Days of Change

Renting the Cow | June 25, 2014

The Supreme Court made a couple of technological decisions today. One is far-reaching because it ruled unanimously that a person’s smart phone is essentially a computer and police need a separate warrant to access it. They can’t just seize it upon arrest to find out about you.

The other is potentially huge. A company called Aereo tried to provide a product that was both cheap and not really available to the public yet. Anyone who watches “TV” on the internet knows that live broadcasts are rarely available online. Cable companies offer a few channels in streaming format, but the ones available outside the network (your home) are usually few in number and low in popularity. Many people would love to watch network television as it airs from their devices. Instead, they have to wait for it to appear on their cable system’s On Demand menu or for the network to make it available on their website, if they offer it at all.

Aereo tried to provide this with a streaming server that would allow you to watch your local channels live, on a delay of your choosing and even with the possibility of skipping ads. The technology to do this actually exists now. I have a device connected to my antenna that I can access to watch TV live over the internet and I can even set up recordings remotely. The technology, however, is complicated and not geared toward that purpose. Aereo’s solution was to allocate a small (1 square inch) antenna to each user and use it to access broadcast channels they could get at home. Basically, instead of the device being in your house, Aereo said the device could be in another part of the city and legally occupied the same space.

This was actually how cable began. In the 1970s, small companies cropped up to wire up people to large antennas on hills and towers that could get better reception than their rabbit ears could muster. This model more or less existed until a decade ago. The law was changed so that broadcast networks could demand license fees from cable providers, even though their channels could be picked up by most companies with an aerial antenna. While Aereo was good for consumers, they were delivering broadcast signals through the internet instead of a cable and they need to license it to do so. This also makes their live streaming and on demand watching unlikely, as the networks have decided they want to restrict it to monetize it.

This actually reminds me of the raw milk decisions from a few years ago. People who want to buy raw (unpasteurized) milk found that many states made the sale of it illegal. People who owned cows, like the Amish, could consume the milk legally, but couldn’t sell it. A scheme was hatched for people to “buy” a share of a cow and pay a fee to feed and house the cow on a farm. The milk was technically a free byproduct. This plan was found illegal, as it was trying to emulate the results of an illegal act with dubious legal justification.

I think broadcast networks are ultimately hastening their demise with decisions like this. Their bloated budgets and content restrictions are not leveraged by a superior product. They will continue to lose market share and eventually cable companies (which are also in trouble) will start to drop them because of their huge license fees and find few customers will fight it. Aereo was trying to sell something they didn’t pay for, but the product may not be worth the price much longer.


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  1. I’d like to believe SCOTUS is protecting intellectual property rights, but I’m pretty sure it’s about $$$.

    Comment by Mary — June 25, 2014 @ 10:26 pm

  2. The correct response to an
    Econ tax “answer” on Jeopardy last night was “Who is Arthur Laffer?” I bet you would have gotten it right.

    Comment by Mary — June 25, 2014 @ 11:20 pm

    • Probably. I was watching Jeopardy and I knew more than half the answers.

      Comment by 1539days — June 25, 2014 @ 11:27 pm

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