. But this case drew a ton of interest on both sides.
NNAMDIAereo streams TV over the internet to its customers which allows us to bring up the Federal Communication Commission's proposal to change the rule of so-called net neutrality. How is the FCC proposing to create a system where a content provider like Netflix or YouTube can pay extra to a service provider, like Comcast or FIOS, to guarantee preferential treatment for its video streams, Cecilia Kang?
KANGSo the Chairman of the FCC, Tom Wheeler, has proposed and will be up for vote, a plan to allow, as you said, the internet service providers, the companies that bring in high speed internet into your home, like cable companies and telecom companies, to make deals with YouTube, Netflix, Facebook, other web content firms, to guarantee that their videos and their content, their downloads, their streams, are delivered flawlessly, that are delivered in more superior way. In other words, a fast track or a fast lane into your home for the companies that are willing and able to pay for that.
NNAMDIHere is an email we got from Andrew, "Educational intuitions increasingly rely on streaming video for content delivery. What impact might the court's ruling have on the delivery of this content? Might education institutions be required to pay additional fees to ensure that their students can consume this media without excessive buffering? In a day of ever increasing tuition costs, this question becomes increasingly important." What do you say David Oxenford? It might not be this ruling, it might be more the FCC decision, huh?
OXENFORDYeah. I mean, it seems to me that the Aereo decision is not going to impact this at all and they're presumably paying for the content that they're receiving, you know, whether net neutrality or other FCC decisions effects it, we have to see. There's a long way to go before we see any rulings on those.
KANGI was just going to mention that, an FCC official in a call with reporters last week, mentioned that that's exactly the kind of example where it makes sense, potentially to have preferential treatment or a fast lane. He mentioned an example of heart rate monitor information. Wouldn't you like it if your medical provider was able to -- have guaranteed perfect transmission of heart rate data to a hospital or to the patient itself. So those are potential aspects of it. The reason -- the way that the FCC plan is connected to the Aereo case, really on the most basic level, has to do with control.
KANGAnd it has to do with the consumers ability to control their consumption of information in entertainment and news. And what -- so you have on the Aereo case, on the one hand, this new technology -- and really, Kojo, it doesn't really matter if it's Aereo that wins or not, it's not the company itself, it's more so what the precedent would be, the next Aereo, the copycats, potentially how that would unleash new business models on TV, on the one hand. And then at the FCC, you have this other proposal that's happening where, maybe, just the richest companies are going to have a lot more control over your experience.
KANGAnd the richest companies being, for example, I don't know, Verizon, Comcast and the ISP site and maybe Netflix and YouTube on the other side. Why would you go to any other website that streams video if you're guarantee that Netflix and YouTube, videos are going to be perfect. And maybe the other experiences on -- and the upstart that's trying to compete might be a little cruddy.
NNAMDIWell, also, what would the new net neutrality rules mean for Aereo, if Aereo actually wins this court case? A colleague of yours at the Post says, the new net neutrality rules will kill Aereo, even if the Supreme Court doesn't.
KANGYeah, that was Brian Fung's piece.
NNAMDIHow so and how do you agree?
KANGI think, his thinking there was that, you know, unless Aereo pays up, according to this FCC proposal, if it's passed, unless Aereo pays up to make sure that its streams are flawless into the homes of Americans, then Aereo doesn't have a -- stand a chance. So that's sort of his way of connecting the two, sort of, items as well. I mean, there's a lot of hypotheticals, of course, but it's, you know -- and it's just sort of pondering and trying to explain that the big picture is, consumers -- there's a moment right now where lots of things are going on in Washington that potentially could have a lot of impact on your viewing experience, online, on cable, on broadcast, etcetera.
NNAMDIFirst you David Oxenford.
OXENFORDI was going to say, this is all -- a lot of speculation based on a blog post by the FCC Chairman and a couple of press conferences. We haven't even seen exactly what the FCC proposals is and we won't until after the May 15 meeting, at which this is considered. There's lots of issues that are going to be resolved, lots of issues that are going to be debated for the next couple of years before we get to an ultimate decision as to whether Aereo or any other streaming service is going to be slowed down by a net neutrality proposal.
NNAMDIJust forget Aereo for a second, is my medical provider going to have to pay more so that my information can get to him or her more quickly under the FCC's proposal?
KANGIf it passes.
NNAMDIThis is about my health we're talking here.
KANGIf it passes, potentially. You know, if it passes potentially. And that may not -- that may be a good or bad thing, depending on how you want your experience.
NNAMDIThis is true. But I wanted to address the question to you, David Sohn, that I addressed to Cecilia earlier. And that is whether net neutrality -- the new net neutrality rules, based on that blog posting, could end up killing Aereo, even if the Supreme Court doesn't -- even if the Supreme Court decision doesn't?
SOHNSo, first, I agree with David, it's sort of an early stage of this proceeding. The FCC is about to come out with an initial proposal, which it'll then refine from there. But net neutrality does go directly to the question of innovation and competition in the video market and indeed in the online market, more generally.
SOHNAnd so if the FCC does not enact strong protections for net neutrality, that would be an extra threat that Aereo would have to worry about if it survives the Supreme Court case, it would still have to worry about the possibility that its video streams would face inferior treatment from the ISP's who might choose to favor their own video content or their own cable services. I do think, at a high level, it highlights that both net neutrality and the broad copyright debate raise really important questions for innovation for all the emerging services that Cecilia is talking about and for this moment when lots of new things are coming up.
SOHNNet neutrality really goes to the question of whether internet services providers will be able to pick winners and losers in these emerging markets or whether they'll have to just provide, basically, an even playing field for all the different services to innovate and see what succeeds. And copyright has a long history of being relevant to innovation because each time new technologies come up, right now it may be Aereo, in the past there have been other technologies from some that are now accepted as legal, like the VCR to technologies that didn't pass the copyright test like say a Napster.
SOHNBut lots of new technologies come up, they process and store information. And so the question for innovators is, are they on the right side of copyright law when they make information technology.
NNAMDIWe got an email from George in Arlington who asks, "Has it ever been legally established that you can copy a music CD or video DVD? If not, how can this copyrighted material be legal in the Cloud?" Has that ever been...
OXENFORDIt's been a major point of debate...
OXENFORD...the recording industry will tell you that, no it's never...
OXENFORD...been established. I think, basically, the Betamax case said, individuals can make copies for their own personal use. But that's -- you wouldn't get the content providers to concede that, I don't think.
NNAMDIThat's what I thought. Here's Meg...
SOHNBut just to -- but...
SOHN...but just to provide a further answer to that question. It may be that there are some sources of copyrighted material that users aren't actually supposed to do, things are not supposed to copy, right. There are lots of lawful sources of copyrighted materials. And so the things that users store on the Cloud, they may have come to that material from any number of sources, many of which may be legal. So, of course, there are lots of perfectly lawful uses for all these Cloud services, even if some consumers might take things that they weren't supposed to have copied and upload those to the Cloud as well.
NNAMDIOnto Meg in Alexandria, Va. Meg, you're on the air. Go ahead, please.
MEGHi, Kojo, thanks for taking my call. I had a question to your panel. I am in my mid 30s, here in Washington, and we haven't had cable in 10 years. And I can't think of anybody that I know under the age of, maybe, 45 or 50 who still has traditional cable programming. And while we are -- we watch most of our programming through Netflix or Amazon or Apple TV, most often. One thing we really miss is football. We can't get any of our football games online legally.
MEGSo do you think there's any chance of having ala-carte programming either through cable networking or online anytime soon? And what are the legal hurdles that we have to jump through before I can go to some device in my home and say, I wanna buy a football game for $15, I want to see the Redskins play, here's my credit card and that's the end of it. Or maybe it's not even football, maybe it's a particular sitcom or a particular drama. How far away from those things are we? And what are the legal hurdles we have to overcome before we can get there?
NNAMDIWhen I can see what I want to see, when I want to see it.
KANGSo even if Aereo wins, it won't be a full and complete experience online, that's for sure. Because the content companies have agreed with what they want to put online. And the most valuable, just as your listener said, is often sports. And the NFL franchise is hugely powerful in the content world. And it is also particular, like cable programming like HBO. You know, it's often said that if ESPN and HBO, once they decide to go online or break out of the bundle, everything's over.
KANGThe reason why Aereo is so important is because it potentially can disrupt what is a very lock down, very tight system, which is the broadcaster and cable relationship. And little by little, you may see the sports franchises, the NFL and HBO, be willing to put more of their stuff online. You're already actually starting to see that HBO agreed, just this week, or was it last week, it was last week, with Amazon, to put some more of its content behind Amazon Prime.
KANGAnd that was sort of an indication that HBO, which is seen as, you know, and AMC, who has some of the most valuable cable content online, now that it's shifting its partnerships and its relationships, you might see a little bit of change. And so you're seeing the market itself respond to consumers, but slowly. Aereo might speed all of that up.
NNAMDIWe got a tweet from someone who asks, "With all the talk about Aereo, is there any evidence that the company is successful? Is it making money?" Does anyone know for sure, Cecilia?
KANGOkay. So we know so little about Aereo and, again, I want to just preference this, the reason why Aereo, this case is so important is not because the company itself but because what the company -- but what this case could do for the broader industry. But Aereo itself is very interesting. It was -- one of its prime investors is Barry Diller who is a big and veteran feature -- figure in the media industry. He has invested, along with other investors, about $100 million. It operates, currently, in 11 cities. And that's about all we know.
KANGWe know very little, we've seen the technology work but they don't talk about how many subscribers they have, they don’t talk about their financials. We know that it's about eight bucks a month. And so, you know, and they say that it's -- if they lose this case, then there's potentially not much of a future for them. So that's about as much as we know.
NNAMDIWhen is the Supreme Court expected to rule in this case? And is there any sense after the oral argument about how the justices' are likely to rule, David?
OXENFORDThe decision should be out, probably, in late June before the Supreme Court breaks for the summer. As I said earlier, I think that, my own personal opinion from viewing the arguments, is we'll see a narrow decision. Probably looking at Aereo specifically and putting the Cloud services and others aside for another day.
KANGI think that's right. In terms of a narrow decision, I mean, I'd be the first to admit that I'm not a huge SCOTUS watcher and pro on how the justices' will announce. But from their questioning, when I was there last week, it -- I could really tell that they're very careful about trying to separate Aereo, the company itself, from whatever their opinion might do for the rest of the internet industry. And so they are going to probably, I would imagine, try to come up with a very nuance, sophisticated opinion.
NNAMDIYou only got about 20 seconds, David Sohn.
SOHNI'll just say that I agree with that. I was encouraged by the fact that the justices' are very aware of the potential implications for Cloud computing and seemed determined not to throw a monkey wrench into that.
NNAMDIDavid Sohn is General Counsel with the Center for Democracy and Technology. David, thank you for joining us.
SOHNThank you very much.
NNAMDIDavid Oxenford represents broadcasters as a partner in the law firm of Wilkinson, Barker and Knauer. David Oxenford, thank you for joining us.
OXENFORDThank you, Kojo.
NNAMDICecilia Kang is a Washington Post Technology Reporter. Cecilia, always a pleasure.
NNAMDIAnd thank you all for listening, I'm Kojo Nnamdi. Coming up tomorrow on, "The Kojo Nnamdi Show," a farm dies once a year, lessons learned from the uncertainty of growing season on the family farm. Then at 1:00, the director of DC's Department of Motor Vehicles, on updating your driver's license to meet new federal rules. "The Kojo Nnamdi Show," noon till 2:00 tomorrow on WAMU 88.5 and streaming at kojoshow.org.
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