http://aereo.com Wall Street Journal 03/13/2012 The new effort would mark a big shift for Intel Chief Executive Paul Otellini, who has made clear his determination to move the company beyond the computer industry. Those efforts so far have include a series of TV-related businesses that have largely failed to gain much traction. An Intel spokeswoman declined to comment. Intel's maneuvers come as the broader television business undergoes a major shift, with people spending more time watching video on the Internet and mobile devices. Several technology and electronics companies have considered offerings that would use the Internet to deliver bundles of live or on-demand TV channels. In recent months, Sony Corp. and Dish Network Corp. have held exploratory talks about creating such services. Others, including Google, Apple Inc. and Microsoft Corp., have spoken with media companies about the concept in the last year or so, but none appear to be moving forward immediately with any talks for the time being, media executives say. Spokespeople for Sony, Dish, Apple and Microsoft declined to comment. A spokesman for Google, which has declined to comment previously on the topic, couldn't immediately be reached. Hoping to get more of its chips into consumer living rooms, Intel has for years made the case that more processing power and better software are needed for services that appeal to consumers. But many of its efforts in the field, including a hardware effort called Viiv, and past partnerships with Hollywood content partners, have been scuttled. Intel in October disbanded a group that had been involved with Google and others developing Internet-equipped set-top boxes and TVs sold directly to consumers. But Intel said it would keep supplying chips for set-top boxes used by some major operators, including Comcast and Iliad SA, a French telecommunications company that sells Internet, TV and phone service. Last year it hired Erik Huggers, an Internet-services specialist who had helped the British Broadcasting Corp. launch a high-profile service called iPlayer. Mr. Huggers, who in October became general manager of a new group called Intel Media, has announced plans to set up an Intel center in London to work on "user experience" software for TVs. Few other details have emerged about his group's efforts, but he has indicated that TV-related services are part of the focus; in a video of a presentation Last summer, Mr. Huggers said the company might "go further up the food chain" in the TV business, beyond offering chips for set-top boxes and assistance to customers. It remains unclear whether Intel or any other company will succeed in launching virtual cable operators. Programming costs are one big obstacle. Incumbent cable, satellite and telecommunications companies already pay nearly $38 billion per year to license TV channels. Those costs are rising—cutting into video-distribution margins. Any upstart could face even higher costs because smaller operators often have to pay more per subscriber. A virtual service could theoretically offer smaller or cheaper bundles than traditional cable subscriptions. Intel, for instance, had talked at times about offering, say, 50 channels, rather than 150, according to one of the people familiar with the matter. But media companies are likely to resist such shifts, at least initially, because they make money by selling big bundles of channels via cable operators. Internet bandwidth could be another problem. Some tech companies have retreated from plans to become virtual cable operators in part because of an inability to guarantee enough bandwidth for high-quality video at all times of day, one media executive said. Cable operators, which also sell high-speed Internet access, could shift to usage-based Internet pricing if more people start consuming their video online. If that happened, consumers watching a lot of online video could end up paying much more for Internet access—cutting into what a virtual cable operator could reasonably charge its subscribers for a package of channels. But the people familiar with the effort say Intel is undeterred about bandwidth, with technicians who say they can safeguard picture quality even on another company's cables. A third issue could be many existing TV channels' lack of Internet rights to all of their own shows. That would mean some channels on a service like the one Intel is proposing could be reduced, at least initially, to a selection of shows in an on-demand format, rather than live. That could make a Web offering less competitive. Some media executives say they believe a real virtual cable service could be two or three years away at the earliest. Others are even more skeptical. "Several large firms have tried to put that package together and backed off," David Wells, Netflix Inc.'s chief financial officer, said of virtual cable operators in an earnings call in late January. "I don't think that is going to come into existence." http://techcrunch.com/2012/03/12/aereo-countersues-broadcasters/ Intel Eyes Web TV As Aereo Turns Legal Screws On Networks [Docs] Rip Empson It’s hard to believe we’re not stuck in some strange time warp, as it’s beginning to feel (again) like TV is the next hot thing. Well, really, web TV. For one, The Wall Street Journal today reported that Intel is rumored to be developing a web-based, pay-TV service and reportedly has been pitching media companies on creating a “virtual cable operator” that would offer TV channels to U.S. consumers in a “bundle similar to subscriptions sold by cable and satellite TV operators.” According to these reports, Intel will be offering its own set-top box to carry the service. Regardless of the fact that the chip company has struggled with consumer-facing (and set-top) offerings, Intel’s purported service would join GoogleTV, AppleTV, and a host of other companies already offering set-top boxes like Roku and Boxee. Of course, as much as everyone ever many want a disruption of the current pay-TV model, Alex Cocotas’ chart shows that current cord-cutting attempts aren’t really having the desired effect. Aereo, the New York-based startup backed by $20 million+ from IAC recently entered the fray with big plans to actually make a dent in this problem with a cloud-based service that streams over-the- air channels for just $12 a month. (You can read more background on the service here.) Of course, just like so many that have come before it, Aereo seems inherently subject to having to change its DVR-in-the-cloud model or to fighting it out with the networks in court. And now it’s countersuing. Last week, a group of broadcasters, which includes Fox, Univision, and PBS filed two separate lawsuits against Aereo (with those two groups collectively representing most of the major media outlets in New York City), as well as an injunction based on the grounds of Copyright Act infringements, which if granted, would prevent Aereo from releasing its product on the market. Shortly thereafter, Aereo released a statement saying, in short, that the broadcasters’ case did not have “any merit.” (Statement and more background here.) The interest in this case also prompted me to take a lengthy look at whether or not Aereo actually has any shot at winning this case. Despite many indications otherwise, I was hopeful. Speaking at SXSW this weekend, Barry Diller, the Chairman and CEO of IAC (the principal investor in Aereo), made it clear that both he and Aereo expected the broadcast networks to resist, and that the issue would likely be resolved in court. (Obviously it would have been a huge mistake not to prepare for this end.) As reported by CNET, Diller said, “This is not some evil thing … This is absolutely predictable. Media companies have hegemony over broadcast TV and they want to protect it.” Diller and Aereo are both of the mind that what they’re doing is completely legal — and not only that — they shouldn’t have to pay retransmission fees either. (Under their conception, this is because each customer would own their own antenna and thus have rights to free, publicly transmitted broadcasts of network TV.) Diller said that he’d recently met with reps from the networks in New York and told them: I said to the broadcasters, ‘One thing that might happen is you’ll get more audience.’ They said, ‘That’s fine. Now pay us retransmission money.’ I said, ‘When you get Radio Shack to pay you some slice of their profit when they sell an aerial, we’ll pay you anything you like, but we’re not transmitting anything.’ Given the trajectory of this back-and-forth with the networks, the news today that Aereo has officially countersued is expected, but it’s further evidence that neither Diller nor Aereo will be backing down from the battle anytime soon. And given Diller’s penchant for mixing it up with traditional media, and his own cloud as a long-time media exec himself, there aren’t a whole lot of people better suited for this battle. After all, with the growing interest among big tech companies (and the public) in this issue, it was either Aereo or someone else. Hey, maybe it could be Ora.tv and Larry King! (Probably not.) After writing this post, we heard from Carlos Nicholas Fernandes, the CEO of RecordTV.com, which launched a similar service in Singapore back in 2007. They were taken to court, lost at first, but eventually won against the state-owned broadcaster, MediaCorp in a landmark ruling. That ruling formed the basis of Optus’ landmark victory in Australia, as it is referenced extensively in the judgement.