Wednesday, April 10, 2013

Aero: Another Sign of Doom for Broadcasters... and Cable Providers...and...

In yesterday's post, I mentioned the challenges facing broadcasters because television's audience is much more mobile; they have access to a range of content via the internet, and they no longer rely on a cable or dish or antenna to get programs they want.

Recently another threat has begun to pop up.  A company called Aereo has challenged the status quo that has existed between broadcasters and cable providers, and it's costing the broadcasters money, or will cost them as Aereo and like companies proliferate.  And broadcasters are getting nervous.

In many respects, the premise of Aereo is not all that different from the initial premises of cable television.  "CATV" originally stood for "Community Antenna Television."  In regions of the country where receiving an over-the-air signal was not easy, local companies set up large antenna towers to receive signals, and via cable hookups broadcast the signals into subscriber homes.   You could pay for a basic service and get the stations nearest to your town; as satellite technology expanded, cable providers could offer more channels.  A key tipping point in the expansion of cable tv even into major cities like New York, where a good set of "rabbit ears" could allow you to pull in about a dozen channels clearly, was the re-broadcasting fees that cable providers would pay to broadcasters for the rights to retransmit signals from the stations to the cable companies, who of course would charge their subscribers accordingly.

How much is Aereo paying to the broadcasters?  Zero.  Instead, they are using their "remote anntennas" to catch the signals, sending them to their online servers, and making the signals available to subscribers at ridiculously cheap prices, including a free version.  So far, Aereo customers in New York have access to the over-the-air local stations, including a few in Spanish and in Chinese, essentially replicating the signals my old black and white set pulled in back in the 1970s, but with HD digital signals and a few more options because of the expansion of the HD spectrum.  Their package does not include the "basic," or "classic," cable networks like ESPN or CNN, or any of the Turner networks, and I don't know that it will, at least not for the same fees being charged now.  (And remember, one very limited option is free.)

The broadcasters took Aereo to court, claiming it is stealing their transmissions. (I wonder if they took to heart the famous warning sports announcers have to give at some point during the game about any unauthorized re-broadcast or transmission without the express written permission etc.)  Broadcasters made similar arguments back in the seventies, when the VCR threatened to change the way people consumed television.  In this case, the complaint was that Aereo had no right to transmit the signals live, though the broadcasters conceded that Aereo could record the transmissions for later broadcast. The courts, so far, have decided in favor of Aereo.

Broadcasters have begun to shake their fists, as they did in the seventies with the VCR and in the eighties with cable companies.  The latest threat: we'll stop transmitting our signals.  Interesting. And how will that yield revenue, I wonder? Fox's threat was to be exclusively a cable/satellite broadcaster, but as more and more of us cut the cable cord, who's going to find the programming there?

The cable companies have enjoyed a very long monopoly on pay-tv service.  Government regulation and de-regulation (paradoxical yes but true) have allowed the corporate giants to dominate, regionally (you live in one part of Brooklyn, you get Cablevision, but for most of the Borough it's Time Warner) and nationally.  With services like Areo and the mobility of the tablet and smartphone, this monopoly is coming to an end.

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