Light Reading
With his company's case now headed to the US Supreme Court, Aereo CEO Chet Kanojia argues that retransmission consent has nothing to do with it.

Aereo CEO Trashes Pay-TV Model

Alan Breznick
1/14/2014
50%
50%

Despite what the major broadcasters have to say, Aereo CEO Chet Kanojia doesn't believe that the legal fight over his company's online streaming of local TV signals has anything to do with retransmission consent or copyright laws. Rather, he thinks the battle is really over control of TV signal distribution and the future of the bloated cable bundle.

With the courtroom showdown over the business model of Aereo Inc. now headed for US Supreme Court arguments sometime this spring, Kanojia argues that the case has absolutely "no implications for retransmission-consent." Even if the high court rules decisively in Aereo's favor, he sees little chance that the broadcast industry's growing stream of retransmission-consent revenue from cable operators and other pay TV providers will come to a screeching halt. Nor does he see much chance that cable companies will start installing similar dime-sized antennas on millions of subscriber rooftops to do a massive end-run around the nation's copyright protection laws and retransmission-consent rules. (See Aereo Headed for Supreme Court? and Aereo Fight Heats Up in DC.)

"This argument is not about retransmission consent," he insisted, speaking at the Citi Global investment, Media & Telecommunications conference in Las Vegas last week. "What is being questioned is: Can I have an antenna as a consumer…? There's no prohibition against third parties making money on TVs and antennas."

Kanojia contends that broadcasters really want to shut down his company's premium service, which charges subscribers $8 to $12 a month for a mix of local stations and cloud-based DVR service, because they don't want to loosen their still-tight control over program distribution. Recalling that broadcasters once fought the same kinds of legal and regulatory battles against cable operators, VCR makers, DVR suppliers, and other proponents of what were then considered new distribution technologies, he noted that they lost in just about each case, but then ended up making out like bandits in the marketplace.

"The history of this industry is that they're driven by control," he said. "The reality is that they have prospered under every one of these circumstances."

If anything, Kanojia believes that Aereo could prove to be "a net benefit for broadcasters" by bringing their programming to more homes and opening up possibilities for specially targeted advertising. Rather than pay unnecessary retransmission-consent fees, he said, these are the ways that Aereo can truly help broadcasters reap more revenue.

"Of course, they should be compensated" for their signals, he said in response to questioning from financial analysts. "We'd be happy to create more technologies to help broadcasters do targeted advertising."

In addition, Kanojia argues that broadcasters, programmers, and other content providers want to shut down Aereo because they view it as some kind of threat to the traditional pay TV bundling model. Under that tried-and-true model, cable operators and other video service providers package dozens and even hundreds of channels for subscribers for one monthly price, rather than let customers choose and pay for just the handful of channels that they actually watch. This model, which has thrived for decades, has spurred the development and deployment of scores of niche channels that generate lucrative carriage fees and advertising revenues even though they're lightly viewed.

But, with the rise of online streaming services like Netflix Inc. (Nasdaq: NFLX), YouTube Inc. , Hulu LLC , Amazon.com Inc. (Nasdaq: AMZN), and even Aereo, and the emergence of media streaming boxes and bundles from such other new players as Apple Inc. (Nasdaq: AAPL) and Roku Inc. , increasingly tech-savvy consumers no longer have to buy the big, bloated programming bundles to get the content they desire. So the future of many of the less popular channels suddenly looks much cloudier than it did before.

"I don't think there's a whole lot of business in selling 500-channel packages of video services to people who don't want them," Kanojia said. "I don't think the future is selling 50 Viacom channels to people."

With cable broadband subscriber totals now rapidly catching up to cable video customer totals for the first time ever, Kanojia may well be right -- and maybe that's not such a bad thing.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(9)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/17/2014 | 6:56:53 PM
Re: Let's twist
If NBC decides to run infomercials over the air while reserving The Big Game for delivery over paid video services only, I don't think political powers could do anything about that.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/17/2014 | 6:12:58 PM
Re: Let's twist
Yep, I can definitely see that happening. Would just hate to see it. Will be interesting to see if the political powers would allow that. Right now I think they still wouldn't. But that could change.   
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/16/2014 | 5:51:59 PM
Re: Let's twist
"Going premium" in this context would mean having the most valuable content offered only through video service providers, which is how the vast majority of viewers get their network programming now. OTA service could well be relegated to low-end content, which of course there is plenty of.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/16/2014 | 5:47:06 PM
Re: Let's twist
Definitely could hapopen. Do you think even the Super Bowl and World Series will end upgoing premium at some point? Those would be sad days for America, at least the sports-loving partof it.   
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/15/2014 | 3:05:43 PM
Re: Let's twist
Programming networks (both over-the-air and cable) will do whatever they have to to minimize any damage to their revenue bases and to make sure that they get the biggest cut of revenue possible. The idea of sending premium content over the air so that a third party can capture and resell it will not fly. I will not be surprised if the networks (who don't own all that many OTA stations outright anymore) start offering premium content through fee-paying video networks only, leaving second-tier content for OTA delivery.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/15/2014 | 11:50:20 AM
Re: Let's twist
Not right away, anyway. But I do think the traditional pay TV bundle is headed for a fall in the not-too-distant future. More and more folks will seek to opt out of these bloated bundles to get just the channels they want, and they will increasingly be able to do so. What's your vision?    
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/14/2014 | 4:28:02 PM
Re: Let's twist
Do you think anything will change?
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/14/2014 | 4:13:07 PM
Re: Let's twist
Of course, it's always abouty the money. But I do think Kanojia has a point that it's also about control. And I agree with him that the wehole retransmission-consent regime with pay TV providers won't collapse if Aereo wins its case.    
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/14/2014 | 3:41:16 PM
Let's twist
I thought A-Rod's lawyers had set a new standard for bendable logic. "It's not about the money" almost always means only one thing.
More Blogs from Breznick Unbound
As expected, US cable broadband subscribers pass cable video subs for the first time in latest report from Leichtman Research Group.
While the No. 2 US MSO is accelerating plans for all-digital video and broadband speed upgrades, it's still desperately playing catch-up.
In yet another attempt to conquer the TV set, Google is launching its Android TV operating system for the big video screen. But will it succeed where other attempts have failed?
In the latest edition of its Visual Networking Index (VNI) study, Cisco forecasts that HD and Ultra HD video will account for nearly two-thirds of all IP video traffic by 2018.
Seven new cable products take the stage this year, covering a wide range of the technology spectrum.
Flash Poll
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
LRTV Huawei Video Resource Center
The Inaugural Optical Innovation Forum in Nice

9|2|14   |     |   (0) comments


More than 170 attendees from network operators, service providers, analyst firms, and component companies from around the world convened in Nice in June for the inaugural Optical Innovation Forum, co-produced by Huawei and Light Reading.
Wagner’s Ring
Data Centers Drive Telcos Into the Future

8|28|14   |   2:20   |   (2) comments


Data centers are at the heart of key trends driving telecom -- network virtualization, the drive for increased agility, and the need to compete with OTT providers.
LRTV Custom TV
Why SPs Should Consider Cisco's EPN

8|27|14   |   5:40   |   (0) comments


Sultan Dawood from Cisco discusses Cisco's EPN, which enables SPs to build agile and programmable networks delivering new network virtualized services using Cisco's Evolved Services Platform (ESP).
LRTV Huawei Video Resource Center
Huawei’s Showcase @ Big Telecom Event 2014

8|26|14   |   2.56   |   (0) comments


SoftCOM is Huawei's framework for telecom business and network transformation. Haofei Liu, Solution Marketing Manager, Carrier Business Group, Huawei, showcases Huawei's SoftCOM architecture in this video.
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Glimpsing the Self-Driving Car
Dan Jones, Mobile Editor, 9/12/2014
AT&T to Launch WiFi Calling in 2015
Sarah Reedy, Senior Editor, 9/12/2014
AT&T: We'll Bundle Fixed Wireless & DirecTV
Mari Silbey, Independent Technology Editor, 9/15/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
Connecticut Cities Crowdsource Gigabit Nets
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/15/2014
Like Us on Facebook
Twitter Feed