Aereo suspends orders in NYC, cites capacity

Michelle Clancy | 03-02-2014

Controversial over-the-top (OTT) streamer Aereo is officially out of capacity in its home market of NYC, and has discontinued taking orders there for the $8 monthly service.

CEO Chaitanya Kanojia took to Twitter to confirm the development, saying only: "Yes we are sold out. Will reopen as we get more capacity deployed." Aereo, which is backed by IAC's Barry Diller, delivers local broadcast feeds and a handful of other networks over the Internet (in New York it delivers 20 networks). Unlike other OTT streamers though, it uses a dime-sized antenna to capture and deliver the content.

"Our team has been working overtime to add more capacity in our existing markets. As soon as additional capacity is added, new consumers will be notified that they can sign up and create an Aereo account," Aereo said.

The OTT service is available in 11 markets: NYC, Cincinnati, Boston, Atlanta, Salt Lake City, Miami, Dallas, Houston, Detroit, Denver and Baltimore. That's short of the 22 it had planned to build out by the end of 2013. But in January it announced that IAC, independent media investor Gordon Crawford and Himalaya Capital Management delivered third-round funding to the company totalling $34 million to build out further the goal is five more markets by the end of the quarter and now, presumably, to beef up NYC operations.

Meanwhile, broadcasters like CBS, NBC, FOX and others are suing Aereo, alleging that the service, which hasn't paid retransmission fees, violates US copyright law. But the Second Circuit Court of Appeals has denied an appeal motion asking for an injunction to shut Aereo down; the crux of the decision held that transmissions made by consumers using the Aereo technology are not public performances under the Copyright Act.

"We conclude that Aereo's transmissions of unique copies of broadcast television programmes created at its users' requests and transmitted while the programmes are still airing on broadcast television are not 'public performances' of the Plaintiffs' copyrighted works under Cablevision," the ruling reads. "As such, Plaintiffs have not demonstrated that they are likely to prevail on the merits on this claim in their copyright infringement action. Nor have they demonstrated serious questions as to the merits and a balance of hardships that tips decidedly in their favour. We therefore affirm the order of the district court denying the Plaintiffs' motion."

The court relied on its prior decision on Cablevision, and noted that many cloud-based businesses that allow users to store their own content "have relied on Cablevision as an authoritative interpretation of the Transmit Clause of the Copyright Act".

Now, the Supreme Court on 10 January said it would hear the case, ABC Television Stations vs. Aereo, with a decision expected sometime this summer.