Intel Eyes Web TV As Aereo Turns Legal Screws On Networks [Docs]

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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. (No idea what I’m talking about? More here.) The point is that Aereo’s case stands to be a big one. Given what’s at stake, this will probably take a long time to resolve, and could travel all the way up the high courts in appeals, etc. But, given the RecordTV and Optus decisions, there are certainly precedents working in favor of Aereo.

Aereo only filed one suit today, but a company spokesman said that the “second filing will happen in due course.” So, again, it’s clear, this battle is just heating up. Well, not only that, Diller and company want swift resolution, as the IAC CEO is already saying that he expects the service to be in 75 to 100 cities within a year. A bold statement even if it’s not likely to hold true; either way, all those wanna-be cord cutters out there should be paying attention.

Here’s Aereo’s official statement:

Aereo’s business rests on three very well established legal principles: the consumers’ right to access broadcast television, their right to record unique copies of broadcasts for personal use and their right to use remotely located equipment to make their private copies. We firmly believe that Aereo’s technology is lawful. We are confident in the legal process, and we look forward to a prompt resolution of these meritless lawsuits.

Lawsuit below: