One of the factors that is jacking up the price of cable TV is the retransmission fees paid to local networks. Cable companies pay hefty fees to local ABC, CBS, FOX, and NBC affiliates in order to carry the stations on a cable system. A decade ago this right was mostly granted for free, but cable companies now typically pay $12 to $15 per month per customer to carry the local network stations.
Locast has found an interesting way to put local networks on the Internet without paying the local retransmission fees. They have launched their service in New York, Philadelphia, Boston, Washington DC, Baltimore, Chicago, Houston, Dallas, Sioux Falls, Denver, Rapid City, Los Angeles, and San Francisco.
Locast is taking advantage of a loophole in the law that allows ‘broadcast translators’ to receive and transmit a local broadcast TV signal without a copyright license. In the US, a broadcast translator was traditionally a relay station that would receive TV signals from an antenna and then retransmit the signal to an area that couldn’t receive the signal. There are always places in and around cities that are in radio ‘holes’ that can’t get a signal, similar to dead areas for cellular coverage. Further, it’s common for folks living in areas with a lot of high rises to not be able to receive local TV through the air without access to rooftop antennas.
A law passed by Congress in 1976, 17 U.S.C. 111(a)(5), allows for a non-profit organization to make a secondary transmission of a local broadcast signal as long as the non-profit doesn’t receive any ‘direct or indirect commercial advantage’ from the process. Non-profits are allowed to charge a fee that allows them to recover actual and reasonable costs, but no more.
Locast is a non-profit that is operated by the Sports Fans Coalition NY, another non-profit that has been fighting to make sure that New York City residents can see local sports over the air. For example, the organization has fought to modify the blackout rules enforced by many major league sports.
In New York City the organization puts 14 local stations on the Internet that includes the major networks. Customers of the service receive the channels along with a traditional channel line-up for the local channels. Locast claims the service is of huge benefit in the city since there are many households who cannot receive signals over-the-air with access to roof-top antennas.
Locast also paints itself as being of benefit to local stations. They geofence each city and only make the internet feeds available to those that can verify they live in the specific metropolitan area. Locast says that they are reaching cord cutters and are providing benefit to local stations because they provide feedback of what people are watching. This gives stations verifiable ‘eyeballs’ that can be counted when selling advertising. Stations are otherwise not seeing any financial benefit from cord cutters.
Locast solicits donations – with the base suggested amount of $5 per month. Viewers are not required to donate, but reviews say that those that don’t donate are interrupted regularly asking for a donation.
It’s an interesting model. A few years ago, Aereo tried to do something similar and was selling low-cost access to local stations through a technology that beamed the signal directly to each viewer. The broadcasters hounded Aereo in court until they finally forced them out of business.
The interesting difference here is the non-profit loophole. It’s a little surprising that Locast hasn’t yet been sued, having started this business in early 2018. They admit on their website that they expect at some point to get sued. But perhaps they won’t get sued if the local stations see the benefit – Locast claims that some stations in Philadelphia are actively working with them since they bring verifiable customers and tracking of views.