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FilmOn Can Use Cable Systems’ Copyright License to Stream Broadcast TV

DEEPLINKS BLOG
July 20, 2015

FilmOn Can Use Cable Systems’ Copyright License to Stream Broadcast TV

Lots of our TV-watching comes over the Internet today. Series programming, reality shows, movies, and even sports are available through Internet-based subscription services—nearly everything except for broadcast TV. That’s because many broadcast stations, whose signals go out over the public airwaves for all to receive, have fought tooth and nail in the courts to keep their signals off of the Internet. Internet subscription services like ivi, FilmOn, and Aereo that agreed to follow the same rules, and pay the same copyright royalties, as traditional cable systems have up to now been denied.

Last week, a court broke new ground. Judge George W. Wu of the U.S. District Court for the Central District of California ruled that TV streaming service FilmOn (which previously went by the names “Aereokiller” and “BarryDriller”) was identical to a cable system for purposes of copyright, and can stream local broadcast channels, including affiliates of NBC, ABC, CBS, and Fox, as long as it pays the fees set by law. This sensible ruling rejects the Internet-phobic position taken by broadcasters and the U.S. Copyright Office, a position that privileges established players like Comcast/NBCUniversal while locking out newer competitors.

For most people in the U.S., it’s hard if not impossible to get local broadcast TV stations over the Internet. Movies, national TV, and some sports are available through subscription services, but local TV news and weather, local advertising, and community programming usually require an old-fashioned “rabbit ears” antenna on the TV, a roof antenna, or a portable TV set. Of course, the technology to send local broadcast TV to our Internet-connected devices has been around for a while. It’s the same technology that powers services like Netflix and Hulu. Copyright law, not technology, has been the barrier.

Copyright applies when shows are transmitted “to the public” by cable systems, meaning that cable operators need a license from copyright holders. But copyright law also includes a way for cable systems to get permission to transmit copyrighted programs to subscribers, by following some specific rules and paying a royalty set by the government. That mechanism, known as Section 111, applies to any “facility” that “receives signals” from broadcast TV stations and “makes secondary transmissions” of those signals to paying subscribers.

Although the law was passed in 1976 with traditional cable systems in mind, nothing in the law says that Internet-based streaming services can’t be considered “cable” systems that are eligible to use the Section 111 license. But several courts have ruled that streaming services that want to retransmit broadcast TV can’t use the license - instead, they would have to negotiate with the copyright holders for every show and every commercial that gets broadcast, something that Congress recognized as practically impossible.

Starting in 2012, Aereo tried another route: assigning each subscriber an individual, tiny antenna in an attempt to avoid comparisons with a cable service, and thus avoid having to get permission at all. It didn’t work. Last year, the Supreme Court ruled that Aereo was similar enough to a cable system that it was infringing copyright without a license from the TV studios. The Supreme Court emphasized that Aereo behaved like a cable business regardless of whether it used Internet streaming, but the trial court later ruled that Aereo still couldn’t use the license that Congress designed for cable systems. Out of options, Aereo declared bankruptcy late last year.

The courts left streaming services for broadcast TV in a double bind: they need to get permission from rightsholders, but they can’t get that permission using the streamlined method that Congress created. In practical terms, that means traditional cable systems (primarily large incumbents like Comcast, Time Warner Cable, Cablevision, and Cox) can retransmit broadcast TV to paying subscribers, but newer competitors that use streaming can’t. Protected against competition from streaming technology, cable subscription prices continue to climb.

Last week’s decision came down on the side of innovation and competition. Judge Wu pointed out that a “facility” that receives broadcast signals and sends them on to subscribers need not be a traditional cable system—an Internet streaming service fits that description too. He pointed out that the Supreme Court, in Aereo’s case, considered cable and streaming services to be extremely similar. And he pointed to many statements by the Supreme Court and other courts that Congress is where the impact of new technologies on copyright should be worked out. He concluded that FilmOn was free to follow the same copyright rules as cable systems, pay the same royalty rates to copyright holders, and stream broadcast TV stations, just like a cable system.

If it’s upheld, this decision means that other streaming video services like Netflix, Amazon, and Hulu, as well as small businesses and community organizations, can get in the business of helping people watch their local TV stations. Smaller broadcasters and smaller cable operators will likely support the decision (just as many of them supported Aereo at the Supreme Court). That’s because the ability to use Internet streaming in place of traditional cable transmissions gives smaller cable systems more technological options and may help them compete against the giants. And local broadcasters, especially those not owned by national conglomerates, stand to gain from getting their signal out to more people who might have poor TV reception where they live, or prefer to watch on Internet-connected devices.

Naturally, major broadcasters like Fox have vowed to appeal this ruling. If history is any guide, we can expect statements from some corners of the entertainment industry about how sending free-to-air TV signals over (gasp) the Internet will destroy the television business. In fact, all it will destroy is existing cable and satellite systems’ comfortable position as the only ones who can transmit broadcast TV for a fee. That’s a positive step, and that’s why Judge Wu’s sensible decision should be upheld.

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