Broadband Cable Association of Pennsylvania

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April 1, 2013

Aereo Inc., the Web television startup backed by media mogul Barry Diller, has discussed partnerships with major pay-TV distributors and Internet service providers, including AT&T Inc. and Dish Network Corp., as it looks to roll out its fledgling service to more markets, people familiar with the matter say. Aereo, which streams local TV broadcast signals over the Web for a fee, is now available only in the New York City region. It could expand its reach significantly if it joins forces with cable, satellite or phone concerns.

Talks between Aereo and telecom operators haven't yet yielded any agreements. One big issue is the legal uncertainty surrounding the startup. Aereo is battling a suit by broadcasters, which say it is violating copyright law, in part because it reformats and retransmits their signals without permission-and then charges a fee to its subscribers. Mr. Diller, IAC/InterActiveCorp's chairman, said last spring that Aereo could expand to 100 cities within a year.

That mark hasn't been met. In January the company announced a plan to reach 22 markets in 2013, including Atlanta, Chicago, Philadelphia and Washington, D.C. "We are taking a phased and thoughtful approach to that expansion to make sure the consumer experience is the best it can be," Aereo spokeswoman Virginia Lam said. She said Aereo is interested in developing partnerships related to content, devices or distribution that could "help increase the choice and flexibility for the consumer." She added, however, that the company's success "is not predicated" on such partnerships. Ms. Lam declined to comment on any specific talks.

For the distributors, a tie-up with Aereo would offer a way to reach a generation of viewers who may be content with a slimmed-down channel package streamed over the Web instead of a traditional cable-TV bundle with hundreds of channels. Aereo believes its live-TV offering complements other Web video providers with on-demand programming, including Amazon.com Inc. and Netflix Inc. In one scenario that was discussed, AT&T would sell broadband or wireless data subscriptions paired with Aereo's video service, people familiar with the matter said.

Dish executives have expressed interest in offering smaller, cheaper packages of TV channels over the Internet to target younger viewers. But they have acknowledged, however, that big media firms that own TV channels aren't likely to support such a radical departure from their current business model anytime soon. On a February investor conference call, Dish Chairman Charlie Ergen said the firm has no plans to buy Aereo. "But we never say never," he added. "I admire what Aereo has done as a disruptor... We'll continue to follow the legal case." Mr. Ergen, who wasn't available for comment, hasn't addressed whether Dish has approached Aereo about a partnership. By linking up with Aereo, TV distributors could reduce the fees they pay broadcasters to retransmit their signals, industry executives say. Those retransmission fees are a relatively small but growing slice of revenue for broadcasters.

Major broadcasters including CBS Corp., Comcast Corp.'s NBCUniversal, Walt Disney Co.'s ABC, Univision Communications and News Corp.'s Fox sued Aereo last year, alleging copyright violations. (News Corp. also owns The Wall Street Journal.) Aereo has said its technology, which essentially lets each user rent a tiny antenna and record free over-the-air signals, is legal based on precedents set by previous cases. Aereo won the critical first round of the legal battle last July, when a federal judge in New York denied the broadcasters' request for a preliminary injunction that would have shut the service down. The broadcasters appealed the decision, and a ruling on the appeal could come anytime. Broadcasters have also sought damages for alleged copyright violations. Lawyers not involved in the case have said it could take years for the suit to wind its way through the courts.

The legal uncertainty is complicating Aereo's discussions with some pay-TV providers, people familiar with the talks say. Satellite provider DirecTV also mulled a partnership with Aereo but reviewed the startup's legal situation and decided it would be too risky to forge ahead, some of the people said. James Grimmelman, a professor at New York Law School who isn't involved in the case, said that if a pay-TV distributor or broadband provider were to link up with Aereo as a source for over-the-air television, it would be "injecting itself in a way that could make it liable" as a copyright infringer. Pay-TV distributors declined to comment on the potential legal questions a partnership with Aereo could pose.

The copyright case has also created hurdles for Aereo as it tries to license programming from cable networks to augment its broadcast offerings. Last year Aereo started paying for its first cable channel, Bloomberg TV. It has approached at least two other media companies that own popular TV channels, people familiar with the matter say, but so far it hasn't signed any more deals. One media executive said, "Let's see how the litigation goes" to see whether Aereo is a "viable entity." Further complicating matters for Aereo, several of the broadcasters suing it are part of media conglomerates that own popular cable channels and aren't likely to want to do business with the company.

Another potential obstacle is that media companies would likely demand a premium fee to license individual channels a la carte to Aereo, which has made clear that it doesn't want to offer the large bundle of channels traditional TV distributors do. Media companies prefer to sell distributors their entire suites of networks, bundling their less-watched channels with more popular ones. Aereo's Ms. Lam says the startup doesn't have to rely on traditional TV channels for content; it could also partner with new Web entrants. Wall Street Journal

Big changes are coming this fall for telephone users based in northeastern and central Pennsylvania. Ten-digit dialing for all owners of a telephone number in the 570 area code will begin Sept. 21. A month later, a new 272 area code will be rolled out in the region. Starting Sept. 21, if a caller dials only the seven-digit telephone number, he or she will hear a recorded announcement stating they must hang up and redial the number using the area code plus the seven-digit number. This recording will be available permanently.

The Pennsylvania Public Utility Commission announced the mandatory changes on Thursday, the culmination of a nearly three-year old plan that was approved July 15, 2010 by the commission when it was informed that numbers in the 570 area code were running low. After consideration of public input and area code relief options, the commission approved an overlay plan for the 570 code. An overlay plan means that once the existing telephone numbers in the 570 area code are exhausted, new telephone services in that geographic region will be assigned telephone numbers with the new area code, which has been designated as 272. The geographic region includes all or parts of 29 counties stretching from the Harrisburg area in the south to the Poconos in the east, the New York state line in the north and Clinton County in the west.

The original intent was to roll out the new 272 area code in the summer of 2011, but the implementation was held off for two years. Denise McCracken, a PUC spokeswoman, said the commission had two choices when it came to the area code situation. It could have split the current 570 region geographically and forced half the region to change area codes or it could just require new phone numbers after a set date to have the 272 area code. The latter option was chosen, she said, because it impacts few people. The 570 area code was established in 1998 after phone numbers were exhausted in the 717 area code that had served a large swath of Central and Northeastern Pennsylvania.

With the same situation on the horizon for the 570 area code, the North American Numbering Plan Administrator informed the state PUC of the plan in 2010 to add the 272 area code as an overlay. North American Numbering Plan Administrator is the neutral, third-party, area code relief planner for Pennsylvania. An overlay will mean that it's possible to have one area code for a home phone and another for a cellphone. Neighbors would have to dial 10 numbers whether they're calling each other or relatives in Alaska. Overlays have become more widely used over the past decade and already exist elsewhere in the state. In the Philadelphia area, 484 has been assigned within the 610 area code since 1999, and 267 has been distributed within the 215 area code since 1997. In Western Pennsylvania, the 878 area code soon will be issued in regions now served by the 412 and 724 area codes.

Bill Moore, the head of the Greater Wilkes-Barre Chamber, said the switch will be a minor inconvenience, but it will not cost companies any business. "If this were 1980, I'd say it's complicated, but now it's commonplace," Moore said. He came to this area from Connecticut, where 10-digit dialing has been mandated statewide since 2009. "Businesses have the area code on letterhead and business cards, so it won't be much of a difference to them," Moore said. For new businesses, the costs of printing materials with the phone number would have been a necessary cost anyway. In an age of cellphones, he said, 10-digit dialing is becoming the norm; and while it might be a small inconvenience, experience has shown him that people will adapt quickly. Pocono Record

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