Video services

Court Cuts Ivi's Web TV Signal

A New York court has snipped ivi Inc. 's plan to make a business out of redistributing broadcast TV signals via the Internet in exchange for paid subscription fees.

The Southern District Court of New York on Tuesday ordered the site to shut down its streams after finding that ivi does not fall under certain copyright protections because it does not qualify as a "cable system."

Before Tuesday's preliminary injunction (PDF), ivi was capturing signals transmitted by Federal Communications Commission (FCC) -licensed broadcast TV stations in Seattle, New York, Chicago and Los Angeles, and charging subscribers $4.99 per month to access them via PCs and other broadband-connected devices.

According to court documents, ivi argued in part that it was complying with copyright rules because it was paying $100 per year to the Copyright Office for a compulsory license. It also claimed that it was operating as a cable system for purposes of the Copyright Act and was likewise immune to the rules of the FCC's Communications Act, which allows broadcasters to command higher retransmission fees, because ivi's services were piped via over the Internet.

The court disagreed.

Ivi says it will appeal the decision in the second circuit, and will suspend invoicing for subscriptions immediately.

Why this matters
If the ruling holds up, it could spell the end of ivi and other purported "virtual" MSOs that hoped to replicate its model. It's growing far more likely that distributors in that over-the-top category will have to pay up and adhere to the traditional pay-TV model. (See Comcast-NBCU Rules to Frustrate OTT Players.)

Ivi has been viewed as a cord cutter's dream. Consumers who were inclined to chuck their traditional cable-TV subscriptions could do so knowing that their live, broadcast TV needs could be fulfilled for less by subscribing to a service such as ivi's. Ivi has yet to reveal subscriber totals. (See Cablevision to Pay for World Series Streams.)

For more
For more on ivi's plight and the cord-cutting trend, please check out:

— Jeff Baumgartner, Site Editor, Light Reading Cable

Jeff Baumgartner 12/5/2012 | 5:12:23 PM
re: Court Cuts Ivi's Web TV Signal

Although this judge doesn't think ivi can hide behind Section 111 of the copyright code, ivi will surely dig it up again when it appeals and try to reasert itself as a cable system under the section's own definition, which calls a cable system somethign that "makes secondary transmissions" of signals or programs "by wires, cables, microwave, or other communications channels..."

So, one might consider (okay, ivy does consider) that the Internet falls under one of those other communications channels categories.

Here's a fuller version of that definition:

A “cable system” is a facility, located in any State, Territory, Trust Territory, or Possession, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under subsection (d)(1), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system.

Granted, this definition may seem antiquated today, but does anyone think ivi stands a chance on appeal or are they just taking all the slings and arrows for the next ivi and the hopes that it can pass the legal test? JB

Jeff Baumgartner 12/5/2012 | 5:12:22 PM
re: Court Cuts Ivi's Web TV Signal

Good point. Would be nice if one could apply rules and classifications that are beneficial and sidestep the ones that aren't, which is what ivi seems to be trying in this instance. But those  compulsory license dollars sure look attractive when compared to retrans fees.  ;)   JB

Adi Kishore 12/5/2012 | 5:12:22 PM
re: Court Cuts Ivi's Web TV Signal

Not a legal expert, but it would seem to be a tricky balance wanting to be classified as a cable system under the Copyright act, but not a cable system under the FCC's Communications Act.

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