Aereo: Oops! We Meant to Say Cable

Company’s new claims face a host of hurdles in D.C.

Why This Matters

WHY THIS MATTERS
Broadcasters can’t rest easy just yet as Aereo makes a last-ditch pitch to stay in business.

Aereo has decided not to go down without a fight. But it faces an uphill battle convincing the U.S. Copyright Office—which last week sounded decidedly unconvinced— and the courts of its newly proclaimed status.

In an about-face almost worthy of a headline in The Onion, the company is now arguing that it is a cable system and, as such, is able to deliver TV station signals over the Internet so long as it gets a blanket copyright license. But Aereo is making that argument to the Second Circuit Court of Appeals, the same court that denied an injunction against the service based on Aereo’s earlier argument that it was not a program distributor, but a technology facilitator.

Aereo points to the Supreme Court’s recent decision that its service was illegal because it was enough like a cable system—delivering a public performance of copyrighted works—that it was violating copyright when it delivered that programming to subscribers without paying for the content.

The company had argued it was simply a technological go-between. But it now said it accepts the court’s definition (the court did not say Aereo was a multichannel video programming distributor, but it came close) and applied for a compulsory license with the Copyright Office. Last week, the office said as far as it was concerned, Internet transmissions didn’t fall under the compulsory license available to cable, but accepted the applications provisionally given that Aereo was raising the issue in court.

“Under the Second Circuit precedents, Aereo was a provider of technology and equipment with respect to the near-live transmissions at issue in the preliminary injunction appeal,” Aereo said. “After the Supreme Court decision, Aereo is a cable system….”

The Copyright Office disagreed, saying it did not read the Supremes’ decision that way.

But even if Aereo were able to get the Copyright Office to recognize it as an MVPD, the FCC would need to determine what MVPD obligations should apply to the service, and by extension, to other over-the-top providers. It’s a question the FCC has been reluctant to answer, given the implications for program access and carriage, and the trigger of retransmission consent deals with TV stations for any over-the-top (OTT) provider that wants to deliver those alongside other program “channels.”

D.C. Daffynitions

The FCC has tentatively concluded that an MVPD has to have control of both the content and the transmission path—copper, fiber, satellite signals—and that an OTT distributor lacks that path since it does not control a facilities-based channel to deliver it.

The U.S. Copyright Office’s tentative decision was not a surprise. The agency has historically found that Internet distribution does not qualify for the compulsory license, according to Tom Davidson, a communications attorney and partner at D.C. law firm Akin Gump Strauss Hauer & Feld.

In testimony on the Hill last year, former Fox and ABC executive Preston Padden, who has long advocated for getting rid of the compulsory license for cable and satellite, pointed out that various international treaties prohibit blanket licenses for Internet distribution of broadcast signals.

The Second Circuit has already signaled it does not think over-the-top providers should get a compulsory license. In denying an injunction against Ivi, which had launched a service in 2010 to stream TV station signals without negotiating for the privilege, the Second Circuit said, “Congress did not…intend for [the] compulsory license to extend to Internet transmission.”

But Aereo is suggesting the Supreme Court has now weighed in, finding its over-the-top service analogous to cable. Davidson, like the Copyright Office, disagrees. “The Supreme Court was pretty careful in its selection of words,” he said. “It did not say Aereo was cable. It said it was substantially similar. It leaves room for courts and others to analyze it as appropriate. I don’t think it at all mandates or dictates a determination by the Second Circuit or change of view of the Copyright Office.”

Aereo had no comment on the Copyright Office call, or what its next move might be.

COMCAST PRAISES RETRANS REGIME

Broadcasters have an ally in arguing against retrans reforms—the nation’s top cable operator.

Comcast last week told the Senate Commerce Committee that it does not support addressing “issues or concerns” related to the retrans regime as part of reauthorization of the Satellite Television Extension and Localism Act (STELA) or “through other legislative action.”

When it acquired NBCUniversal, Comcast struck an agreement with its affiliates saying it would not actively lobby or in any way seek to change the current retrans regime. Still, Comcast executive VP David Cohen spoke positively about the system in hearing testimony.