Nonprofit service that streamed local TV channels shuts down after legal loss

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A nonprofit service that streamed local TV channels for free over 30 U.S. markets has suspended operations after losing a key part of a lawsuit brought against it.

The service’s model was relatively simple — intake feeds from local stations’ free over the air signals and retransmit them for free via streaming.

ABC, CBS, NBC and Fox all brought suit against Locast in 2019, saying the service violates their copyright.

Locast, for its part, argued that because of its nonprofit status (it even used as its website), the normal copyright laws don’t apply to it.

Locast didn’t charge directly for its service, but would interrupt streams every 15 minutes asking for donations — which needed to be at least $5 a month to avoid the interruptions.

However, a New York judge didn’t agree with the argument, specifically pointing to the fee the service collects as problematic under the law, even though it is optional.

The TV industry is full of providers that rebroadcast the signals from local stations across the country, but they do so by paying negotiated amounts back to the station owners and networks.

This generates billions of dollars in revenue for station owners and networks — and disputes between broadcasters and cable and satellite providers can be vicious, often leading to so-called “blackouts” of certain channels.

Stations that broadcast over the air, which are often affiliates of either ABC, CBS, NBC or Fox, are required to allow individual viewers to grab the signals for free with a standard equipment setup.

A tenet of this concept is the fact that the stations are sending signals through the air, or spectrum, which isn’t “owned” by anyone, so therefore people should be able to access those signals for free.

However, with the growth of cable or satellite service in the past, less people were receiving TV over the air. While cable and satellite subscriptions have stalled, there are now streaming options that require an internet connection and can receive local channels.

Since cable companies charge money to receive broadcast stations as well as cable-only networks, courts have ruled that they must pay the originating stations a fee, commonly referred to as a “retransmission” or “retrans” fee. This also typically applies to streaming services such as YouTube TV, Hulu with live TV and others.

The retransmission fee has its roots in the 1992 Cable Television Consumer Protection and Competition Act.

Locast was attempting to circumvent this model by saying it wasn’t charging a fee, so therefore it wasn’t subject to retransmission requirements even though it was acting in a similar manner.

The case has some flashbacks to Aereo, a startup that shut down back in 2014, a company that used custom made miniature antennas to grab local TV signals off the air and feed the video to subscribers. It would have one antenna for each active viewer, even if all of them were watching the same channel.

These subscribers did pay a fee, but Aereo argued that it didn’t have to pay retrans fees because its subscribers were technically only “renting” one of the antennas and therefore exercising their right to watch TV for free from over the air.

Aereo did charge a fee for its service, but it was significantly cheaper than even many basic cable packages.

The courts didn’t see it Aereo’s way either, noting that the way it gathered signals, while unique, still did not distinguish it from traditional cable and satellite providers.

Going even farther back, Cablevision faced a 2008 lawsuit when it introduced a cloud based DVR service. Rather than store recordings on a hard drive in each customer’s set top box, it stored the video files in the cloud and “streamed” the playback when requested.

Cablevision was able to successfully argue that because each customer who recorded a particular show had a separate recording on its servers, rather than every customer who opted to record a show relying on a single one of it, it was legal under a long held standard that consumers can record TV programming for their own personal playback.

That has roots in a 1984 Supreme Court case that ruled manufacturers of VCRs or similar recording devices could not be held liable for what consumers recorded with them, even if it might otherwise violate copyright law.

Ultimately Cablevision won, but Aereo, and now, Locast, didn’t appear to. Aereo shut down and filed for bankruptcy in 2014 and Locast has opted to suspend operations.