The National Press club as Outgoing NationalTransportation Safety board chair deborah herzman gives her farewell address. Cspan, created by americas Cable Companies 35 years ago and brought to you as a Public Service by your local cable or satellite provider. Host and on april 22nd the Supreme Court will hear the case of American Broadcasting Companies etal v. Aereo. The networks are claiming that aereo is transmitting their broadcasts without compensation and without permission. Here to discuss that case and some of the technology surrounding this company is chet kanojia, ceo and founder of aereo. Mr. Kanojia, what is your strongest argument to the Supreme Court justices that you are not stealing broadcast signals . Guest and great start to the questions. I think all of our arguments are extremely strong. So if you start with the basics which is everybody acknowledges that consumers have the right to an antenna, everybody acknowledges a consumer has a right to make a recording of free to air content for themselves, everybody acknowledges there is nothing wrong with a combination of an antenna and, back then, a vcr, now a dvr. So the debate seems to be about where that equipment is located because nobody has appealed the finding of facts which is that each individual consumer controls their own antenna. The antenna is dead until the consumer instructs the antenna to tune to a particular frequency. Each individual consumer makes their own copy, unique, distinct, never mingled with anybody elses, and transmits it to themselves. So none of those facts have been appealed or disputed ever. So it comes down to we as a country and as 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. So the idea that a new way of capturing this signal by an individual should somehow be prohibited is just absolutely incorrect, wrong, incorrect policy and a 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. So i think these are very simple, logical, grounding, sound policy, progressive arguments. It gets a little more nuanced beyond that as well. So the idea that broadcasters have gotten the spectrum for free from the government, from the people, their requirement, the bar gain, essentially, was to program in public convenience and interest free to the consumer, and they make billions and billions and billions of dollars with advertising. None of which is affected in this particular scenario. The idea that somehow they are entitled to compensation from people that manufacture equipment is just absolutely there is no basis in law, there is no basis in policy for that argument to be made with a straight face. Its pure, straight and simple preservation of a Business Model appeal, not legality. Host exactly how does aereo work . Guest so aereo created two really interesting technologies. One is this idea of a remote microantenna. And the reason we want them to be micro is because since theyre based in the cloud, we need to make sure they are small so we can deploy them in a Cost Effective manner. And second is a high density, a very high capacity dvr in the cloud. So the way the technology works, there is a connection between the antenna to dvr along with associated electronics, but the consumer has a very simple interface that says log in, establish that you were eligible to watch broadcast tv, and the reason for that is do you live in that city . Do you have a domicile in that city because you could have set up your antenna, if you will. Once that process is done, theres an Electronic Program guide where the consumer says i want to see today show. Thats when the consumers signal is sent to this antenna, their unique antenna. The antenna changes the frequented city that particular channel is on, goes through the dv russian because the consumer dvr, because the consumer wants to pause, rewind and then is rendered in front of consumers device, and the consumer can watch it on a tablet, a phone, smart tv, a settop box applied by Companies Like roku and apple tv. So its a great, simple experience. They just need internet, they dont need to pay for cable. And it fits, you know, not everybody, but some peoples lifestyle, a good number of peoples lifestyle very well. Host and you charge 8 12 per month for this service, correct . Guest depending on the plan. You can either have a single antenna and 20 hours of storage, or you can have two antennas so you can watch and record at the same time, different channel, for 12. Host the National Association of broadcasters says that aereos ruin goldberglike Rube Goldberglike contrivance is a technologicallyflawed approach designed solely to circumvent the law. Guest i cant even begin to describe on how many levels thats absolutely wrong. Its just insane, that characterization. And let me, so let me start at the beginning of this. We designed so the question is why do it the way were doing it, and i think its a legitimate question to ask. The reason is inherently Consumer Expectation is they dont want to buy they like to buy modern equipment, an iphone, a tablet, things that do lots of Different Things. No consumer would want to pay for it. Plus theyre expensive. You have to install them, and you have to do all these complicated things. So the idea that you want to do this in the cloud is generally accepted as good, clean, progressive thinking. Both from a consumers perspective and investors perspective and a technologists perspective. So you have to bring practicality into the equation. The internet doesnt have sufficient bandwidth to pump all 50 or 70 or 30 whatever number of channels have to be because each channel is give or take 9 at any time 2 megabits a second, and thats on a single household. So just for peoples benefit, there is no broadcast capability in the internet. Thats not how the internet is designed. So you have to move the ability to tune away from the house into the cloud, because what that allows you to do is allows a consumer to get a single stream down to their house. So once you move the tuning ability away from the house and put it in the cloud, that means youve essentially put an antenna in the cloud. Whether you have, you know, one antenna youre just putting a loop at the end of it. Theres not a whole lot of magic. It actually simplifies high. So you start there, and that hopefully gives people a picture why the technologys architected this way. Either you accept migration to the internet is inevitable, and if you do, aereos the only rational architecture that exists. And if you dont, then the cable architecture makes complete sense, and it is what it is. Second, the spectrum is such a precious resource. For them to argue that they need to continue to do what theyre doing and cast aspersions at us where weve demonstrated that our Antenna Technology can cross low vs, high vs, uhf, any frequency band. The idea we can operate this in such a channelpacked world with all kinds of multipath interference that exists, i challenge anybody to demonstrate a technology that doesnt work like ours that gets a reliable signal to consumers. In fact, 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 will still pick it up whereas you can use 6, 700 megahertz, those ranges, for data bands which is as all we know extremely important for our progress on mobile technologies. So those are that rhetoric has no basis in science, has no basis in engineering. Its a bunch of people who are tied to making money the way theyre making it, and they think there is a constitutionality built into their model that is irrevocable. And the sad news for them and im sympathetic to this issue because the internet is happening to everybody. All of us. Whether you run a retail store or a movie studio or whether you run a car service. It doesnt matter. The internet is happening. That connectivity is happening to everybody. The reaction to that cannot be just characterizational and slander. It should be productive Business Models. Host joining our conversation from the wall street journal, gautham nagesh. Thanks for having me. Mr. Kanojia guest chet, please. Chet, can you explain why its necessary for the Cable Companies to pay the broadcaster retransmission fees but your company should be able to connect their signal to the internet without providing any compensation back . Guest so, again, the question holds so many loaded characterizations that i have to object to the question itself. First and foremost, it was demonstrated we do not sell the content. We lease technology to consumers. Number two, it was also factually demonstrated that we dont retransmit, the consumer tunes their antenna and acquires the signal themselves. Vast differences between Cable Technology which captures the entire broadcast spectrum bland, amplifies it and pumps it on their wires. That is a classic retransmission. Aereos case, classic case of a consumers antenna or any pickup device remotely located. So thats just a technological difference that i think as you read the facts of the case, it becomes clear that you have to move beyond characterization, and you have to really look at the material issues underneath to understand that there are significant differences between those two. And third, as a matter of policy Cable Companies do not make copyright payments for inmarket transmissions. In fact, even after the 76 act it took a decade or later for congress to devise retransmission must carry. The purpose of that is a Cable Company a franchised monopoly. It was a market balance loss for a communications it had nothing to do with copyright. What your question suggests is treasured be a way there should be a way to increase or bring in copyright regimes and equipment manufacturers. It is unprecedented. Congress has never intended to do that. In fact, there was a move to levy copyright taxes on vcrs and tapes of vcrs, and that was expressly rejected. Why . Because it is Congress Intent and constitutionally sound for equipment providers to increase the opportunity to have copyrighted material to get to consumers better, faster, increase distribution by enabling technology that does that. And thats what we enable. If aereo is at its core an antenna service, why cant i buy an aereo antenna and attach it to my tablet . I believe theyre very small, why must i rent one and pay a service fee to you . Guest because theres no restriction in which Business Models your allowed to execute on. In fact, i have a picture on my iphone from staples, there is an antenna that you can buy and plug into your port on your device. Absolutely, that exists. So this debate about how long the wire is doesnt make sense. We are integrating the entire technology, providing you dvr, consuming power and bandwidth on your behalf which are ongoing expenses, so logically, it makes sense for us to changer you for that relationship because we are taking care of all of those things. You no longer have to maintain that equipment as a consumer, we do. The broadcasters would contend it is not the Antenna Technology that raises the legal question, but it is the service you offer as aereo. The question then becomes, as you say, youre leasing the antenna to consumers, and then providing them lets say we have consumers who are watching the super bowl, and you have 100,000 consumers. Are you then recording 100,000 copies as you indicated of the super bowl, and each one would be separately accessible by the consumer who is leasing it . Guest absolutely. Again, i think your questions arent broadcasters arent con tending that the Service Model somehow implicates copyright. Broadcasters are contending the idea of individual performance is somehow incorrect. They are contending the idea of private performances does not exist because the argument they make, is you should be able to look at the totality of all private transmissions irrespective of when they occurred and total them up. By that measure, it doesnt really matter what Business Model youre in. Basically, everything is a Public Performance because you, im sure, listen to a stevie nicks song. Maybe not, i know i did. In our dvds or whatever that performance, that was never the Business Congress intended. Absolutely not. Guest if one individuals antenna fails because the associated electronics failed, your screen goes be goes dark, and your neighbor is fine. The system detects that and says, sorry, im going to give you another one. Host chet kanojia, this seems to have been a kind of Public Campaign by your company to get this word out. Who are you, who are you focusing on with your web site protect my antenna. Org and barry diller writing a wall street journal editorial, one of your investors. Guest right. I think its probably fair to say that the amount of inquiry we get inbound by consumers, policy folks, too many lawyer ares, lawyers, obviously, lawmakers or staff around materials. Hey, what are the real issues. Can you send us the briefs, can you send us, you know, white papers, educate us on what this issue, what are the related issues. Because it is very easy for all of us to simply say, you know, its just about aereo. Its actually not. Because the statute applies uniformly. The idea of public versus private performance and a transmission from a copy or a source to an individual means applies universeally to, effectively, every Technology Company thats in the business of providing communications from a distant server. Generally, Cloud Computing industry. All of these industries are equally effective, so a lot of these folks, you know, have filed amicus briefs on our behalf and also asked for information and content including our consumers. I cant tell you how many emails i get that tell me stories about, you know, the money they save, why and where can they find a petition. And i keep telling them were not there yet. We hopefully will never be there yet. But where can they sign a petition that this is a good product, this makes sense for their family or their lifestyle. So its really an effort to educate people and to have a central repository for information. I think barrys oped was really focused around and i think we were all very disappointed, shocked at the administrations position which is a very narrow, it wasnt the fcc, it wasnt commerce department, it wasnt state department, it wasnt anybody except the copy reich office. And, in fact Copyright Office. And, in fact, the brief was signed by the Copyright Office which is obviously tasked around copyright, but none of the other interests in the country where the fcc, for example be, theyre responsible for consumer competition effectively speaking and making sure the public airwaves are used as they were intended to. Unfortunately, it wasnt the appropriate forum for them to weigh in, but it was a very narrow view, and i think it left people with the impression that the government is against us which is absolutely not true because there are lots of parts of government that, whose agenda lines very squarely with the direction of our, and the sensibility and the mission of our company. Host well, another branch of the government thats involved in this is congress and their spent by some of the laws theyve passed that are related. And in the brief filed by the broadcast companies, they write in congress view, the public availability of broadcast does not render third parties free to build Business Models out of facilitating the publics access to that copyrighted content without to havization. Authorization. Guest so none of these people, im assuming, watch a television because, clearly, sony built up a pretty meaningful business making money off of other peoples content by facilitating access. So did the vcr, so did tivo. These are atmosphereics. The spent has always been there is a distinction between Cable Companies who are monopolies and equipment providers whose job it is to build equipment that adds value to a consumers life. Now, if i was a Cable Company and doing this, itd be a different story, but im not. Im not technologically one, im not by the statutory definition, im not considered one by the fcc, im not how i operate. Host why not pay retransmission fees to the broadcasters . Guest why would we pay retransmission fees when, does any other equipment manufacturer pay retransmission fees . And, in fact, Cable Companies pay retransmission fees because theyre monopolies. If you gave me a a monopoly on something, you know, maybe theres an obligation that comes with that. We are a competitive alternative for consumers that dont want cable, cant afford cable or satellite or any of those. And and its a growing number. When you raise 7 , rates by 7 a year on a compounded basis, you kind of end up at a point where a shrinking population can afford your product. Would aereo be threatened if the broadcasters decided to offer a streaming version of their broadcast service over the internet . Guest i think the question is what would be the model. If the product and i dont want to put into context because i actually thrive on the idea of competing in a marketplace which is being educated more and more and being marketed to more and more. So its not one guy carrying everybodys water. The question is, if the broadcasters said we are going to allow people to watch our product online without the cable bundle, i say fantastic. Hallelujah. That is exactly what should happen because thats what theyre desi