Aereo Challenge to Cable to Be Aided by Senate Proposal

U.S. Senator Jay Rockefeller introduced a bill to help online video services and Aereo Inc.’s antenna-based system challenge cable providers such as Comcast Corp. and broadcasters including CBS Corp.

Rockefeller, a West Virginia Democrat who is chairman of the Commerce Committee, said he wants consumers to benefit from lower costs and increased choice.

The bill would “give consumers the ability to watch the programming they want to watch, when they want to watch it, how they want to watch it, and pay only for what they actually watch,” Rockefeller said in an e-mailed statement today.

The legislation “is likely to face an uphill battle in this Congress” amid opposition from broadcasters, cable companies and satellite-television providers, Jeffrey Silva, a Washington-based analyst with Medley Global Advisors, said in an interview.

The measure would bar cable, satellite and broadcast companies from engaging in anticompetitive practices against online video distributors, according to a news release issued by Rockefeller.

Antenna services that broadcast over the Internet wouldn’t be obligated to pay fees to television stations for their signals, according to a committee staff member who asked not to be identified because the bill hasn’t been made public. The bill doesn’t address questions about the legality of such services, the staff member said.

Legal Challenge

Aereo, backed by IAC/InterActiveCorp Chairman Barry Diller, is under legal challenge by broadcasters. The New York-based company uses thousands of small antennas to capture free over-the-air TV signals and transmit them to paying subscribers on the Internet.

Aereo threatens $3 billion in fees that broadcast station owners will receive this year from pay-TV systems to provide signals to subscribers.

“We remain concerned about proposals that may legitimize theft of copyrighted programming,” Gordon Smith, president of the National Association of Broadcasters, said in an e-mailed statement about Rockefeller’s bill. “Copyright theft poses a very real threat to the revenue stream that supports local television.”

The broadcasters say Aereo violates copyrights by capturing their signals and sending them to customers without permission. Aereo in court filings said its technology does the same thing consumers are entitled to do such as capture broadcast signals and make recordings for personal use.

“Efforts to increase choice, competition and transparency for the consumer are a welcome step in the right direction,” Chet Kanojia, chief executive officer of closely held Aereo, said in an e-mailed statement today.

Federal judges in Boston and New York have permitted Aereo to operate during legal challenges, and broadcasters have asked the U.S. Supreme Court to bar the service.

Joy Sims, a spokeswoman for the National Cable & Telecommunications Association, declined to comment.

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