Locast, like Aereo and Ivi before it, has ceased streaming local, over the air television signals on a non-profit basis after a New York federal court judge ruled the service is violating U.S. copyright law by receiving more funding than it needs. But in developments this afternoon, there is word an appeal is planned.

Since January 2018, Locast has attempted to provide its service legally by operating as an independent “translator service,” extending streams of over-the-air signals to viewers within the acknowledged viewing range of the stations. Locast used geofencing technology to block more distant viewers, and sought support for its service with a suggested contribution of $5 a month. Non-paying viewers were nagged with donation request messages that interrupted each stream every 15 minutes.

Despite its limited service areas, Locast amassed over 3 million regular users in its 36 served TV markets over the last three years. That growth represented a threat to lucrative retransmission fee revenue collected by TV station and network owners, who promptly sued Locast in federal court in 2019. A part of that lawsuit was decided Tuesday in favor of the broadcasters.

Judge Louis L. Stanton rejected Locast’s claim it was exempt from Section 111 (a) (5) of the U.S. Copyright Act, which allowed it to stream over the air signals without getting permission from those stations in advance. That section of the Copyright Act was designed to provide a loophole for independent non-profit translator stations, which in some rural areas pick up difficult to receive TV stations and rebroadcast them locally on other channels. Some of these translator operations existed before the days of cable and satellite television, and well before the internet as we know it ever existed. But many of these services were provided through low-power transmitters operated inside large apartment complexes or hotels for the enjoyment of tenants or guests. The Copyright Act allowed groups to retransmit TV signals as long as they lacked “direct or indirect commercial advantage” and did not charge viewers in excess of the “actual and reasonable costs of maintaining and operating the secondary transmission service.”

What got Locast in trouble with the judge is the fact the service nagged viewers to make $5 donations if they wanted the nagging messages to end, and those contributions delivered healthy revenue to Locast of $4.51 million in 2020, while the costs to provide the service were just $2.43 million that same year.

“On those undisputed facts, in 2020 Locast made far more money from user charges than was necessary to defray its costs of maintaining and operating its service,” Judge Stanton wrote. Stanton also rejected arguments that excess revenue was used to expand Locast into new markets, claiming the law was quite clear limiting charges only to the “actual and reasonable costs” incurred providing the service, not for expanding it. Stanton ruled Locast could not charge viewers to raise funds to expand into new markets. Had Judge Stanton accepted Locast’s argument that it was pouring excess revenue into expanding its service, not to make a profit, the broadcaster’s legal case could have been seriously weakened and Locast would have continued operating pending the final disposition of the lawsuit.

Instead, perhaps bowing to the court’s judgment that Locast’s contribution system was hampering its case, last evening Locast notified users it was suspending requests for contributions aired every 15 minutes, and hoped supporters would continue contributions anyway. But early this morning, Locast went further and announced the immediate suspension of its video streaming service.

In an e-mail to supporters, Locast announced:

We are suspending operations, effective immediately.

As a non-profit, Locast was designed from the very beginning to operate in accordance with the strict letter of the law, but in response to the court’s recent rulings, with which we respectfully disagree, we are hereby suspending operations, effective immediately.

Thank you.

Judge Stanton

The Electronic Frontier Foundation (EFF), which has supported Locast with legal assistance in this case, criticized the judge’s ruling.

“We are disappointed that the court ruled against Locast on its copyright defense,” the EFF said in a statement. “The court interpreted the law in an artificially narrow way. Congress wrote copyright’s nonprofit retransmission exception to make sure that every American has access to their local broadcast stations, and expanding access is exactly what Locast does.”

The EFF said Judge Stanton’s ruling may not be the end of Locast, however.

“Locast has decided to suspend its operations. The case will continue, likely including an appeal, to resolve the remaining issues in the case. The problem remains: broadcasters keep using copyright law to control where and how people can access the local TV that they’re supposed to be getting for free,” a lawyer at the EFF said in a statement.

Theoretically, Locast could be restructured to spin off each of its markets into independent non-profit entities responsible for raising funds to maintain current operations and possibly be found “legal” under the U.S. Copyright Act provisions. New markets could be launched independently as well, starting with fundraisers to launch the service and then additional fundraising to maintain each operation.

Any legal appeal would likely be based on Stanton’s determination that “expansion” was disallowed under the Copyright Act, even though most non-profit entities raise funds to expand their operations all the time.

But for now, Locast will likely remain dark until the remaining legal issues are settled or determined.

A small sample of Locast’s program guide for Phoenix viewers.

Internet customers in Phoenix and Atlanta can now watch local, over the air TV stations for free thanks to Locast, a not-for-profit streaming TV service that is fighting the escalating costs of online streaming of network and local television programs.

That brings a total of 15 cities to the Locast roster, and the service has also expanded the number of stations it streams in many of its existing markets to include additional digital sub-channels it neglected previously.

Locast geofences its service, requiring viewers to allow Locast to verify location data proving a viewer is within a Locast service area. That is an effort to comply with current copyright law, which allows Locast to operate as a local relay service. That has not stopped a coalition of TV networks from suing Locast, claiming it violates that copyright law and is only masquerading as a non-profit organization. The lawsuit cites Locast’s increasingly aggressive fundraising messages found on its app and as a pre-roll streaming message each time a viewer switches channels. Some viewers claim the only way to get rid of those messages is to enroll as a donor member and contribute several dollars a month to the service.

Locast says it uses contributions to bolster its legal defense fund and also acquire equipment and resources to launch the service in new cities. Locast officials claim they will eventually launch in all 210 TV markets if contributions are adequate to cover the costs.

Locast carries all major network affiliates, independent and PBS stations, and most ethnic language and general interest sub-channels. Some religious stations are also included, but most home shopping channels and those dedicated to airing paid commercial programming 24/7 are omitted. In Atlanta, Locast carries nearly three dozen local channels. In Phoenix, 40 stations are available.

Locast does not offer time-shifting DVR service or on-demand programming. It relies entirely on live streaming, but offers viewers an on-screen program guide.

As more paid streaming services debut, consumers have signaled they are increasingly willing to pirate their favorite shows and movies to save money.

A new survey conducted by Broadband Genie found the percentage of consumers willing to evade TV paywalls will double if content continues to be scattered across multiple streaming platforms.

Although the survey was confined to UK consumers, North Americans are also getting frustrated with the number of subscription services that are launching, because many of those same services are also responsible for removing content from popular services like Netflix. Consumers will need to subscribe to the new service to get that content back.

Like in North America, Netflix and Amazon Prime Video are the most popular paid streaming services in the United Kingdom, partly because they maintain very deep content libraries with thousands of movies and TV shows. But with content balkanization now underway, more and more customers are finding their favorite shows are no longer available on those platforms. At least 30% of UK consumers report one or more shows they want to watch are now only available from a service to which they do not subscribe.

“As more legal services have exclusive releases, it’s harder for people to get everything they want from one place,” Ernesto van der Sar of TorrentFreak told Broadband Genie. “Instead of signing up for paid subscriptions at a handful of services, which may go beyond one’s budget, some then turn back to piracy.”

At least 48% of those surveyed reported their single biggest frustration with streaming services is the growing number of them and their combined cost. About 37% indicated they were now willing to get content for free from unauthorized websites or file sharing networks that violate copyright law.

Many consumers report their budget for streaming television is already straining, yet almost a half-dozen new services are yet to launch, each priced between $7-15 a month. Recent price increases by Netflix and live TV streaming providers also complicate matters. Netflix’s own subscriber numbers are under stress after their latest price hike, which may signal a price ceiling. If content becomes too expensive or difficult to access, increased piracy will probably result.

Locast, the not-for-profit cooperative that has successfully streamed local, over the air stations without running afoul of copyright law and attorneys, has announced a big expansion into the cities of Los Angeles, San Francisco, Sioux Falls and Rapid City (South Dakota).

The free, donation-supported service now covers (in addition to the aforementioned) New York City, Philadelphia, Boston, Washington, D.C., Baltimore, Chicago, Houston, Dallas, and Denver.

In each city, Locast streams all the major network stations, almost all independents, some low power outlets, and a host of digital sub-channels featuring digital multicast networks like MeTV, Grit, Comet, and many others. It skips home shopping outlets and some minority language stations. Viewers get a program grid to know what to watch, and picture quality is generally very good to excellent.

Locast has staked its position as a “virtual translator” operation. FCC rules allow independent groups to pick up and rebroadcast television stations without the permission of the stations involved, as long as the operation is not-for-profit:

Before 1976, under two Supreme Court decisions, any company or organization could receive an over-the-air broadcast signal and retransmit it to households in that broadcaster’s market without receiving permission (a copyright license) from the broadcaster. Then, in 1976, Congress passed a law overturning the Supreme Court decisions and making it a copyright violation to retransmit a local broadcast signal without a copyright license. This is why cable and satellite operators, when retransmitting a broadcast signal, either must operate under a statutory “compulsory” copyright license, or receive permission from the broadcaster.

But Congress made an exception. Any “non-profit organization” could make a “secondary transmission” of a local broadcast signal, provided the non-profit did not receive any “direct or indirect commercial advantage” and either offered the signal for free or for a fee “necessary to defray the actual and reasonable costs” of providing the service. 17 U.S.C. 111(a)(5).

Sports Fans Coalition NY is a non-profit organization under the laws of New York State. Locast.org does not charge viewers for the digital translator service (although we do ask for contributions) and if it does so, will only recover costs as stipulated in the copyright statute. Finally, in dozens of pages of legal analysis provided to Sports Fans Coalition, an expert in copyright law concluded that under this particular provision of the copyright statute, secondary transmission may be made online, the same way traditional broadcast translators do so over the air.

For these reasons, Locast.org believes it is well within the bounds of copyright law when offering you the digital translator service.

Earlier efforts to stream over the air stations without the permission of the networks or stations involved quickly resulted in lawsuits and eventual forced closedowns. Locast is the exception, at least so far, having launched first in New York City in January 2018. Since that time, no lawsuits have been filed against the service despite its rapid expansion.

Locast suggests viewers donate $5 a month to help cover its costs and is soliciting donations to launch in more cities. Currently, Seattle, San Diego, Alexandria, La., and Albany, N.Y. are the top contenders.

The service is geofenced, so only those present in a Locast-serviced city can access the service.