The case for Aereo: is the air really free and if so, who pays for what crosses it?

Jim Barthold, FierceIPTVAereo continues to live a charmed life. Multichannel video programmer distributors (MVPDs) of all stripes--including, but not limited to cable, satellite and IPTV service providers--are paying increasingly higher fees to retransmit over-the-air broadcasts of such stellar fare as Splash and Hell's Kitchen. Aereo, meanwhile, is allowed to grab those same signals off-air without a fee and present them to consumers for $8 a month.

Obviously, something's amiss.

This week's decision by the U.S. Court of Appeals for the Second Circuit in New York that Aereo's transmissions and recordings of broadcast programming are not "public performances" of copyrighted material hardly resolved anything--the broadcasters will make sure of that. Still, since this was an appeals case, it's important to note that the decision reinforced a previous court's decision to dismiss the broadcasters' plea for a preliminary injunction against Aereo.

Aereo came out on top of the 2-1 appeals ruling because the court decided its business model doesn't infringe on copyrights claimed by broadcasters. The decision basically said it was OK for Aereo to equip subscribers with a small off-air antenna and a 40-hour DVR, then charge $8 a month for off-air broadcast signals.

The broadcasters, cloaking themselves in copyright colors, disagreed, of course, and promised to continue the fight for however long it takes either to make Aereo stop what it's doing or, probably better, reinforce the content providers.

It's probably best to take a few steps back here. Despite what the broadcasters say, this is not about "truth, justice and the American way." This is about money--scads of it, in increasingly higher piles, that broadcasters are reaping from service providers (who are reaping it from their subscribers) to offset money that advertisers are diverting to other sources other than broadcasters. This includes content provided by the same service providers that are paying higher retransmission fees.

Yes, it is as convoluted as that--and worse--and despite what Aereo maintains, it's not primarily about "consumer access to free-to-air broadcast television," it's about who pays for content that advertisers used to subsidize. It's about a shift in a business model that was caused, to some extent, by the cable/telco/satellite decision to create content that competes against--and, in many instances because it's paid for by subscribers, is better than--broadcast quality. It's about a broadcast market share that has eroded when faced with pay TV product and a growing online content delivery model. And it's about the old fashioned notion that these broadcasters are transmitting their wares across airwaves that were granted by the public, rather than over wires or from birds in the sky paid for by moneymaking service providers. It's also about--if you dig down even further--whether Americans who provide the free airwaves can actually receive the content free of charge because of the limitations of digital broadcast.

In short, this is not a black-and-white issue--and it's certainly not a red, white and blue matter. It's about 100 layers of gray ranging from who owns the airwaves (the public); who pays the bills for broadcast content (the public); who pays the bills for cable content (the subscribers); and who has the rights to over-the-air content that, when traced all the way back, has been produced at broadcaster expense but carried on public airwaves.

Thus, it's not surprising that the case will go on, and it shouldn't be surprising that the final outcome will affect more than Aereo and the broadcasters and even the MVPDs; it will affect a public that has been increasingly paying outright for content that it never really received free, but received in subsidized form from advertisers.

In the end, there might even be a silver lining. Perhaps, broadcasters will realize that a paying public deserves something a little better than yet another reality show with washed-up fringe celebrities.--Jim

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