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Aereo: Cable Partner?

Jeff Baumgartner
The Bauminator
Jeff Baumgartner
2/27/2013
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LAS VEGAS -- NCTC Winter Educational Conference (WEC) -- Aereo Inc. has been called a lot of things during its brief life: market disruptor, cord-cutting tool and -- if you happen to be a TV broadcaster -- copyright infringer. (See Diller's Aereo Under Legal Attack and Aereo Makes Cord-Cutting Bid in NYC.) Here's another possible label: cable partner. Say what? That one was posed by Aereo CEO Chet Kanojia here Monday on a panel about the "Future of TV," as he noted that "we'll take a very open approach with everyone we choose to work with." So, how would Aereo work with cable, considering that some view Aereo as a potential threat to the pay-TV model and a destroyer of the traditional video bundle? Among the possible options, Kanojia postulated that some operators might be interested in bundling in Aereo so they can make a "more compelling" broadband product. Nothing along those lines appears to be ready to pop at the moment, but Kanojia said he'd be "ecstatic" to work with a like-thinking cable ISP. The idea might make sense for the group of operators that were in attendance her -- primarily Tier 2/3 independent operators that are getting increasingly disenchanted with delivering a video service that is exposed to a one-two punch of rising programming fees and shrinking margins. And some smaller ISPs have even noodled how they could work with Aereo, if given the opportunity. Toledo Telephone Co. Inc. COO Dale Merten, for example, brought up just such an idea last year at a Light Reading video event in Boston. (See Aereo's ISP Opportunity.) The problem (or one of them, anyway) is that Aereo's service is presently limited to the New York City metro, and its expansion plans call for it to target larger cities, not necessarily the towns and rural markets that are served by typical cable operator that was represented here this week. (See Aereo Sets 22-City Expansion.) Kanjoia also expressed what doesn't interest him: helping cable operators gain leverage in their retransmission negotiations with broadcasters. "I spend 50 microseconds thinking about that stuff," he said. "My goal is to create a platform." But others in the cable industry think Aereo can lend a helping hand, whether it actively intends to or not. "We'll see how the litigation turns out," Matthew Polka, the CEO of the American Cable Association (ACA), said during a panel on Tuesday morning, noting that he does not see Aereo as much of a threat to cable operators. "I'm interested in seeing the development of technology like Aereo's and others that provide alternative means of carriage of broadcast signals." And if Aereo wins its case ("I like my chances, but I can't predict my future," Kenojia said), cable operators might want to think twice about trying to replicate Aereo's technological feat. For one, there's another type of litigation risk to consider. Aereo's got lots of intellectual property tied up in its platform, which includes all those thumb-sized digital antennas. Kenjoia also believes it won't be easy to duplicate Aereo's ability to support "thousands of concurrent transcodes set at multiple bit-rates" so it can ship live and recorded video to a wide range of IP-connected devices. "It's non-trivial technology," the exec boasts. "It's a remarkable feat of engineering to do what we've done." But if the courts look favorably on Aereo's approach, some cable operators might have an opportunity to use it. — Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
3/1/2013 | 5:07:44 PM
re: Aereo: Cable Partner?
but still very questionable if MSOs will play a direct part with Aereo.-á I spoke to a cable exec privately about this and was told that contracts with bcasters typically include items in there that would prevent them from bundling in a service like Aereo's,-áno matter how the legal case shapes up.-á Wonder if that was part of what took the wind out of the sails when cable operators and vendors were demonstrating set-tops with built-in OTA digital antennas. JB
craigleddy
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craigleddy,
User Rank: Blogger
2/28/2013 | 2:18:17 PM
re: Aereo: Cable Partner?
Another example of a "disruptive technology" coming to realize that cable's actually pretty important to their future. Or at least they need to sound like they'll play nice. Reminds me of two other disruptive technology providers, Sling and TiVo, both of which eventually courted cable. Sling never got anywhere and TiVo went to hell and back to get cable deals.
jtombes
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jtombes,
User Rank: Light Beer
2/28/2013 | 5:21:26 AM
re: Aereo: Cable Partner?
Hard to say which of the metros in that 22-city expansion might be a better fit for a cable broadband/Aereo collaboration than NYC. Birmingham? Madison? Ever since the digital transition I've been bullish on the quality of over-the-air digital (uncompressed HD, after all). But in those tier 2/3 markets, Aereo is up against satellite -- cheap, lots of channels, lots of HD. Keep us posted on what happens next....
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