Tag Archives: cable

Supreme Court: Aereo Looks Just Like Cable TV, So It Has to Follow the Same Laws as Cable TV

Mother Jones

I’ve been reading the Supreme Court’s opinion in the Aereo case, and it’s kind of fascinating. As you may know, Aereo is a company that installs thousands of tiny antennnas in a warehouse and then lets users “rent” one of the antennas, as well as some storage space. Users connect to their antenna via the internet, and can either watch broadcast TV in real time or set up times for shows to be recorded.

Broadcast networks claim that Aereo is retransmitting their content to the public, which is a violation of copyright law. Aereo, naturally, disagrees. The court’s decision appears to hinge on a single key question: can Aereo be said to be an active infringer when it’s merely a passive conduit for users, who are the ones who choose what to watch and record?

The majority said yes, because Aereo is essentially just like a cable TV operator, and the Copyright Act of 1976 specifically says that cable TV operators are retransmitting content. Antonin Scalia, writing in dissent, calls this specious:

The Court’s reasoning fails on its own terms because there are material differences between the cable systems at issue in Teleprompter and other decisions on the one hand and Aereo on the other. The former (which were then known as community-antenna television systems) captured the full range of broadcast signals and forwarded them to all subscribers at all times, whereas Aereo transmits only specific programs selected by the user, at specific times selected by the user. The Court acknowledges this distinction but blithely concludes that it “does not make a critical difference.”

….Even if that were true, the Court fails to account for other salient differences between the two technologies….At the time of our Teleprompter decision, cable companies “performed the same functions as ‘broadcasters’ by deliberately selecting and importing distant signals, originating programs, and selling commercials,”, thus making them curators of content—more akin to video-on-demand services than copy shops. So far as the record reveals, Aereo does none of those things.

The key distinction here is that Aereo doesn’t actively “curate” its content or retransmit everything at all times. It just makes everything available and users then choose what to watch. “Some of those broadcasts are copyrighted; others are in the public domain. The key point is that subscribers call all the shots.”

I can’t say that I find this very persuasive. For one thing, cable operators don’t forward everything to all subscribers at all times. You have to turn on your cable box and then set your tuner to pick up a particular station. More substantively, I suppose it’s true that there are bits and pieces of broadcast television that are in the public domain, but come on. Virtually everything Aereo makes available is copyrighted material and they know it. Scalia says Aereo is a lot like a copy shop, which isn’t held liable for the occasional customer who infringes copyright because, in practice, most of their customers aren’t infringing. But if a shop ran a service where they copied entire books from their library, they’d be held liable—even if a few of their books were in the public domain and even if their users had to physically press a button to start up the copying process.

In any case, as near as I can tell this case is based almost entirely on extremely fine points like this. Is Aereo essentially the same as a cable TV operator, and thus something that Congress intended to regulate in the Copyright Act of 1976? Can Aereo be held liable for infringement even though it’s users who make the decisions about what to watch and what to record? Are Aereo’s transmissions “public” even though each individual antenna is rented out to only a single individual person?

I could have seen this case going either way, but in the end the majority decided the case based on their conclusions about (a) the intent of Congress and (b) whether Aereo is so similar to a cable TV operator that it falls under the same laws. In the end, they decided that if it looks like a duck and quacks like a duck, it’s a duck. And Aereo lost.

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Supreme Court: Aereo Looks Just Like Cable TV, So It Has to Follow the Same Laws as Cable TV

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Want Better Broadband? Unbundle the Local Loop.

Mother Jones

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Felix Salmon says we have plenty of bandwidth in America. Contra Tyler Cowen, we don’t need to spend a bajillion dollars rolling out a new nationwide network based on new pipes or new technology:

What we do need, on the other hand, is the ability of different companies to provide broadband services to America’s households. And here’s where the real problem lies: the cable companies own the cable pipes, and the regulators refuse to force them to allow anybody else to provide services over those pipes. This is called local loop unbundling, it’s the main reason for low broadband prices in Europe, and of course it’s vehemently opposed by the cable companies.

Local loop unbundling, in the broadband space, would be vastly more effective than waiting for some hugely expensive new technology to be built, nationally, in parallel to the existing internet infrastructure. The problem with Cowen’s dream is precisely the monopoly rents that the cable companies are currently extracting. If and when any new competitor arrives, the local monopolist has more room to cut prices and drive the competitor out of business than the newcomer has.

Cable companies have a thousand ready-made technical incantations to explain why they can’t possibly open up their networks to competitors. To listen to them, you’d think this would be akin to letting a five-year-old mess around with your electric wiring. This is delicate stuff! You can’t just let anyone start sending bits around on it.

It’s all special pleading, of course, of the same type that Ma Bell engaged in when people wanted to start putting answering machines on their phone lines. But everyone understands there would be technical requirements they’d have to meet, just as answering machines had to meet reasonable technical requirements back in the day. Regulators would have to be involved to make sure everyone plays nice with each other, but that’s far from impossible.

No, this is all about money, as you already guessed. Allowing other companies to use their last-mile pipes would (a) take away some of their broadband rents, (b) force cable companies to genuinely compete on price and features, and (c) allow competitors onto their network who couldn’t care less about cannibalizing TV business. If I were a cable company, I’d fight that tooth and nail too.

But that doesn’t mean the rest of us have to take their arguments seriously. The rest of us should be in favor of competition, not the profit margins of local cable TV monopolies.

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Want Better Broadband? Unbundle the Local Loop.

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Comcast-Time Warner Merger Really Has Nothing to do With You and Me

Mother Jones

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Via Matt Yglesias, I see that Matthew Klein has finally written a short post that explains what’s really behind the Comcast-Time Warner merger:

To understand what the deal is really about, remember that pay-TV distributors are at the mercy of the networks that sell programming. According to Bloomberg Industries analyst Paul Sweeney, about half your cable bill goes to companies such as Viacom Inc. and Walt Disney Co. The networks consistently raise prices about 10 percent a year on average, irrespective of the state of the economy. By contrast, the typical cable bill only goes up by about 5 percent a year. Cable companies have eaten the difference by lowering their margins and cutting costs elsewhere, but there are limits to both processes.

This margin squeeze is why Time Warner Inc. spun off its cable business, why Comcast acquired NBC Universal, and why Internet-based subscription services offered by Netflix Inc. and Amazon.com Inc. have invested in original programming as a defense against the rising cost of licensing content. It also explains why Time Warner Cable had to cave to demands for higher fees from CBS Corp. a few months ago. Merging the two biggest cable operators might give them more bargaining power with the networks, especially if it encourages DIRECTV and Dish Network Corp. to consolidate the satellite business.

In the same way that the health care business can largely be understood as a competition between suppliers (hospitals, pharma, etc.) and consumers (insurance companies), the video entertainment business should largely be understood as a competition between content producers (Disney, Viacom, etc.) and content distributors (Comcast, Verizon, etc.). Ideally, you want competition everywhere. That is, you want enough producers that they compete with each other; enough distributors that they compete with each other; and enough balance between the two that neither producers nor distributors have the whip hand against the other.

So the question we should be asking about the Comcast-Time Warner merger is simple: Do content distributors need more clout? Klein suggests they do: they’re at the mercy of rapacious networks who keep raising carriage fees and they don’t have the market power to fight back. The merger will help that.

That may be, but I’d like to hear more about this. Networks and cable companies fight constantly, as you know if you’ve ever seen dueling ads about why your favorite shows will soon be off the air in your area. The networks run ads telling people that if they don’t want to miss the next episode of CSI, they better call their cable company and tell them to knock off the gamesmanship. The cable companies run ads insisting that the network is jacking up rates unconscionably and everyone should besiege them with demands that they be more reasonable. Usually this continues until about one minute before the current contract runs out, at which point both sides make a deal. Occasionally it goes longer, and certain shows really are blacked out for a while.

If you’ve ever had trouble figuring out which side is really at fault in one of these battles of the titans, well, that’s the problem. Two mega-corporations are duking it out, and the rest of us are just caught in the middle. From a consumer point of view, part of the problem is that we’ve all been trained to hate the cable companies who send us outrageous bills every month and love the content producers who make all the shows we love. But don’t fall for that: it’s just an artifact of which business happens to be customer facing. The truth is that both sides are big, soulless corporations who have no claim on your emotions. That said, I’d normally take Klein’s side of this except for one thing: would a bigger Comcast really have more negotiating clout than they do now? I guess that’s possible, but they have a helluva lot of clout already. No network can afford to be shut out of Comcast’s market for long. So it’s not clear to me that a bigger Comcast would really do much for the rest of us.

In any case, that’s how to think of this stuff. Practically every big battle you see in the media arena is, one way or another, a battle between gigantic producers on the one hand and gigantic distributors on the other. That’s what net neutrality is all about. That’s what copyright battles are all about. That’s what broadband fights are all about. And that’s what this merger is all about. We are all just pawns watching the fireworks.

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Comcast-Time Warner Merger Really Has Nothing to do With You and Me

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