America’s most powerful broadcasters are trying to shut down an emerging TV recording service. If their case is heard, the implications could be far reaching.
Late on Friday (Oct. 11) the major free-to-air broadcasters filed a petition in the Supreme Court against Aereo, a start up backed by media billionaire Barry Diller (a founder of the Fox and USA networks). Aereo uses tiny antennae to capture broadcast television signals, which it then stores in the cloud and sells to subscribers. For a relatively low monthly fee, users can access just about anything broadcast on the public airwaves via the Internet—which means they can watch broadcast TV without having a TV. The service is pitched at cord-cutters—the increasing number of Americans who are abandoning their expensive, all-you-can-eat cable subscriptions (at least for pay-TV access) and rebuilding their content menus “a la carte” using online streaming services like Netflix and Hulu.
The broadcasters’ gripe is that Aereo pays them nothing to access the content it sells to its customers. By contrast, cable companies pay the broadcasters big bucks to carry their channels; the two are in frequent dispute over these retransmission or “retrans” fees, as the Time Warner-CBS blackout earlier this year attests. Higher retrans fees are one of the reasons why cable bills keep increasing, in turn fueling the cord-cutting phenomenon.