The Case For Aereo

The Supreme Court is going to hear the case brought by the American Broadcasting Companies against Aereo, an evidently extremely disruptive start-up that places thousands of antennas around the US to capture local broadcasts and then stream those broadcasts to individual, paying customers.

I understand why the cable/satellite companies hate this model: it allows more people to cancel their subscriptions while still enjoying the content they like. Result: lower subscription rates.

I also (sort of) understand why the networks don’t like this model as the cable companies pay them hefty fees to transmit

My humble OTA antenna

My humble OTA antenna

local stations. But here’s where I don’t entirely understand the networks’ objections: any viewer can now watch any local channel without a cable subscription with an antenna that captures local Over The Air (OTA) digital broadcasts.

(Note: as a cord-cutter myself I’ve set up an antenna and enjoy everything including Hell’s Kitchen, The Good Wife, all the 49ers and Raiders NFL games and my local news. In HD to boot!)

Local stations transmit digital OTA broadcasts because they’re required to by law. But additionally, they see a benefit in increased viewers leading to increased advertising revenue. No one is complaining about local OTA transmissions because (I assume) they’re beneficial to local stations. So how is Aereo any different?

The plaintiffs in the Aereo case state that because Aereo is charging a fee that they don’t see any part of, Aereo is clearly “stealing.” But the manufacturer of the digital antenna I bought didn’t pay the the networks any fee for the same service, no?

The drop in the total number of cable subscribers in the US. Source: Business Insider

The drop in the total number of cable subscribers in the US. Source: Business Insider

Finally, why not just try satisfying these users before they cut the cord with Aereo? Look at consumers profiled by the Washington Post and New York Times and see that they’re looking for customized, smaller packages, so that they can pay only for the content they want.

Nah, that would be too disruptive to existing revenue streams from huge, expensive channel bundles. We’ll just wait and watch subscription numbers go down.

 

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