The broadcast streaming service is in limbo after the U.S. Supreme Court ruled in June that it can’t retransmit TV stations’ free, over-the-air signals without their permission. But while Aereo’s down, it isn’t out — as evidenced by its new campaign to persuade the FCC to help. CEO Chet Kanojia argued in a visit with FCC chairman Tom Wheeler and other senior officials on Friday, and in a blog post today, that regulators should define it as a pay TV service (in industry jargon a Muiltichannel Video Programming Distributor, or MVPD). If the FCC does that, then Aereo might be able to use the current retransmission consent rules to negotiate deals with programmers — who would be required to engage in “good faith” talks.
The FCC hasn’t formally indicated that it might deem an online service as an MVPD, but Wheeler’s said to be interested in the idea. In July, the U.S. Copyright Office said that it would not define Aereo as a pay TV service under the Copyright Act — waiting at least for the FCC to act. That would have enabled it to secure a so-called compulsory license so it could carry station signals even without owners’ permission for a relatively low, government-set fee. Aereo has asked the U.S. District Court in New York to rule that it qualifies for the copyright law’s provision; a hearing is scheduled for Wednesday.
If the FCC uses separate communications laws to give Aereo “regulatory parity” with cable and satellite companies, Kanojia says, then that would “increase investment and competition in the video programming market, allow new entrants to emerge and provide consumers with new and innovative video products.” Before the Supreme Court ruling, Aereo was up in 14 metropolitan areas with plans to be in 50 cities within a year, it told the FCC according to its public summary of the meeting. What’s more, it had “compiled a list of interested consumers nearly three times its member base.”
Like a cable or satellite company, Aereo says it can fulfill FCC requirements to carry stations that insist on it (under the “must carry” rules), and offer emergency alerts, equal opportunity employment, and closed captioning.
But Aereo asked the FCC to make it clear that it could seek deals just to carry a broadcast station “without a license to other content or bundles” — for example, to carry an ABC station without also having to offer ESPN and the Disney Channel. What’s more, the deals should only cover real-time broadcasts, not on-demand or non-linear channel programming. Aereo told regulators that they need to act quickly. If a rule is in place within several months then it would “support Aereo’s re-launch as a viable and sustainable new entrant in competition with incumbent MVPDs.”
BTIG’s Richard Greenfield — an early Aereo fan — says that “the underlying concepts are so consumer friendly and pro-competition, it is hard to imagine any of the five FCC commissioners voting against to-be-proposed rules.” But Janney Capital Markets’ Tony Wible says that a rule change would be insufficient since small companies including Aereo may not be able “to afford these fees to begin with.”