New York — Cable and satellite TV program bundling will eventually end, whether Aereo succeeds or fails in the marketplace.
That was one of several comments made by Chet Kanojia, founder and CEO of Aereo, in his one-on-one discussion with Gary Shapiro, president and CEO of the Consumer Electronics Association (CEA) at the CEA Line Show, here, on Wednesday morning.
Aereo provides a technology that tunes local over-the-air broadcasts and stores them on a computer before rebroadcasting them to consumers in the same marketplace, without paying broadcasters for content.
Shapiro said at the beginning of the session that new technologies are “disruptive” and that Aereo is the most recent example. He noted that new technologies always “take share from old technologies and old business models,” and what the established entities do is go to the courts “or go to Congress to block the innovator.” This is what broadcasters have done in the case of Aereo, which has won rulings in the U.S. Second Circuit Court, here, but appeals are pending.
Kanojia, who emigrated from India in 1991 and ran two companies (one was sold to Microsoft) that involved cable TV research, maintained that TV “had to migrate to the Internet. Other than cable TV employees … no one likes their incumbent cable [or satellite] provider. Bandwidth is everywhere and increasing … [and online] provides opportunities to create and get programming to consumers.”
He noted that online is “the future is where you will buy or sell content. The cost of content production … is low and creators can sell to consumers. The artificial packaging [of cable TV bundles] has to go away.”
It was Kanojia’s contention that “ultimately cable can’t continue to bundle and increase prices 8 percent compounded per year to provide HD broadcasts and record for over $100 a month.”
Shapiro mentioned the cable and satellite industries’ argument that without bundling, sports and minorities’ programming wouldn’t survive, to which Kanojia disputed, saying that consumers may purchase apps or go to online services such as Hulu to get that type of programming.
Kanojia explained that much of the programming watched on cable and satellite stations is from over-the-air broadcasters. For those consumers in New York or Boston, where Aereo currently serves, who can’t get a signal via a traditional antenna, “our service costs $8 a month,” he noted, “unless you are a diehard sports fan.”
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