A nonprofit backed by AT&T and Dish that claims to “Free Your TV” by offering free streams of broadcast networks’ local programs, was hit with a lawsuit this week in what may be a test of its ability to bypass networks’ traditional fee model.
Locast was sued for copyright infringement in federal court by NBCUniversal, CBS, ABC and Fox. “Locast is not the Robin Hood of television,” said the lawsuit, first reported by the Wall Street Journal.
The four networks say in the lawsuit that Locast, which retransmits local broadcast TV feeds over the Internet, is infringing on their copyrights by airing broadcasts without permission or compensation via licensing fees. Networks are expected to accumulate over $10 billion from these fees this year, according to The New York Times.
Broadcast stations are required by federal law to provide their signals for free to the public, who can get access with antennas. Locast argues that it is offering the same service, only through Internet streams rather than antennas.
Though Locast claims to be a free alternative for cord-cutters, the networks say that Locast is acting as a bargaining chip for AT&T and Dish, who have donated to the nonprofit.
AT&T has contributed $500,000, and a group called IoT Broadband LLC, which is owned by Dish’s former executive vice president Michael Kelly, has donated about $800,000, WSJ said. Locast’s founder David Goodfriend formerly was vice president of law and public policy at Dish.
- The lawsuit compares Locast to Aereo, a similar company that was shut down for copyright violations in 2014. Aereo, however, was a for-profit company with monthly charges.
- Locast is available in 13 markets in the U.S. It seeks to expand to others, but says it requires donations to do so in order to cover “considerable costs for equipment, bandwidth, and operational support.”
- Antenna usage in the U.S. has increased as cord-cutters abandon traditional television for streaming services. According to the market intelligence firm Parks Associates, 22% of U.S. households use an antenna to access over-the-air broadcasts, up from 20% at the end of 2017 and 16% in 2015.
- Though consumers can access broadcasts with antennas, many rural areas, primarily in states like Oregon, Nevada, Montana, Idaho and Utah, are either out of range or can only tap into limited signal strength.
- Over the past decade, pay-TV companies and broadcasters have been aggressively negotiating the same licensing fees the networks say Locast is skirting. Their disagreements have resulted in a record 230 blackouts for pay-TV subscribers so far in 2019, most recently with an ongoing July 20 blackout of CBS for DirecTV customers in 12 U.S. markets.
- Karma Take: As broadcast television networks adjust their business models to the streaming age, consumers’ best interests — especially those of rural and low income consumers — may become collateral damage to negotiations and legal proceedings.