Diller On Aereo: ‘We Do Not Resell Anything’

Testifying before a Senate panel today, Internet mogul Barry Diller defended Aereo, a online video service that distributes local TV broadcast signals to paying subscribers. He told lawmakers that Aereo allows a consumer to access “the over-the-air content to which they are all entitled.”

Diller was a key witness at a Senate Commerce Committee hearing convened to examine the future of television and the growing migration of video from traditional TV outlets to the Internet.

Diller is chairman and senior executive of  Expedia and TripAdvisor as well as IAC/InteractiveCorp., whose e-commerce investments include Ask.com, Match.com and Citysearch. He is an investor in Aereo. Diller is best known to broadcasters as the executive who started the Fox network 25 years ago.

Launched in February, Aereo picks up broadcast signals off the air using tiny antennas and then makes them available for reception on smartphones, tablets and desktops. The service costs $12 a month and includes an online DVR.

Broadcasters promptly sued Aereo, claiming it violates their copyrights in redistributing their programming without permission or compensation.

During the hearing, South Carolina Republican Sen. Jim DeMint asked Diller, “What would you think of Aereo, if you were still in the broadcast business?”

Replied Diller: “I would do what every broadcaster has done since the beginning of broadcasting to protect their arena and do anything to prevent anyone else from getting into that arena.’’

However, the Internet executive also said he would recognize that part of being a broadcaster was “receiving a free license and in return you program in the public interest.’’

Said Diller: “Aereo is a technology that simply allows a consumer to get what was the quid pro quo for a broadcaster receiving a free license.’’

But DeMint didn’t let it go, asking Diller if Aereo is selling network subscriptions or reselling content.

“We are not reselling anything. What we have is a technological platform,” Diller replied.

The senator then asked if Aereo were a network that people can subscribe to.

“No it’s not a network. You have this antenna and it is one to one. It is not a network. It is a platform simply for you to receive over the Internet broadcast signals that are free and to record them and use them on any device you like,’’ he said.

Furthermore, he said, “We do not resell anything. We charge consumers for the infrastructure that we put together, for the little antenna and for our DVR cloud service. We don’t charge for programming that is broadcast for free. The local broadcasters send a signal out and we provide an antenna to receive it and put it over the Internet and allow people to record it.’’

Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) wanted to know if Diller thought online video would completely replace pay television.

The former broadcaster said he thought online video would not replace pay TV but would become a “supplement.’’

Diller told the Senate panel that Intenet TV can give viewers more choice. “There’s no closed pipe. It gives the ability to offer individual programs, or discrete packages or the narrowest of narrow casting,” he said.

He also suggested that Congress “keep a most watchful eye’’ as the online video marketplace develops. He said he thinks the 1996 Telecommunications Act will soon need to be rewritten to take the Internet into account. However, any regulation of online video should be a “light touch,’’ he said.

Although, he also said, applying the “legacy obligations’’ of broadcasting and cable to the Internet should not be that problematic.’’

Diller also complained that the U.S. does not have a first-rate broadband infrastructure. “All the efforts to free up spectrum should be mandated for the widest broadband coverage,” he said.

“It would be nice if enough spectrum is offered and enough bidders bid it up and then they bash each other in competition,” he said. “The potential then is for transmission rates to be lowered. That would be a good thing.”