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Aereo CEO: Lawmakers Won’t Let Networks Shift to Cable Model

The CEO and founder of Aereo suggested that lawmakers will step in if TV networks follow through with threats to move programming from the free airwaves to cable TV as a response to courts allowing digital streams of broadcast station signals.

Chet Kanojia (pictured) says in an interview with C-SPAN’s “The Communicators,” to be shown on Saturday, that if Fox and other broadcasters convert to a cable model, “I have a very difficult time believing that lawmakers are going to sit idle while this develops and as … consumers [don’t] have access to broadcast TV. I don’t think that’s in the future of the United States.”

News Corp. COO Chase Carey said in April that moving Fox to a pay TV model would be an option if Aereo’s service is allowed to continue to offer streams of their signals without compensation to broadcasters. They argue that Aereo undermines their ability to collect retransmission fees from cable and satellite operators, which pay hefty sums to carry stations while Aereo pays nothing.

Yet the networks and other broadcasters have so far lost in courtroom attempts to put an immediate stop to Aereo. On Tuesday, the 2nd Circuit Court of Appeals refused to reconsider the networks’ appeal of a district court judge’s refusal to issue an injunction against Aereo.

Fox said that it is considering options, including whether to take its challenge to the Supreme Court.

Just as Kanojia suggests that Congress would try to prevent broadcasters from switching to a cable model, there also is a presumption among some Wall Street analysts that lawmakers would step in to clarify the Copyright Act to prevent Aereo or any other upstart from providing broadcast signals without falling under restransmission consent rules.

Kanojia, however, said in the interview that he thinks “there is a desire [in Congress] to support innovation. I think there is a desure to create competition. I think there is a desire to have choice.”

Launched last year in New York, Aereo this year has expanded to Boston and Atlanta, and has ambitious expansion plans to launch in nearly two dozen more cities, including Washington.

While other services offering digital broadcast streams have been shut down by the courts, Aereo keeps a farm of thousands of dime-sized antennas for its subscribers, the idea being that each subscriber is still capturing his or her own signal as they would if they had an antenna on their rooftop. The legal rationale is based in part on a 2008 2nd Circuit decision that allowed Cablevision to offer a remote DVR, the idea being that because consumers are still in control of what and when they are watching, it is still a private use and not a violation of the public performance provisions of the Copyright Act.

“It is a very discreet, distinct, one-to-one relationship,” Kanojia said in the interview.

Denny Chin, an appellate judge who dissented with the majority in the Aereo decision, called it a “Rube Goldberg-like contrivance” and wrote that the company was “engineering technology to fit within the law.”

Kanojia defended how the company was set up, comparing it to drivers operating within the speed limit.

“We are taking advantage of the guardrails that the law has set up,” he said, adding, “I think that is a perfectly fine thing to do.”

He declined to say how many subscribers Aereo has. He said that the reaction from broadcasters was a “default reaction of the industry to keep everyone out, to stop innovation.”

He also rejected the notion that Aereo should be paying retrans fees to broadcasters, saying that “trying to levy that regime on equipment providers makes absolutely no sense.”

He said that broadcasters’ predictions of doom if Aereo goes forward is “saber rattling,” noting that more than 50 million people get TV via antennas.

“How is it that people can do that and there is no harm and life is going great, and a little company Aereo is suddenly going to mean the death of you?”

He said that the “reality” is that there has been agenda among broadcasters that they “would rather just be cable, and just essentially have the dual protected revenue stream.”

“The problem with that is, the intent in Congress in granting the spectrum was public convenience, the right of people to get this programming for free using a technology is important,” he said. “That is the basis of the spectrum grant, and that needs to be protected.”

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