ISSUE 18.35.F • 2021-09-13

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PUBLIC DEFENDER

By Brian Livingston

A nonprofit organization that uses the Internet to stream live, over-the-air television signals to digital devices has suspended its service throughout the United States after a federal district-court judge ruled that the offering didn’t fully comply with an exception Congress wrote into the US Copyright Act.

The nonprofit, known as Locast — short, of course, for “local broadcasting” — has made available since January 2018 an app that streams to your smartphone, personal computer, or smart TV via the Internet every local television station that broadcasts over the air.

Locast provided a free service, but it was interrupted by frequent on-screen requests for donations. In return for a minimum monthly donation of $5.50 — or zero in cases of hardship — there were no interruptions. In both cases, Locast provided an up-to-the-minute channel guide from which viewers could switch to any program then airing on any local channel. (See Figure 1.)

Figure 1. The Locast app provided smartphones, personal computers, and televisions with live TV from local stations via the Internet, complete with a constantly updated channel guide.  Source: Locast webpage

To comply with provisions of the Copyright Act, the service has always provided to subscribers only those stations that broadcast over the air in a user’s particular media market (see Figure 2).

The major television networks were not amused. A consortium of plaintiffs — including ABC, Disney Enterprises, 20th Century Fox, CBS, Fox Television, NBC, and others — filed a lawsuit against Locast in July 2019. The networks alleged that the nonprofit did not actually qualify under the Copyright Act’s exception.

A judge of the district court of Southern New York — Louis Stanton, 93, appointed in 1985 by President Ronald Reagan — ruled against Locast on August 31, 2021. The service suspended operations two days later. The judgment will be appealed to a higher court, but the service is not expected to open again, regardless.

The quashing of Internet-based retransmission of free, over-the-air television content holds vast implications for us and our media consumption — on the Web and elsewhere.

Figure 2. There are 208 television market areas (TMAs) in the contiguous United States.  Source: Wikipedia webpage

To understand the impact of Judge Stanton’s decision, we need to be clear about two completely different US laws that control live video content:

Before the August 31 ruling, Locast had managed to acquire 3.2 million sign-ups. Few of those users ever made the $5.50 monthly donations, so the nonprofit had subscription revenue of a mere $4.37 million in 2020. That’s not even a rounding error compared with the more than $55 billion that Disney (which owns ABC) takes in annually, according to a Medium article.

But despite the challenges, Locast had managed to make its streaming service available in 36 markets, encompassing 55% of the US population. To its credit, the nonprofit didn’t just seek to serve the largest metro areas. It also supported smaller regions, such as the Bristol, Tennessee/Virginia area (market #100).

Locast’s wide coverage was quite an achievement, considering the tricky task of ensuring that its app showed subscribers only the channels that were within their locally defined markets.

In their legal complaint, the networks flatly asserted that Locast was not eligible for the exception Congress had written into the Copyright Act:

First, as a threshold matter, the exemption is limited to localized transmissions and thus does not extend to Defendants’ inherently global internet transmissions.

Second … by competing against Plaintiffs’ licensees in the market for television over the internet—they cannot prove that they make transmissions “without any purpose of direct or indirect commercial advantage.”

Third, Defendants do not qualify for the exemption because they impose “charges” on users, and those charges are neither “assessments” nor “necessary” to defray the costs of operating their service.

Contrary to the networks’ complaint, Locast’s retransmissions were localized. Each subscriber saw only local stations. Brazenly, the networks’ lawsuit maintained that simply by using the Internet, a nonprofit service was competing with the media giants on a global level.

Judge Stanton bought into the corporations’ arguments. In his decision, the jurist interpreted individual words of the Copyright Act in the narrowest possible way:

It would have been simple for Congress to add one word to paragraph (5) to make it read “…costs of maintaining, expanding, and operating the secondary transmission service. But expansion is nowhere mentioned, and it is therefore excluded from the short, tightly-crafted grant of exemptions. [Emphasis in original.]

Since portions of its user payments fund Locast’s expansion, its charges exceed those “necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service,” which is the only exemption granted in Section 111(a)(5).

I’ve never heard of a nonprofit that could operate a service without first spending whatever funds were necessary to set it up!

By ruling that “maintaining and operating” a service does not include creating the service in the first place, Judge Stanton gave the media giants everything they wanted. Apparently, a nonprofit can’t operate a free app that retransmits free, over-the-air television in more than one market area — unless it has enough money to set up every area before requesting donations to serve subscribers there.

The smallest television market area in the US is Glendive in eastern Montana (bordering on North Dakota). The Glendive TMA has one TV station and only 3,900 television homes, according to 2021 Nielsen rankings. It’s inconceivable that every small area such as Glendive should have to generate its own software, servers, and technologists in order to meet Judge Stanton’s definition of “operating without expanding.” That’s especially true since a nonprofit cannot raise money from shareholders and can’t offer investors any profits.

A spokesman for law firm Williams & Connolly, which represented the networks, declined to comment for this article. For more information, Document Cloud has posted the full text of the networks’ complaint and the judge’s ruling.

In a statement provided to The New York Times, the CEO of Locast, David Goodfriend, said:

Locast always was meant to be a public service for people who want to watch their local broadcast TV stations, can’t get them over the air, and can’t afford expensive cable, satellite or streaming services.

Locast showed that millions of Americans fit that category. They deserve something better than the status quo.

Goodfriend is known for having taken on major corporations and winning. As an attorney based in Washington, DC, he’s been deputy staff secretary to President Bill Clinton, an adviser to FCC Commissioner Susan Ness, and a vice president of Dish Network. In his copious spare time, he also founded in 2009 the Sports Fans Coalition, another nonprofit, which organized public opposition to the so-called Blackout Rule.

Under the rule, major-league sports teams prevented local broadcasters from airing any game that had not sold out all its stadium seating. After years of citizens’ efforts, the FCC in 2014 agreed in a bipartisan 5–0 vote to end the rule, as Politico documented. The NFL suspended its blackout policy a few days later.

Locast was technically a service of the Sports Fans Coalition and acted as a continuation of the older nonprofit’s feisty activism. In its short life, Locast developed a faithful following among people who resented the high monthly fees of cable companies. One user is quoted on Locast’s website as saying:

Due to the rising cost of satellite and cable, I am unable to afford even the basic package and have no other way to watch the local news. Without Locast, my family would not have known about the tornado and flood warning in my area on 02-06-2020.

Locast is appealing Judge Stanton’s ruling to a three-judge Court of Appeals panel. If successful, that may establish a broader interpretation of the Copyright Act’s exemption for nonprofits.

But even in the best case, Locast does not plan to restart. With so little to personally gain financially from battling the world’s largest media corporations, Goodfriend deserves a rest — and an opportunity for some other nonprofit with deeper pockets to carry the battle. Or, perish the thought, there may never be another app like Locast.

To get good local television reception in 2021, I never thought I’d need to dig out a 20th-century, analog television antenna.

Fortunately, tech has evolved since those days. Every television station in the US has been required since July 13, 2021, to broadcast solely digital, high-definition programming (Broadcast Law blog). Digital transmissions make it easier for even a paper-thin antenna to pick up weak TV signals, amplify them, and feed them into the same apps you use on your smart devices.

Cord-cutting has been a thing for years, but it’s accelerating. Five million Americans canceled their cable contracts in 2020, according to an eMarketer podcast, and the number is growing.

Streaming services such as Sling TV provide dozens of “cable” channels for $35 a month — a tiny fraction of the $217 monthly bill the average US household paid operators for cable/Internet service in 2020, according to DecisionData.

Full disclosure: For more than a year, I’ve been a paying subscriber of Sling Orange — a monthly $35 package that omits ESPN, Fox Sports 1, the NFL Network, and some other sports channels — as well as Locast. I’m completely off cable TV and have been as happy as a clam at high tide, at least until Locast’s untimely demise.

If you’re trying to leave cable behind, but hills or tall buildings give you poor over-the-air TV reception, streaming services have various ways to get you local programs, news, sports, and weather:

For new subscribers who prepay for three months, Sling provides both devices free of charge (more info). Sling has toll-free numbers (888-291-0438 and 855-554-2862) staffed by salespeople who can answer questions about digital antennas and sign you up for streaming services. (I have no business relationship with Locast, Sling, or Amazon, and I receive nothing if you buy any products or services from them.)

There are numerous other cable-cutting solutions. Rating every alternative is beyond the scope of this column, but if you’d like to do your own research, good reviews are at CNET, Consumer Reports (registration required), the Cord Cutting Report, PCMag, and TechHive.

Locast should not be confused with Aereo. That was a for-profit company founded in 2012 to retransmit — via the Internet — over-the-air TV that users could optionally record. The service, backed by Barry Diller’s IAC (formerly InterActiveCorp), enrolled within two years 80,000 subscribers, mostly in New York City, Boston, and Atlanta. As with Locast, a consortium of Disney’s ABC, CBS, Fox, and NBC sued Aereo. The US Supreme Court ultimately ruled 6–3 in June 2014 that Aereo was infringing the networks’ copyrights, as reported by Vox. The company filed for bankruptcy in November 2014.

Given the legal travails of Locast and Aereo, it would appear that consumers are losing 0–2 against media giants that want to maintain their hugely profitable enterprises. But novel technologies have a way of disrupting even the largest empires. We haven’t seen the end of this movie.

Do you know something that we all should know? Tell me about it! I’ll keep your identity totally confidential or give you credit, as you prefer. Send your story via the Public Defender tips page.

Join the conversation! Your questions, comments, and feedback about this topic are always welcome in the AskWoody Lounge!

The PUBLIC DEFENDER column is Brian Livingston’s campaign to give you consumer protection from tech. If it’s irritating you, and it has an “on” switch, he’ll take the case! Brian is a successful dot-com entrepreneur, author or co-author of 11 Windows Secrets books, and author of the new book Muscular Portfolios. Get his free monthly newsletter.

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