Aereo CEO wants to sell cable operators a cloud-based DVR for $10 per sub

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WASHINGTON, D.C .-- Aereo Founder/CEO Chet Kanojia sounded highly confident in his Supreme Court case and boldly pledged to spend the year after the court case expanding his 110-person company and supplying low-cost technology to the nearly 1,000-member companies of the American Cable Association (ACA).

Chet Kanojia

Kanojia

In a session at the ACA Summit in DC Wednesday, Kanojia vowed to "push the boundaries" with his disruptive technology and offered small and mid-size operators a cloud-based DVR for $10 per subscriber in capex. "You'll be obsolete" without technology like this, he said. "I don't know what you're paying now," but "I'm pretty sure it's more than $10." Kanojia sees opportunities in technology since the market is broken. The big players have "decimated" the technology base: "either you take technology from Comcast" or you're not relevant, he said.

In passing, he added Aereo's future role in cable would include an a la carte model, although he wasn't questioned on this point. The Supreme Court is scheduled to hear the Aereo case April 22.   

While Kanojia spoke of expanding Aereo to "50-60 markets" and "finding new partners," he also disdained talk of profits and margins. "I went into this to bring lasting change with an open online platform," Kanojia said. "My goal is to keep us relevant … to enhance the customer experience...that's the future," not making "a quick return on investment," he added. Nobody has a "God-given" right to a specific profit margin or market share, he noted. The impetus to provide TV in the cloud came from extensive market research, he said. The research showed "a huge gap between satisfaction, value and price" for consumers. That market imbalance spelled opportunity.

Regarding the case itself, Kanojia called his arguments "robust," and added "we've raised $100 million...so we can" [pay for a fight]. "This is not a copyright case, it's a business-model case...[our opponents] want to protect their bundle." The crux, he said, is the Court's interpretation of the transmit clause in the Copyright Act. "If you feel all works [of art]" are protected, "then you can't sing...in the shower." Broadcasters, he said, "are conflating copyright royalties with retransmission consent."

In other words, they are saying all platforms should be regulated in the manner of retransmission consent. Aereo, though, believes individuals have the right to obtain TV content through the company's cloud-based antenna. "The question is how long can that wire be?" He characterized his opponent's case as "asinine [and] stupid," noting that broadcasters say they have a free product, but are upset that Aereo isn't paying for it.

In addition, broadcasters are saying they're not worried about winning or losing the case since they'll collect retrans fees of $2 billion, yet they also say if they lose the case 'the sky will fall.'  Meanwhile, the consumer is stuck in a closed market, unable to take advantage of technological innovation that's available, but blocked by the broadcasters, he said. With the top 3 executives at the networks making in excess of $1 billion/year "they've lost track of right and wrong." It's "fascinating," companies that revere free enterprise come running to Washington "at the first sign of loss of control" over the market, he said. 

ACA chief Matt Polka reiterated his group's support of Aereo court case, and said that ACA would file an amicus brief at the Supreme Court today in which it will back Aereo. 

While Aereo didn't want to go to the Supreme Court and Kanojia wouldn't predict if the issue would end with this case, he noted consumers eventually will have the ability to make a real choice about the way they receive content. "It's inevitable," he said. He cited HBO's "Game of Thrones," the most illegally downloaded show, as an example. "It's a travesty...it should be sold directly to the consumer." The illegal downloading represents the consumer revolting, he said. "Look, there's not a single person under 30 running around saying 'I want a cable connection.' You guys know that."

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