Back then eight vcr, now a dvr. The debate seems to be about the where where the equipment is located. Nobody has appeal the finding of facts, that each consumer controls their own antenna. The antenna is dead until the consumer lockin and instructs the antenna to tune to a particular frequency. Each consumer makes their own copy, unique, distinct, never mingled with anyone elses, and transmits it for themselves. None of the facts have been appealed or disputed ever. So it comes down to we as a country and a society a system, do we permit this idea of private conduct, which the courts have consistently found, yes, we do. And congress has been encouraging the idea of consumption of local broadcast television. A new way ofhat capturing the signal by an individual should somehow be prohibited is absolutely acorrect policy, and devastating blow to innovation in the next step of our industry, which is movement of all of these technologies away from the consumers home into the cloud. These arguments are simple, logical, grounded in sound policy, progressive arguments. It gets a little more nuanced beyond that as well. Gotidea that broadcasters the spectrum for free from the government, from the people, the requirement, the bargain was aogram in Public Interest and Convenience Fee to the consumer, and they make billions of dollars from advertising. None of which is affected in this particular scenario. The idea that somehow being entitled to compensation from for equipment, there is no basis in law, no basis in policy for the argument to be made with a straight face. It is pure preservation of a Business Model, not legality. Exactly how does aereo work . Created two really interesting technologies. One is the idea of a remote micro antenna. We want them to be micro because since they are based in the cloud we need to make sure they are small so we can deploy them in a costeffective manner, and second, a high density, very highcapacity dvr in the cloud. The technology works, there is a connection between the antenna, the dvr, and associated electronics. The consumer has a very simple in,erface that says, log establish you are eligible to watch broadcast tv, and the reason for that is you live in the city, do you have a domicile in the city, because you could set up an antenna. When the process is done, the consumer is presented an Electronic Program guide. It only applies to broadcast television. That is when the consumer signal is sent to their unique antenna. The antenna tunes to the frequency the particular channel is on. The signal enters the system, goes through the dvr, because most modern consumers expect the ability to pause, rewind, and is on the Consumer Device and they can watch it on the tablet, settop box. E, tv, it is a great, simple experience. They just need internet. They do not need to pay for cable. Not everybody, but some people eightcharge a to 12 to 12 per month. Depending on the plan. You can have a single antenna and 20 hours of storage or two antennas, so you can watch and record at the same time, for 12. In the brief they file, the National Association of broadcasters says aereos rube is not acontrivance technological innovation, but instead a technologically flawed approach designed solely to circumvent the law. I cannot begin to describe on how many levels that is absolutely wrong. It is insane, that characterization. Let me start at the beginning. Do it theon is, why way we are doing it . That is a legitimate question to ask. The reason is inherent in Consumer Expectation is they do not want to buy the spoke bespoke devices. They want to buy generalpurpose equipment, an iphone or tablet that does lots of different things. To payumer would want for a retail cable box. They are expensive. You have to install them into competition things. So the idea you want to do this in the cloud is generally accepted as good, clean, progressive thinking. Both from a consumer and investor perspective and a technology perspective. Then you have practicality. The practicality is the internet does not have sufficient bandwidth on a consumer level nels,ump all the chan because each channel is give or take 19. 2 megabits per second times any number of channels, on a single household. Benefit,he peoples there is no broadcast capability in the internet. That is not how the internet is designed, so you have to move the ability to tune away from the house and into the cloud. That allows the consumer to get a stream down to the household. When you move the tuning ability from the house and put it in the cloud, you essentially put an antenna in the cloud. You put a loop at the end. It actually simplifies it tremendously because you do not have to do math for permits or towers or any of those kinds of things. That hopefully gives people a picture of why the technology was architected that way. Either you accept the make the migration to the internet is inevitable, and this is the only rational architecture that exists, and if you do not accept the migration to the internet, the cable architecture makes sense. The spectrum is such a precious resource. For them to argue that they need to continue to do what they are doing and cast aspersions to us, where we have demonstrated that our Antenna Technology, any frequency band, because of the soft smart tunable antennas, we can operate it in such a channel pax world channelpacked workld, i challenge anyone to demonstrate a technology that does not work like ours and get a reliable signal to consumers. It is a heck of a lot more rational to free up those parts of the spectrum and move to lower frequency bands, because technologies like aereo take it up. You can use 700 megahertz ranges for data bands, which as we know is extremely important for our progress on mobile technologies. Basis inoric has no science, no basis in engineering. It is a bunch of people who are tied to making money the way they are making, and it seems there is a constitutionality built into their model that is irrevocable. The bad news for them, and i am sympathetic to the issue because the internet is happening to everybody, all of us, whether you own a retail store, a movie studio, a car service, it does not matter, the internet is happening, the connectivity is happening to everybody. The reaction cannot this be characterization and slander. Business be productive models. Joining us from the wall street journal, gautham nagesh. Mr. Kanokia. 0 kanojia. Can you explain why it is rebroadcast pay th these, yet they are able to not provide any compensation back . The question holds so many loaded characterizations that i have to object to it myself. You can demonstrate, we do not sell content. We lease technology to consumers. Number two, it was demonstrated we do not retransmit the consu mer. The vast differences between Cable Technology that capture the entire broadcast spectrum band and concert on wires irrespective of what a consumer asks for, that is retransmission. Aneo is a classic case of antenna remotely located. That is the technological difference that as you read the it becomese case clear you have to move beyond characterization and look at the material issues underneath to understand the significant differences. Third, as a matter of policy, Cable Companies do not make copyright payments for inmarket transmissions. Even after the act, it took a decade or later for congress to devise retransmission must carry. The purpose was a Cable Company is a franchise monopoly. That hadbalance law nothing to do with copyright. What your question suggests is there should be a way to bring copyright regimes and equip them. It is unprecedented. Congress never intended to do that. In fact, there was a move to levy copyright taxes on the vcrs and tapes. That was rejected. Why . It is the intent of congress and constitutionally sound for club and providers to increase the opportunity of copyrighted materials to get to consumers better, and faster with technology that does that. That is what aereo is. Antennareo is an service, why can i not buy the antenna and attach it to my tablet . They are small. Why must i read one and provide a service the to you fee to you . There are plenty of antennas you can plug into your ipad. There is no restriction. I have a picture on my iphone from staples, there is an antennae you can buy and put on your device. Absolutely, that exists. For this to be about how long the wire is does not make sense. The reason you are paying aereo is because we are integrating the entire technology, providing anddvr, consuming power bandwidth on your behalf, which are ongoing expenses, so it makes sense for us to charge you on an ongoing basis because we are taking care of all of those things. You no longer have to maintain the equip and as a consumer. We do. The broadcasters would contend it is not the Antenna Technology that raises the legal question, but the service you offer with aereo. The question becomes, as you say, you are leasing the antenna to consumers and then providing them lets say we have consumers watching the super bowl. Are you recording 100,000 copies, and each one is separately accessible by the consumer who is leasing it . Absolutely. Again, your questions, broadcasters are not contending that the Service Model somehow implicates copyright. Broadcasters are contending the idea of individual performances is somehow incorrect. They are contending the idea of private performances does not exist, because the argument they made it you should be able to look at the totality of all private transmissions your respective of when they occur irrespective of when they occurred. It does not matter what Business Model you are in. Basically everything is a public performance. You will listen to a cv next song on a dvd or cd or whatever it happens to be. Somehow to reactivate all that and it is somehow public performance, that was never the Business Congress intended. Absolutely not. The idea of private conduct has always been permitted. They are proposing somehow this idea that individual transmissions are somehow supposed to be reaggregated because they dont like the business. Whereas if you draw the line and say, today according to the nab 50 Million People use an antenna in some way, shape or form, theyre all antennas making transmissions to tvs. I would like to say that the idea of an antenna for an individual, remotely located, not permissible i do not see what the harm is. Doesnt have the interference a typical Television Antenna might . Depends on the type of interference. Does the signal fluctuate in terms of picture quality . Of course it might. So it is a similar experience to having traditional rabbit ears on your television. Absolutely. Fails, the associated electronics fail, the screen goes dark and the system is smart enough that it detects that and says, sorry, i will give you another one. Chet kanojia, in the last couple days leading up to the Supreme Court case there has youra Public Campaign by company to get this word out. Who are you focusing on with your website, protectmyantenn a. Org, and barry diller, one of your investors, writing a wall street journal editorial . It is fair to say that the amount of intrigue you get inbound by consumers, policy folks, too many lures, staff,ly, lawmakers, around materials. What are the real issues, can you send us the briefs, white what are the related issues . Because it is very easy for us to simply say it is just about aereo. It is actually not, because the statute applies uniformly, the idea of public versus private performance, it applies universally to effectively every Technology Company in the business of providing communications from a distant server. Generally, Cloud Computing is, all of the industries are equally affected. A lot of the folks filing amicus briefs are asking for information and content, including consumers. I cannot tell you how many emails i get that tell me stories about the money they have saved, why, and where can they find a petition . I keep telling them we are not there yet, we will hopefully never be there yet. But that this is a good product, that it makes sense for their family or their lifestyle. It is an effort to educate people and have a central repository for information. Oped, we were all disappointed and shocked at the administrations position, which is a very narrow it was not the fcc, not the commerce department, not the state department, not anybody except the copyright office. The brief was signed by the copyright office, which is finding atasked with way around copyright. But none of the other interests in the country, the fcc for example, they are responsible for consumer competition, effectively speaking, making sure the public airwaves are used as they were intended to. Unfortunately it was not the appropriate for him for them. But it was a very narrow view and left people the impression that the government is against us, which is absolutely not true. There are lots of parts of government whose agenda aligns very squarely with the direction and sensibility and mission of our company. Another branch of the government involved in this is congress. The intent, but some of the laws they have passed that are related. In the brief filed by the broadcast companies, they write, in Congress View the public ability availability of broadcastings not render third parties free to build Business Models out of facilitating Public Access to copyrighted content without authorization. Clearly they built a fairly meaningful business making money off of other peoples content. That is the same as access. So did the vcr, so did tivo. The congressional intent has aways been that there is distinction between Cable Companies that are monopolies and equipment providers, whose job it is to build equipment that adds value to a consumers life. If i was a Cable Company, it would be a different story. But im not technologically one, not one by the statutory definition, not considered one by the sec, and not how fcc, and not how i operate. Why not pay retransmission fees to broadcasters . Why would read we repay transmission fees . Is any other equipment manufacturer paid retransmission fees . Cable companies have the fees because they are monopolies. If you have a monopoly on something, there is an obligation that comes with that. We are a competitive alternative for consumers that do not want cable, cannot afford cable or satellite. It is a growing number. 7 i year on a compounding basis. You end up at a point where a shrinking population can afford your product. What aereo he threatened to broadcasters decided to offer a streaming version of their broadcast service over the internet . The question is, what would be the model . The not want to put it in context, because i thrive on the idea of competing in a market place which is being educated more and more and marketed to more. Not one guy carrying everybody. The question is, if the rod casters start rod casters say they will allow people to watch online without the cable bundle, i say fantastic, hollowly a. That is exactly what should happen, because that is what they are designed to do, that is what the obligation is. If they say you can watch online, but only if you pay for cable, which is the current philosophy, i do not see with the differences between that and what is happening today. What they charge directly . If they can sustain a valuable a proposition, fantastic. Choice, andve more at that point the best technology, the best marketing, the best Customer Care will win. I am happy to be in the marketplace. We have the Supreme Court case. I am sure you are confident, but what do you believe the odds are that the sprinkler will find aereo Supreme Court will find aereo is permissible . If not, what are the contingency plans . It would be inappropriate for us to speculate on the odds. The arguments have not happened yet, and deliberations have not gone in. Positionlike me, in my , it is very dangerous to go one wayecause you or the other. The best thing you can do is prepare really well. We firmly believe in our merits, as you can tell. Precedentished supports our position. There is policy that supports our position. There are massive implications if our position is not supported. On the other side, there are literally no implications because dvr has been in existence since 2008, the world has not changed and it, and 60 Million People use antennas and the world has not ended either. That will block that somehow the world will and a little old way ontinues on its our business margins are locked in for the next 10 years. I like my fax. I like my position. I like our alignment with the correctness for the consumer. That is the best you can do. Hands, but i am, in the hands of what im confident our smart, just people. Theirl be in the hands of advocacy. Gordon smith said that if broadcasters lose the case their records will be to go to congress and ask congress to expressly prohibit aereo service. The broadcasters still have quite a bit of influence in washington. Is that a possibility that would concern you . The standard playbook is litigate, and if you fail, legislate. If you fail legislation, figure out a good Business Model. Cting how have your conversations done with people on the hill . Editor rockefeller offered a video bill that would explicitly allow Services Like aereo to continue. Do you find that has gained traction . We are not engaged in seeking any legislative change or influence. Our goal has been to educate lawmakers around what we are doing, and what i do find almost universally is that when people look at the product people say, now i get it. This is so great. When are you and d. C. . I have to tell them, not yet. All across the board. A good number of them do not have cable. They do not make enough money to have cable. Or they their lives, they are busy people, doing all these different things. It resonates. I do not know what comcast spends. On lobbying. But our recollection is it is a big number. That is not who we are, and that is not our strategy. We believe that if we appeal to a decent base of consumers, these consumers will support us. I cannot predict the future, but i do believe that there is a genuine appetite for encouraging new things. Not just watching them over. How do we get to the Supreme Court with this . We didnt. [laughter] look, they wanted to have the highest court. Move an unconventional agreed. Because of our firmness in our police, and more importantly, this is an Infrastructure Company that requires a substantial amount of capital. Changing the environment in anticipation, trying to state where the puck is going to be from a consumer perspective. That requires investment, execution, a Meaningful Company to be able to do that. So in order for us to deal with that, it makes sense. If you believe in what you are have validateds that, including the applet you accelerate your soiness by creating clarity the appropriate investment, talent, all these things can get lined up. One final question . I heard someone compare aereo not to taking a program. I believe you made the betamax comparison. But this is akin to someone taping a program on your behalf and is selling it to you on a monthly basis. I have an antenna at home that i purchased last week for 20. I also have a cable description. Costs eightreo dollars to 12 per month, in the year,orhood of 70 to 96 is that all value created from you posting it in the cloud . Where do you see the proposition, and do you understand at all why the pricing aspect has raised eyes on the hill . I am not aware of aereo raising eyebrows on the hill. The only piece of the bill i recall was mentioned on the floor was senator rockefellers bill. We did not ask for it, but we are happy to acknowledge its presence. You had two or three questions. No plaintiff,ain, no broadcaster has disputed the facts. The facts are a consumer decides what to record, a consumer presses the record button, a consumer makes all the decisions, much like they do on their home dvr, recording it for themselves. Decides whether or not to view it. I do not understand where the comparison comes in that you are saying. Obviously somebody who does not want to believe the facts or somebody who has not read the facts. Either case is dangerous to speculate without a factual basis. We do not sell shows or content. Whether you use aereo once or 60 hours a day, it does not matter to us. We charge you a fee for providing the equipment. Much like tivo. Ever bought a tivo retail . If you buy a tivo retail without cable packaging, you do pay them a monthly fee for the guy product the product. This is very common in software businesses. There used to be something called 15 annual maintenance tacked onto software purchases. That has migrated toward an annualized or monthly fee model because we constantly update, create, maintain your quitman or software on and on you are free to come and go as you well. None of those things are prohibited in any shape or form. You could walk into radioshack or walmart. You can make installment payments. Any time you purchase an antenna, you are leasing it. You have an ongoing relationship. If you dont really pay your bill in advance. Where you draw the line on these things . There is no basis at all. Saying that how you chart somebody makes a difference. The question is, what are you selling, and is it technology or content . It is