For the third time, legal action from the four largest commercial television networks to shut online streaming service Aereo has been denied.

In a 10-2 decision, with one recusal, the 2nd Circuit Court of Appeals denied an attempt to re-hear the case by the full appellate court.

Following disposition of this appeal on April 1, 2013, Plaintiffs-Appellants filed petitions for rehearing in banc. An active judge of the Court requested a poll on whether to rehear the cases in banc. A poll having been conducted and there being no majority favoring in banc review, rehearing in banc is hereby denied.

Circuit Judge Denny Chin strongly dissented from the majority’s decision, joined by Circuit Judge Richard C. Wesley. Chin firmly took the side of the broadcasters, fearing if Aereo was permitted to continue operating, it could quickly mean the end of free over-the-air television. He believes the service exists only because of a precarious loophole:

“The majority’s decision elevates form over substance. It holds that a commercial enterprise that sells subscriptions to paying strangers for a broadcast television retransmission service is not performing those works publicly. It reaches that conclusion by accepting Aereo’s argument that its system of thousands of tiny antennas and unique copies somehow renders these transmissions “private.” In my view, however, the system is a sham, as it was designed solely to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law….”

Just about every over-the-air network and major station in the New York City area is opposed to Aereo. Among those filing suit against its continued operation:

• Networks: ABC, CBS, NBC, FOX, PBS, Univision, and Telemundo
• Stations: WNET, WPIX, WNJU

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Barry Diller, the force behind Aereo, tells Bloomberg News he expected to get sued when he provided viewers with an alternate way to watch television. Diller says networks and stations are simply uncomfortable with change and that Aereo poses no threat to them. (3 minutes)

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Bloomberg Industries director of North American research Paul Sweeney looks at Aereo’s impact on television broadcasters and how it could eventually threaten their revenue streams. He speaks on Bloomberg Television’s “In The Loop.” (2 minutes)

Time Warner Cable won’t engage in an expensive bidding war for ownership of Hulu so it is trying to convince the online video venture’s current owners not to sell.

Sources tell Bloomberg News the cable company has offered to buy a minority stake in the online video streaming service alongside its current owners, which include Comcast-NBC, Fox Broadcasting, and Walt Disney-ABC.

If Hulu accepted the offer, the other bidders’ offers may not even be entertained.

Among those filing binding bids/proposals with Hulu as of the July 5 deadline:

• DirecTV, which reportedly wants to convert Hulu into an online companion to its satellite dish service for the benefit of its satellite subscribers;
• AT&T and investment firm Chernin Group, which submitted a  joint bid, presumably to beef up online video options for U-verse customers.

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Bloomberg News discusses how the various bidders for Hulu would adapt the service for their own purposes. It’s all about bulking up online video offerings.  (4 minutes)

Hulu’s new owners could continue to offer the service much the same way it is provided today, with a free and pay version. But most expect the new owners will throw up a programming “pay wall,” requiring users to authenticate themselves as a pay television customer before they can watch Hulu programming. If Time Warner Cable acquired a minority interest and the current owners stayed in place, Time Warner Cable TV customers could benefit from free access to certain premium Hulu content, now sold to others for $8 a month. That premium content would presumably be available to U-verse customers if AT&T emerges the top bidder, or DirecTV could offer Hulu to satellite subscribers to better compete with cable companies’ on-demand offerings.

Hulu’s influence will be shifted away from broadcast networks and more towards pay television platforms regardless of who wins the bidding. That could end up harming the major television networks that provide Hulu’s most popular content. Many of Hulu’s viewers are cord-cutters who do not subscribe to cable or satellite television. Placing Hulu’s programming off-limits to non-paying customers could force a return to pirating shows from peer-to-peer networks or third-party, unauthorized website viewing.

Online video rights are so important to cable operators and upstarts like Intel, which wants to launch its own online cable-TV like service, providers are willing to pay a premium for streaming rights.

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Richard Greenfield, analyst at BTIG, and Scott Galloway, chairman and founder of Firebrand Partners, discuss Hulu and the ability to stream on multiple platforms. They speak on Bloomberg Television’s “Bloomberg Surveillance.” (4 minutes)

The Los Angeles Times reports that pay TV distributors are in a rush to make deals, not only to offer more viewing options for customers, but to potentially get rid of expensive and cumbersome set-top boxes.

Interlopers like Intel, Apple, and Google who want to break into the business have not had an easy time dealing with programmers afraid of alienating their biggest customers. Even DirecTV, which has done business with some of the largest cable networks in the country for well over a decade still meets some resistance.

Acquiring Hulu could be an important part of DirecTV’s strategy to develop the types of services satellite TV has yet to manage well. On-demand programming is no easy task for satellite providers. But if DirecTV acquired Hulu, satellite customers could find DirecTV-branded on-demand viewing through the Internet. The Times speculates DirecTV could even build an online subscription service for subscribers who don’t want a satellite dish, receiving the same lineup of programming satellite customers now watch.

Distributors that acquire enough online streaming rights could even launch virtual cable systems in other companies’ territories, potentially pitting Comcast against Time Warner Cable, but few expect cable operators to compete against each other.

Free TV? Not quite.

Despite offering free over-the-air television, ABC is putting its programming and stations behind a new paywall that can only be breached by “authenticated” cable and AT&T U-verse subscribers able to prove they already pay to watch.

Watch ABC is the television network’s contribution to the cable industry’s “TV Everywhere” project that offers online viewing options for current cable television subscribers.

Watch ABC now offers on-demand and live viewing of programming aired by the network and six network-owned television stations both at the desktop and through apps for iOS, Android, and the Kindle: New York City’s WABC-TV, Philadelphia’s WPVI, Los Angeles’ KABC, Chicago’s WLS, San Francisco’s KGO, and Raleigh-Durham’s WTVD. (Coming soon: Houston’s KTRK and Fresno’s KFSN.)

During the “online preview,” ABC permitted online viewers within confirmed coverage areas to watch the station nearest them for free. Now, viewers will also have to confirm they are paying cable or AT&T U-verse customers to watch online.

But even then, not everyone will qualify. ABC only has streaming authentication agreements with AT&T U-verse, Cablevision, Charter, Comcast, Cox Communications, and Midcontinent Communications. Watch ABC is currently off-limits to everyone else, including customers of Verizon FiOS, Time Warner Cable, and both satellite services.

ABC has also banned IP addresses known to be associated with anonymous proxy servers. This measure is designed to enforce geographic restrictions to be sure only local viewers can get access to the station in their area.

By this fall, ABC affiliates owned by Hearst are expected to also join Watch ABC’s paywall system.

ABCNews.com announced an experiment with a paywall in the summer of 2010. It never came to fruition.

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WPVI in Philadelphia turned over airtime during its evening newscast to self-promote the new ‘Watch ABC’ app and explain how it works. Effective now, it only works with preferred partner cable companies and AT&T U-verse. (Aired: May 14, 2013) (2 minutes)

Cox Communications has found a new way to target cord-cutters and sell television service to its broadband-only customers reluctant to sign up for traditional cable television.

flareWatch is a new IPTV service delivered over Cox’s broadband service. For $34.99 a month, customers participating in a market trial in Orange County, Calif. receive 97 channels.  About one-third are local over the air stations from the Los Angeles area, one-third top cable networks, and the rest a mixture of ethnic, home shopping, and public service networks. Expensive sports channels like ESPN are included, but most secondary cable networks typically found only on digital tiers are not. Premium movie channels like HBO are also not available.

The service is powered by Fanhattan’s IPTV set-top box. Cox offers up to three “Fan TV” devices to customers for $99.99 each.

flareWatch’s channel lineup in Orange County, Calif.

The service is only sold to customers with Preferred tier (or higher) broadband service and is being marketed to customers who have already turned down Cox cable television.

What Cox reserves for the fine print is an admission the use of the service counts against your monthly broadband usage allowance. Preferred customers are now capped at 250GB of usage per month. While occasional viewing may not put many customers over Cox’s usage caps, forgetting to switch off the Fan TV set-top box(es) when done watching certainly might. flareWatch also includes another usage eater — a cloud-based DVR service. Cox does not strictly enforce its usage caps and does not currently impose any overlimit fees, but could do so in the future.

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Cox’s brief promotional video introducing flareWatch. (1 minute)

Cool… usage capped.

Cox spokesman Todd Smith described the introduction of flareWatch as a “small trial,” and that “customer feedback will determine if we proceed with future plans.”

The service is clearly intended to target young adults that are turning down traditional cable television packages. Most of those are avid broadband subscribers, so introducing a “lite” cable television package could be a way Cox can boost the average revenue received from this type of customer. It may also serve as a retention tool when customers call to disconnect cable television service.

The MSO is selling flareWatch at five Cox Solutions stores in Irvine, Lake Forest, Rancho Santa Margarita, and Laguna Niguel.

Customers (and those who might be) can share their thoughts with Cox about flareWatch by e-mailing [email protected] and/or [email protected]. Stop the Cap! encourages readers to tell Cox to ditch its usage cap, and point out the current cap on your Cox broadband usage is a great reason not to even consider the service.

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The Verge got a closer look at the technology powering flareWatch back in May. Fan TV could be among the first set-top boxes to achieve “cool” status. Unfortunately, technical innovation collides with old school cable company usage caps, which might deter a lot of Cox’s broadband customers from using the service.  (4 minutes)

Time Warner Cable subscribers in New York and New England are receiving letters notifying them their local public access, educational, and government (PEG) channels are being removed from the analog television lineup and switched to a digital-only format.

Time Warner Cable is moving towards a higher quality, digital only experience to provide better picture and sound, more HD channels, and more robust Internet speeds. Delivering channels in digital format is one way we continue to improve the quality of our service.

Starting on or about July 23, local Public, Educational, and Government access programming will be delivered in digital format only. These channels will remain in your existing package, however they will only be viewable with digital equipment, such as a TWC supplied digital set-top box, Digital Adapter or CableCARD.

If you want to view these channels on a TV without digital equipment, you may request Digital Adapters and remote controls free of charge through Sept. 23. Beginning Jan. 1, 2015 each Digital Adapter will cost 99 cents a month.

Time Warner has since had to stress the forthcoming changes will not affect local public television (PBS) affiliates.

QAM-capable sets will be able to continue accessing the channels, although Time Warner provides only basic information about how to find them. If customers want a Time Warner technician to install a Digital Adapter, there is a fee of $39.99.

Time Warner Cable is not following other cable operators that have switched most of their channels to digital-only service. Instead, it is gradually moving a handful of channels at a time and moving others to a bandwidth-saving “Switched Digital Video” format that only delivers certain networks in neighborhoods where those channels are actually being watched. Unfortunately, SDV technology is not currently compatible with Time Warner’s Digital Adapters, so customers without full-featured digital set-top boxes will still lose more than a dozen channels on older sets.