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the national press club as outgoing national transportation safety board chair deborah herzman gives her farewell address. >> c-span, created by america's cable companies 35 years ago and brought to you as a public service by your local cable or satellite provider. >> host: and on april 22nd the supreme court will hear the case of american broadcasting companies etal v. aereo. the networks are claiming that aereo is transmitting their broadcasts without compensation and without permission. here to discuss that case and some of the technology surrounding this company is chet kanojia, ceo and founder of aereo. mr. kanojia, what is your strongest argument to the supreme court justices that you are not stealing broadcast signals? >> guest: and great start to the questions. i think all of our arguments are

extremely strong. so if you start with the basics which is everybody acknowledges that consumers have the right to an antenna, everybody acknowledges a consumer has a right to make a recording of free to air content for themselves, everybody acknowledges there is nothing wrong with a combination of an antenna and, back then, a vcr, now a dvr. so the debate seems to be about where that equipment is located because nobody has appealed the finding of facts which is that each individual consumer controls their own antenna. the antenna is dead until the consumer instructs the antenna to tune to a particular frequency. each individual consumer makes their own copy, unique, distinct, never mingled with anybody else's, and transmits it to themselves. so none of those facts have been appealed or disputed ever. so it comes down to we as a country and as a system, do we

permit this idea of private conduct which the courts have consistently found, yes, we do. and congress has been encouraging the idea of consumption of local broadcast television. so the idea that a new way of capturing this signal by an individual should somehow be prohibited is just absolutely incorrect, wrong, incorrect policy and a devastating blow to innovation in the next step of our industry which is movement of all of these technologies away from the consumer's home into the cloud. so i think these are very simple, logical, grounding, sound policy, progressive arguments. it gets a little more nuanced beyond that as well. so the idea that broadcasters have gotten the spectrum for free from the government, from

the people, their requirement, the bar gain, essentially, was to program in public convenience and interest free to the consumer, and they make billions and billions and billions of dollars with advertising. none of which is affected in this particular scenario. the idea that somehow they are entitled to compensation from people that manufacture equipment is just absolutely -- there is no basis in law, there is no basis in policy for that argument to be made with a straight face. it's pure, straight and simple preservation of a business model appeal, not legality. >> host: exactly how does aereo work? >> guest: so aereo created two really interesting technologies. one is this idea of a remote microantenna. and the reason we want them to be micro is because since they're based in the cloud, we need to make sure they are small

so we can deploy them in a cost effective manner. and second is a high density, a very high capacity dvr in the cloud. so the way the technology works, there is a connection between the antenna to dvr along with associated electronics, but the consumer has a very simple interface that says log in, establish that you were eligible to watch broadcast tv, and the reason for that is do you live in that city? do you have a domicile in that city because you could have set up your antenna, if you will. once that process is done, there's an electronic program guide where the consumer says i want to see "today show." that's when the consumer's signal is sent to this antenna, their unique antenna. the antenna changes the frequented city that particular channel is on, goes through the dv russian because the consumer -- dvr, because the

consumer wants to pause, rewind and then is rendered in front of consumer's device, and the consumer can watch it on a tablet, a phone, smart tv, a settop box applied by companies like roku and apple tv. so it's a great, simple experience. they just need internet, they don't need to pay for cable. and it fits, you know, not everybody, but some people's lifestyle, a good number of people's lifestyle very well. >> host: and you charge $8-$12 per month for this service, correct? >> guest: depending on the plan. you can either have a single antenna and 20 hours of storage, or you can have two antennas so you can watch and record at the same time, different channel, for $12. >> host: the national association of broadcasters says that aereo's ruin goldberg-like -- rube goldberg-like contrivance is a

technologically-flawed approach designed solely to circumvent the law. >> guest: i can't even begin to describe on how many levels that's absolutely wrong. it's just insane, that characterization. and let me, so let me start at the beginning of this. we designed -- so the question is why do it the way we're doing it, and i think it's a legitimate question to ask. the reason is inherently consumer expectation is they don't want to buy -- they like to buy modern equipment, an iphone, a tablet, things that do lots of different things. no consumer would want to pay for it. plus they're expensive. you have to install them, and you have to do all these complicated things. so the idea that you want to do this in the cloud is generally accepted as good, clean, progressive thinking. both from a consumer's

perspective and investor's perspective and a technologist's perspective. so you have to bring practicality into the equation. the internet doesn't have sufficient bandwidth to pump all 50 or 70 or 30 whatever number of channels have to be because each channel is give or take 9 at any time 2 megabits a second, and that's on a single household. so just for people's benefit, there is no broadcast capability in the internet. that's not how the internet is designed. so you have to move the ability to tune away from the house into the cloud, because what that allows you to do is allows a consumer to get a single stream down to their house. so once you move the tuning ability away from the house and put it in the cloud, that means you've essentially put an antenna in the cloud. whether you have, you know, one antenna -- you're just putting a loop at the end of it. there's not a whole lot of

magic. it actually simplifies high. so you start there, and that hopefully gives people a picture why the technology's architected this way. either you accept migration to the internet is inevitable, and if you do, aereo's the only rational architecture that exists. and if you don't, then the cable architecture makes complete sense, and it is what it is. second, the spectrum is such a precious resource. for them to argue that they need to continue to do what they're doing and cast aspersions at us where we've demonstrated that our antenna technology can cross low vs, high vs, uhf, any frequency band. the idea we can operate this in such a channel-packed world with all kinds of multipath interference that exists, i challenge anybody to demonstrate

a technology that doesn't work like ours that gets a reliable signal to consumers. in fact, it is a heck of a lot more rational to free up those parts of the spectrum and move to lower frequency bands because technologies like aereo will still pick it up whereas you can use 6, 700 megahertz, those ranges, for data bands which is as all we know extremely important for our progress on mobile technologies. so those are -- that rhetoric has no basis in science, has no basis in engineering. it's a bunch of people who are tied to making money the way they're making it, and they think there is a constitutionality built into their model that is irrevocable. and the sad news for them -- and i'm sympathetic to this issue because the internet is happening to everybody. all of us. whether you run a retail store or a movie studio or whether you run a car service.

it doesn't matter. the internet is happening. that connectivity is happening to everybody. the reaction to that cannot be just characterizational and slander. it should be productive business models. >> host: joining our conversation from "the wall street journal," gautham nagesh. >> thanks for having me. mr. kanojia -- >> guest: chet, please. >> chet, can you explain why it's necessary for the cable companies to pay the broadcaster retransmission fees but your company should be able to connect their signal to the internet without providing any compensation back? >> guest: so, again, the question holds so many loaded characterizations that i have to object to the question itself. first and foremost, it was demonstrated we do not sell the content. we lease technology to consumers. number two, it was also factually demonstrated that we don't retransmit, the consumer tunes their antenna and acquires the signal themselves. vast differences between cable technology which captures the

entire broadcast spectrum bland, amplifies it and pumps it on their wires. that is a classic retransmission. aereo's case, classic case of a consumer's antenna or any pick-up device remotely located. so that's just a technological difference that i think as you read the facts of the case, it becomes clear that you have to move beyond characterization, and you have to really look at the material issues underneath to understand that there are significant differences between those two. and third, as a matter of policy cable companies do not make copyright payments for in-market transmissions. in fact, even after the '76 act it took a decade or later for congress to devise retransmission must carry. the purpose of that is a cable company a franchised monopoly. it was a market balance loss for a communications -- it had nothing to do with copyright. what your question suggests is treasured be a way -- there should be a way to increase or

bring in copyright regimes and equipment manufacturers. it is unprecedented. congress has never intended to do that. in fact, there was a move to levy copyright taxes on vcrs and tapes of vcrs, and that was expressly rejected. why? because it is congress' intent and constitutionally sound for equipment providers to increase the opportunity to have copyrighted material to get to consumers better, faster, increase distribution by enabling technology that does that. and that's what we enable. >> if aereo is at its core an antenna service, why can't i buy an aereo antenna and attach it to my tablet? i believe they're very small, why must i rent one and pay a service fee to you? >> guest: because there's no restriction in which business models your allowed to execute on. in fact, i have a picture on my iphone from staples, there is an antenna that you can buy and plug into your port on your

device. absolutely, that exists. so this debate about how long the wire is doesn't make sense. we are integrating the entire technology, providing you dvr, consuming power and bandwidth on your behalf which are ongoing expenses, so logically, it makes sense for us to changer you for that relationship because we are taking care of all of those things. you no longer have to maintain that equipment as a consumer, we do. >> the broadcasters would contend it is not the antenna technology that raises the legal question, but it is the service you offer as aereo. the question then becomes, as you say, you're leasing the antenna to consumers, and then providing them -- let's say we have consumers who are watching the super bowl, and you have 100,000 consumers. are you then recording 100,000 copies as you indicated of the super bowl, and each one would be separately accessible by the consumer who is leasing it? >> guest: absolutely.

again, i think your questions aren't -- broadcasters aren't con tending that the service model somehow implicates copyright. broadcasters are contending the idea of individual performance is somehow incorrect. they are contending the idea of private performances does not exist because the argument they make, is you should be able to look at the totality of all private transmissions irrespective of when they occurred and total them up. by that measure, it doesn't really matter what business model you're in. basically, everything is a public performance because you, i'm sure, listen to a stevie nicks song. maybe not, i know i did. in our dvds or whatever that performance, that was never the business congress intended. absolutely not.

. >> guest: if one individual's antenna fails because the associated electronics failed, your screen goes be -- goes dark, and your neighbor is fine. the system detects that and says, sorry, i'm going to give you another one. >> host: chet kanojia, this seems to have been a kind of public campaign by your company to get this word out. who are you, who are you focusing on with your web site protect my antenna.org and barry diller writing a "wall street journal" editorial, one of your investors. >> guest: right. i think it's probably fair to say that the amount of inquiry we get inbound by consumers, policy folks, too many lawyer ares, -- lawyers, obviously, lawmakers or staff around materials. hey, what are the real issues. can you send us the briefs, can

you send us, you know, white papers, educate us on what this issue, what are the related issues. because it is very easy for all of us to simply say, you know, it's just about aereo. it's actually not. because the statute applies uniformly. the idea of public versus private performance and a transmission from a copy or a source to an individual means applies universeally to, effectively, every technology company that's in the business of providing communications from a distant server. generally, cloud computing industry. all of these industries are equally effective, so a lot of these folks, you know, have filed amicus briefs on our behalf and also asked for information and content including our consumers. i can't tell you how many e-mails i get that tell me stories about, you know, the money they save, why and where can they find a petition. and i keep telling them we're not there yet.

we hopefully will never be there yet. but where can they sign a petition that this is a good product, this makes sense for their family or their lifestyle. so it's really an effort to educate people and to have a central repository for information. i think barry's op-ed was really focused around -- and i think we were all very disappointed, shocked at the administration's position which is a very narrow, it wasn't the fcc, it wasn't commerce department, it wasn't state department, it wasn't anybody except the copy reich office. and, in fact -- copyright office. and, in fact, the brief was signed by the copyright office which is obviously tasked around copyright, but none of the other interests in the country where the fcc, for example be, they're responsible for consumer competition effectively speaking and making sure the public airwaves are used as they were intended to. unfortunately, it wasn't the appropriate forum for them to weigh in, but it was a very narrow view, and i think it left people with the impression that

the government is against us which is absolutely not true because there are lots of parts of government that, whose agenda lines very squarely with the direction of our, and the sensibility and the mission of our company. >> host: well, another branch of the government that's involved in this is congress and their spent by some of the laws they've passed that are related. and in the brief filed by the broadcast companies, they write: in congress' view, the public availability of broadcast does not render third parties free to build business models out of facilitating the public's access to that copyrighted content without to havization. authorization. >> guest: so none of these people, i'm assuming, watch a television because, clearly, sony built up a pretty meaningful business making money off of other people's content by facilitating access. so did the vcr, so did tivo.

these are atmosphereics. the spent has always been there is a distinction between cable companies who are monopolies and equipment providers whose job it is to build equipment that adds value to a consumer's life. now, if i was a cable company and doing this, it'd be a different story, but i'm not. i'm not technologically one, i'm not by the statutory definition, i'm not considered one by the fcc, i'm not how i operate. >> host: why not pay retransmission fees to the broadcasters? >> guest: why would we pay retransmission fees when, does any other equipment manufacturer pay retransmission fees? and, in fact, cable companies pay retransmission fees because they're monopolies. if you gave me a a monopoly on something, you know, maybe there's an obligation that comes with that. we are a competitive alternative for consumers that don't want cable, can't afford cable or

satellite or any of those. and and it's a growing number. when you raise 7%, rates by 7% a year on a compounded basis, you kind of end up at a point where a shrinking population can afford your product. >> would aereo be threatened if the broadcasters decided to offer a streaming version of their broadcast service over the internet? >> guest: i think the question is what would be the model. if the product -- and i don't want to put into context because i actually thrive on the idea of competing in a marketplace which is being educated more and more and being marketed to more and more. so it's not one guy carrying everybody's water. the question is, if the broadcasters said we are going to allow people to watch our product online without the cable bundle, i say fantastic. hallelujah. that is exactly what should happen because that's what they're designed to do, that's

what their ambition should be, that's what their obligation is. if they say you can watch a product online but only if you pay cable, which is the current philosophy, i don't see what the difference is between that and what's happening today. >> host: what if they charged directly? >> guest: great. i think if they can sustain a product and a value proposition, fantastic. consumers can have more choice. and at that point, the west experience -- the best experience, the best technology, the best marketing, the best customer care will win. and i'm happy to be in that marketplace. >> sure. so we have the supreme court case. what the, of course, i'm sure that you're confident, but what do you believe the odds are that the supreme court will find that aereo's service is permissible, and if they don't, what would your contingency plans be? >> guest: i think it'd be very inappropriate for us to speculate on what the odds are. the argument hasn't happened yet, and it's still -- nothing's, i'm sure, considerations haven't gone in.

i think, you know, somebody like me or somebody in my position it's very dangerous to speculate because you get wrapped around the axel one way or the other. the best thing you can do is prepare really well. we firmly believe in our merits, obviously, as you can tell. i think there is supportive law, there's established precedent that supports our position. there's good policy that supports our position. there are massive implications if our position isn't supported. and on the other side, there are literally no implications because the dvr has been in existence since 2008, the world hasn't ended, and 60 million people use antennas in some way, shape or form, and career will i the world -- clearly, the world hasn't ended. so this hoopla that somehow the e world is going to end if aereo continues, our business margins

are locked in for the next ten years. so i like our position, i like our alignment with the correctness for the consumer. after that, you know, that's the best you can do. after that, it's in the hands of nine what i'm confident very smart, just people. and it's going to be a matter of good advocacy to, hopefully, see our perspective. >> former senator gordon smith told me should broadcasters lose this case, that their recourse would be to yo to congress -- go to congress and ask congress to prohibit aereo service. the broadcasters do still have quite a bit of influence in washington, is that a possibility that would concern you? >> guest: look, i think the standard playbook is litigate, and if you fail, legislate. and if you fail in legislation, then figure out a good business model, right? so i'm expecting that the playbook would be played out as it's -- >> and how have your

conversations gone with people on the hill? senator rockefeller, i know, offered a video bill that would exless sitly -- explicitly allow for services like aereo to continue. do you find that viewpoint has gained traction? >> guest: we are not engaged in seeking any legislative change or influence of any kind. our goal thus far has been to educate lawmakers around what we're doing, and what i do find and i find almost universeally is when people look at the product, people say, oh, now i get it. this is so great. when are you in d.c.? and i have to tell them, unfortunately, not yet. staff all across the board, you know, a good number of them, they don't have cable. they don't make enough money to have cable. or they don't want to. their lifestyle -- they're busy people, they're doing all these different things at times. it resonates very much. now, we don't have -- i don't know what comcast spends, some 100 million, i don't know what the number is on lobbying, but

my recollection is it's a big number. we clearly don't have that, and that's not who we are, and that's not our strategy or approach. we we believe if we appeal to a decent base of consumers, these consumers will support us and something will have to get figured out. you know, i can't predict the future. but i do believe i think there is an appetite, a genuine appetite for encouraging new things, not just jabbing them over. -- squashing them over. >> host: chet kanojia, how did we get to the supreme court? >> guest: well, we didn't. [laughter] >> host: we in a generic, formal sense. >> guest: look, i suppose they wanted to have the highest court review. and, you know, we in an unconventional move agreed because of our firmness in our beliefs and more importantly as a business, this is an infrastructure company that requires a substantial amount of capital. we're changing the environment

in anticipation of what the consumer, you know, we're trying to skate where the puck's going to be from a consumer's perspective. and that requires a lot of investment, that requires a lot of execution, it requires a meaningful company to be able to do that. so in order for us to deal with all of that, it sort of made sense that if you believe in what you're doing and others have validated that including the only appellate court that's spoken on this issue, you accelerate your business by getting more clarity not for yourself, but you create a very environmental clarity so that appropriate investment, talent, all these things can get lined up. >> host: gautham nagesh, one final question. >> so i've heard someone compare aereo not to taping a program -- i believe you made the beta max comparison with that case, but that this is akin to someone taping a program on your behalf and then selling it back to you on a monthly basis. can you explain if i can buy --

i have an antenna at home, i actually purchased it last week, $20, i also have a cable subscription. where does, if aereo costs $8-$12 per month and we're talking about somewhere in the neighborhood of $70-$96 a year, where does that, is that all value created from you hosting it in the cloud, or where do you see this price proposition, and do you understand at all why the pricing aspect has raised some eyes on the hill as to aereo attempting to profit off of this programming? >> guest: i'm not aware aereo has raised any eyebrows on the hill. the only piece of bill that i recall being thrown on the floor was senator rockefeller's bill which was pretty clearly we didn't ask for it, but we're happy to acknowledge its presence. let's start, you had two or three questions in there. number one, again, no plaintiff

or no broadcaster has disputed the facts, and the facts are consumer decides what to record, consumer presses the record button. consumer makes all those decisions much like on their home dvr and records it for themselves and decides when or not to view it. so i don't understand where the parallel comes in, with the comparison that you are saying. obviously, there's somebody who doesn't want to believe facts or hasn't read the facts, and it's dangerous to speculate on these things without having a factual basis. we don't sell shows or content. whether you use aereo once or you use it 60 hours a day, it doesn't matter to us. we charge you a fee for providing the equipment. much hike tivo -- much like tivo. have you ever bought a city slow retail? >> no. >> guest: okay. if you buy without the cable