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Cable Technology Feature Article

July 01, 2014

Aereo Takes a 'Pause' but Vows to Fight On

By Tara Seals, TMCnet Contributor

Aereo may have lost in the Supreme Court decision in the case of ABC. v. Aereo, but the Barry Diller-backed start-up service isn’t fading gently into that good night.

Aereo subscribers in 12 cities have been told that the start-up is merely hitting the pause button on its endeavors, and this week CEO Chet Kanojia urged consumers to begin a letter-writing campaign to their representatives.

“Tell your lawmakers how disappointed you are that the nation's highest court issued a decision that could deny you the right to use the antenna of your choice to access live over-the-air broadcast television,” he said. “Tell them your stories of why having access to a cloud-based antenna is important to you and your families. Show them you care about this issue.”

Aereo went to the Supreme Court in April to defend its right to exist in the face of copyright infringement suits from every major broadcaster—they argued that because the company broadcasts local feeds via the Internet without paying retransmission fees, it’s essentially stealing their content. Aereo has counter-argued that because it provides dime-sized antennae to its subscribers — who pay $8 per month for access to a couple dozen channels — it constitutes an over-the-air, rabbit ears-based service, which is exempt from retrans fees. It has also argued that its content is delivered to a single cloud-based DVR device for one subscriber and can therefore not be categorized as a public broadcast service, subject to fees and regulations.

Despite mostly succeeding in its arguments in the lower courts, winning legal challenges in Boston and New York (but not in Denver), the start-up got a mammoth smack-down when the Supreme Court held that the company was in violation of the Copyright Act, for a variety of reasons. The case has thus been returned to the lower courts.

Reaction has been swift, with Aereo supporters considering the implications for cloud models going forward. And, Aereo itself has been quick to hop on the message that the ruling will have a chilling effect on innovation. In his latest letter, Kanojia quoted Charles Kettering, inventor, entrepreneur, innovator and philanthropist: “The world hates change, yet it is the only thing that has brought progress.”

Over the weekend, the company “decided to pause our operations temporarily as we consult with the court and map out our next steps.” Service will be shut off this Friday, and users will be refunded their last paid month.

“The spectrum that the broadcasters use to transmit over the air programming belongs to the American public and we believe you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud,” Kanojia said. “Keep your voices loud and sign up for updates at ProtectMyAntenna.org – our journey is far from done.”

Despite the proclamation, the journey may be short going forward depending on the company’s cash reserves. Diller, Aereo’s major backer and lifeline, had previously said there was “no Plan B” if the courts ruled Aereo illegal. After the ruling, he told CNBC, “We did try, but it’s over now.”

Edited by Maurice Nagle

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