August 23, 2013
If you've ever wanted to watch live local television on your smartphone or tablet, your day is near. But a legal dispute that could play out in the nation's highest court threatens to restrict viewing options.
Entrepreneur Jack Perry's Marion, Iowa, company, Syncbak, has developed a technology that allows local television stations to transmit signals to the Internet and give access to local users who download the application. The company has some high-profile backers, with support from the National Association of Broadcasters and investment money from CBS, among others. Other companies, such as New York-based Aereo, have circumvented the networks to offer services that retransmit the networks' signals to Internet-enabled devices for a fee, using a small antenna the company ships to customers. That has led to the major networks crying copyright infringement in multiple lawsuits and complaints across the country.
A California court agreed with the networks, but the U.S. Court of Appeals for the 2nd District in New York has sided with Aereo. Experts expect a drawn-out battle. "The industry is at a crossroads," said analyst Justin Nielson of SNL Kagan. "Especially with the split decision, it seems like the Supreme Court is the direction this fight is going." Last month, Aereo dragged Syncbak into the fray, issuing a subpoena seeking documents related to the CBS investment, as well as other documents. Aereo said the information is critical to its defense. Perry said he is ready to battle Aereo on all fronts, including the courthouse. "The industry is figuring itself out at the moment," Perry said. "It's the next big battle: the battle for the people who don't subscribe to cable. Every day, that number grows."
The company has installed devices at nearly 300 television affiliates across the country, Perry said. Users download the Syncbak application, which uses a smartphone's or tablet's GPS to determine which available stations lie in the user's vicinity. The affiliates determine which programming can be accessed through the application. WOI in Des Moines, for example, has most of its newscasts available for live streaming. WOI Vice President and General Manager Russ Hamilton said he frequently uses the app to check in on his station's programming. He said the application gets consistent usage, although actual numbers were not available. He said mobile television is likely here to stay. "I'm not smart enough to figure out the future of television, but it's definitely headed that way," he said. "People are on the go."
The technology allows broadcasters to send their signal to the Internet and restrict access to users within the station's geographical markets. This provides a countable number the networks can use when determining advertising rates. A trial run with the television ratings agency Nielsen showed that Syncbak gives the networks accurate numbers. "There is a new platform shift and someone has to do it the right way," Perry said. "The way we do it, everyone upstream will get paid for the ability to deliver the live broadcast. We believe in paying the rights holder." Aereo has the major networks up in arms for delivering local content without permission and without paying the rights holder.
In March 2012, a consortium of broadcast networks sued Aereo for copyright infringement. They said Aereo's service, which sends users an antenna-like device to pick up live, local television programming, amounts to stealing their original content without permission. Aereo counters that the company merely duplicates the function of the old-fashioned "rabbit ears" that pick up those same signals. The truth might be somewhere in between, experts say. "Aereo is taking free material, material that anyone could have, and they've created a more efficient way of watching that," said Michael Dahlstrom, Iowa State University assistant professor of journalism. Aereo's attorney did not return emails seeking comment for this story.
Aereo is also the subject of a Hearst Corp. copyright infringement complaint filed in a Boston court in July. Nielson of SNL Kagan said the networks are concerned that startups will disrupt a portion of the industry, live television, that remains profitable. "You have this disruptor coming in and sidestepping the business model using their over-the-air signals," he said. "It's a loophole they are using right now that allows them to stream the broadcast."
The loophole concerns whether providing an antenna to a user constitutes a "public performance" of other people's copyrighted work. Aereo's defense, according to reports, has maintained that there is no public performance because individual users access broadcasts on their own. A Los Angeles federal court's ruling against Aereokiller, a startup that essentially does what Aereo does, means companies can no longer retransmit over-the-air broadcast signals in nine Western states.
However, the U.S. Court of Appeals for the 2nd District in New York has repeatedly upheld Aereo's side. That increases the likelihood that the case reaches the U.S. Supreme Court, said Naomi Gray, a partner at San Francisco's Harvey Siskind law firm who specializes in copyright and trademark law. Gray said she has become fascinated by the case and speaks to audiences about their similarities regularly. "One of the interesting things we have seen in the last decade, when you have these disruptive models come along, it creates a lot of controversy in the industry," she said. "It creates a lot of litigation over time. But while that litigation is going on, the industry typically adapts around the new technology." Syncbak could help lead that adaptation, as it offers networks a way of making money from and retaining control of their live broadcast content.
As the battles play out in court, Syncbak plans to expand its reach. Perry said his company should soon be in all 210 television markets in the U.S., helping it to compete in what he called a "market share game." So far, about 150,000 people have downloaded the Syncbak application. His ultimate goal involves much more than merely broadcasting live signals online. "We are laying the groundwork, setting the stage for us to help personalize TV," he said. "In the future of television, we will be the go-between among content owners, advertisers and users." To do that, his company hopes to work with the industry. "Look at the TV space. Look at everything between viewers and content originators," he said. "There are a lot of people in between and there are billions of dollars at stake if disruptors come in. The best way is to not disrupt a $70 billion industry and say, 'Let me help you with your business model.'" Des Moines Register
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