Aereo, Congress and an expiring satellite TV law

Josh Wein

This week, Aereo will turn on service for some customers in its second market, Boston. The company also announced that it will expand later this summer to Atlanta. Meanwhile in the U.S. Senate, John McCain (R-Ariz.), introduced a bill that, among other things, would revoke the licenses of TV stations that withhold their most popular programming from over-the-air broadcasts and instead pipe it directly to pay-TV distributors.

The legislation and the broader attention the Senate is giving to video issues this session is important for Aereo and other online video services for several reasons.

Aereo uses an array of small reception antennas and DVRs to offer online access to in-market TV station signals in a way that broadcasters, at least for now, have been unable to block through the courts. In response, TV executives have openly discussed the idea of reducing or eliminating the service they provide over the air while still delivering their traditional program lineup to cable operators, satellite distributors and other multichannel video programming distributors (MVPDs). The McCain bill would essentially outlaw that practice and assure Aereo and traditional over-the-air viewers access to premium broadcast programming.

McCain pitched his bill Tuesday to a panel of the Senate Commerce Committee responsible for media legislation. McCain doesn't sit on that committee, so his ability to shepherd his bill through the Senate--where committee chairs typically move their own bills--is tenuous.

But the McCain bill and the hearing Tuesday could lay some of the groundwork for broader media legislation that could affect online video. With the law that lets satellite distributors carry some distant broadcast signals set to expire Dec. 31, 2014, it's easy to see Tuesday's hearing and McCain's bill as early jockeying to bring related issues to the table. And if Congress takes up a comprehensive video bill as part of the satellite reauthorization, it's hard to imagine they would ignore online video.

Cable and satellite operators enjoy something known as a compulsory license. It allows them to carry broadcast TV signals without having to clear the rights for every individual piece of content the station broadcasts. It's a complicated statute that is not favored by the content industry. Online distributors lack this license, but the chances for legislation putting online and traditional distributors on even footing here have never been higher.

"It's more likely than it ever has been, and I think the notion of parity will have some inherent appeal to some people on the Hill," Matt DelNero, a partner at Covington & Burling who represents media companies on such issues, said in an interview with FierceOnlineVideo. But parity doesn't necessarily mean online distributors will get--nor do they necessarily want--a compulsory license. "Is it everybody gets the license or nobody does? Those are two very different outcomes," DelNero said.

Were online distributors to be given such a license, it would make it easier for them to license broadcast programming. But it may also open them to a host of other regulations they may not want.

Aereo and other online distributors may not even want some of those changes that would place them more on par with traditional pay-TV distributors. "If you apply the same old methodology of offline to online, what have you really accomplished?" Aereo CEO Chet Kanojia said in an interview with FierceOnlineVideo. "If you get ABC but you also get all the Disney properties with that, what have you really changed? The consumer is no better off," he added.

Complicating the matter further is the fact that the satellite bill's reauthorization may no longer be considered a "must-pass" piece of legislation. In the past, the bill has attracted a host of related media and telecom issues because it has been expected to ultimately pass in some form.

"It's not as clear this time around that everybody in Congress considers the satellite bill to be 'must-pass' the way it was in prior renewals," Paul Gallant, an analyst with Guggenheim Partners who follows telecom policy, said in an interview with FierceOnlineVideo. With fewer viewers than ever receiving the distant signals the satellite bill allows, and the increase in availability of those same programs online, Congress may be willing to let the bill lapse.

If that's the case, discussions about the how online distributors like Aereo could be implicated are fun, but academic. - Josh