Two years ago, a new product came onto the market in
NYC that just might have a significant impact on the distribution of video
programming. Aereo uses small antennas,
individually assigned to subscribers, to receive public broadcast signals locally
and then retransmits those signals to subscribers over the internet. The small bundle of broadcast television
stations (e.g. ABC, CBS, NBC) are streamed to any device at any time.
Today, about 10% of households use an on-premise
antenna to receive television broadcast signals for free. What Aereo does is moves those antennas (and
DVRs) from the customers’ homes to their own facility. That move to the cloud allows for greater flexibility
on where and when subscribers can view “their shows”. Aereo offers the service to households for just
$8 a month. Some MVPD customers may
choose to pair Aereo’s service with broadband and drop their cable subscriptions. Televisions stations would see a drop in
retransmission fees paid by MVPDs, because under the Copyright Act, if a
television broadcast is considered a public performance than Aereo, the
internet redistributor, does not need a license or have to pay television stations
retransmission fees. If the Supreme
Court rules in Aereo’s favor, how will competitors respond? Will more content move from broadcast
channels to premium cable channels or the internet? How disruptive will this technology change
be?
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