Aereo Not Like Cable, Shouldn’t Have to Pay Retrans Fees, CEO Says

"We're treated very unfairly,” Kanojia said. “There is a distinction -- has been since time immemorial -- on equipment providers, and MVPDs or cable companies” he said of multichannel video programming distributors. “The person who makes a tuner, a television set, a box, an antenna, doesn’t pay retransmission consent because they're providing equipment to the consumer. Whereas companies that have statutory rights that go along with being able to buy content -- being able to force people to sell them content even though they may be competitive -- they have monopoly rights in markets because they have rights to public access on electric utility poles. There’s a bouquet of rights that come along with being an MVPD and as part of that, they have to pay broadcasters."

There is already a “tremendous amount of uncertainty” in the Internet ecosystem on neutrality and potential data caps, Kanojia said. “In comes a company that creates interesting technology.” The idea that you can equate equipment providers and cable companies “is just absolutely incorrect,” he said: Equipment providers have never paid retrans, and don’t have the rights and protections a cable company does. “Trying to levy that regime on equipment providers just absolutely makes no sense. What’s next after that? Every car radio has to pay retransmission fees? Is it a taxation scheme that you're really talking about at that point?"

What of broadcaster allegations that Aereo is stealing their signals? “At some point, you have to sort of call it what it is: It’s name calling,” said Kanojia. Three federal courts have decided Aereo’s service is consistent with congressional intent, so “it’s difficult for me to look at it any other way except as name-calling and a mischaracterization,” he said. Consumers have a right to use whatever antenna they choose to access broadcaster content, he said. “Whether they buy the antenna from RadioShack or they buy it from Aereo is sort of not relevant.”

The 2nd U.S. Circuit Court of Appeals Tuesday declined to rehear en banc broadcasters’ challenge of Aereo’s technology (CD July 17 p6). In a dissent, Judge Denny Chin once again compared Aereo’s equipment to a “Rube Goldberg-like” device, using “miniature antennas and unique copies to flout Congress’s licensing regime.” That sort of allegation implies there’s something wrong with what Aereo does, Kanojia said. “We are taking advantage of the guardrails that the law has set up, and the purpose is to build technology that complies within those guardrails. And I think that’s a perfectly fine thing to do."

The real issue is that “this industry in general reacts the same way to every technological innovation that comes around,” Kanojia said of broadcasters. That industry had the same fight with cable companies, which “lasted a number of years until it became a meaningful business and now everybody’s a great, happy partner,” he said. The same thing happened when VCRs came out and people tried to record programs at home, he said. “This is a default reaction of the industry, to keep everybody out, to stop innovation because fear leads as opposed to opportunity.” An NAB spokesman declined to comment.

In response to a question about Aereo’s similarities to peer-to-peer file sharing of free broadcast signals, Kanojia said he hadn’t previously considered the comparison. “If there [are] individual users creating individual copies using individual antennas, then I think they're similar,” he said. “But I don’t think peer-to-peer does that. I think it’s not individual antennas by individual consumers making those copies, so I think they're very technologically distinct."

Aereo gets a “tremendously positive” reaction from FCC officials and lawmakers when the company educates them on the possibilities, said Kanojia. “It really brings competition and choice into the marketplace,” and creates an “alternative way” of thinking about how the next generation is going to consume content, and how cloud technologies can be relevant and important, he said.

Kanojia perceives broadcaster threats to leave the airwaves as little more than “saber-rattling from a set of people who are not interested in innovation.” How is it that “a little company, Aereo, is suddenly going to mean the death of you?” Kanojia asked. Broadcasters would “rather just be cable” and have a protected dual revenue stream, but Congress mandated the spectrum be for the public convenience, he said. “The right for people to be able to get this programming for free, using a technology, is important. That was the basis of the spectrum grant and that needs to be protected."

"I have a very difficult time believing that lawmakers are going to sit idle” while consumers are prevented from getting access to broadcast TV, Kanojia said. “I think there is a desire to support innovation. I think there is a desire to create competition. I think there is a desire to have choice. I have a very naïve immigrant’s point of view.”