Aereo Naught

I am of the opinion that we should be covering the Aereo story at the Super Wi-Fi Summit, though I am far from certain whether my advisory board joins me in my enthusiasm. Here is what I like about it: Aereo is a bundle of antenna and servers that basically store broadcast television for subscribers to watch when and how they wish to do so.  Just $8 per month buys a PVR in the cloud with which the subscriber can watch locally broadcasted channels, and these channels can be tuned into via browser, smart TV, Apple TV, Roku, etc.

From a spectrum policy perspective, the Aereo service has nothing to do with TV White Space and really is just another way to watch your existing TV. If you have a TiVo, a VCR, or a PVR, of course, you can do the same thing.

So why do I want to cover Aereo at Super Wi-Fi? Because it has implications for the Reverse Incentive Auction and a few other aspects of FCC jurisdiction, that’s why.

If you recall, every so often a cable operator and broadcaster get into a Mexican standoff in which neither side is willing to back down, a good example being the recent one between CBS and Time Warner, a conflict that – of course – occurred just before football season and the start of the new network television season. In theory, CBS itself is part of the local broadcasting must-carry rules, however they own Showtime and a few other properties that serve to make the negotiations about something other than just broadcasting local. CBS must think, though, that there is leverage in their local broadcast because they bundle it into the negotiation. So in other words, while CBS could have demanded that Time Warner carry their local broadcast, they felt it was more in their interest to negotiate as a whole for greater revenue. And the broadcaster has the right not to demand application of the must-carry rule. 

With me so far?

Aereo is a receiver service that catches the public air waves and does not share any revenue with the broadcasters, and for this reason ABC, CBS, FOX, NBC and PBS are hip-joined in the courts fighting against Aereo’s service, because they want to be able to charge them like they charge the cable broadcasters. So far, though, the courts have regarded Aereo not as a cable-like service, leading to frustration on the part of broadcasters to the point where they have threatened to stop broadcasting.

Here is where it gets interesting for the implications of the Reverse Incentive Auction, as up until now the pressure has been on the affiliates and local TV companies not to participate in the Reverse Incentive Auction to give up broadcasting on ‘their’ frequencies (much of this pressure coming from the major networks). If the big networks are going to stop broadcasting, however, it hardly seems fair that the spectrum should go to waste.

So the broadcasters are caught between the proverbial rock and a hard place, the rock being the court’s perspective that Aereo is fair use of the air waves, and the hard place being Reverse Incentive Auction as if the broadcasters are not going to use the spectrum the government can demand its return gratis. And, naturally, if that much spectrum becomes available great opportunities will abound for new wireless services.