Uber and Aereo: Innovation wins


This month has been a good one for innovation. The government resisted efforts to shut down two innovative services, despite pleas from vested interests to protect their monopolies.

Uber is a new type of car service. Launched in San Francisco, it uses sophisticated algorithms to link up idle limo drivers with people needing a ride. You simply download Uber's smartphone app and punch in your location, and it will tell you how many minutes before a car picks you up. The service fills a huge gap between the randomness and frequent unavailability of taxis and the huge expense of limos, many of which require a three-hour minimum. The service has taken off quickly in every city in which it has launched.

Enter the DC Taxicab Commission, which tried to shut down Uber because it was deemed an "illegal" taxi service. The commission head authorized a sting operation and tried to intimidate Uber into leaving D.C.

After a six-month battle, which no doubt cost Uber a substantial amount in legal fees, the D.C. Council finally voted to legalize Uber (at least for 2012). Good for the council; bad for the commission and the taxi companies only interested in protecting their monopoly.

The back story is that the council got "SOPA-ed." The council was ready to help the taxi drivers protect their turf and had scheduled a vote July 10 on a proposal to make it difficult for Uber to operate in the city. But late in the day on July 9, Uber CEO Travis Kalanick asked Uber users to let the D.C. Council know how they felt. One council member said his office received 5,000 contacts in just a few hours. Given this unprecedented outpouring, the council tabled the opposition, and it now looks like clear sailing for Uber. Score one for the good guys and a green service that will cut down on the number of people who feel like they need to own cars.

Another big victory for innovation came in New York on July 11, when a federal court rejected a bid by major U.S. broadcasters to stop a service that rebroadcasts programming over the Internet. Although over-the-air television service is free (as our broadcaster friends are always announcing with such pride), many New York City residents cannot get the signals, thanks to the multitude of skyscrapers that block them. Along came Aereo, a technology and service that uses a special antenna to resend the signal. With Aereo technology, you can also get your TV signal in a wireless device.

Broadcasters sued to stop Aereo from providing the service, claiming the technology is illegal because it retransmits copyrighted content. A federal court in New York, usually a friendly place for copyright holders, refused to issue a preliminary injunction (a stop to the service) because of two other big decisions. First, the Sony-Betamax Supreme Court decision that held the VCR was a legal product even though it recorded full-length TV broadcasts. Second, a 2008 federal appellate court decision (known as the Cablevision decision) found that a cable company's centrally located digital video recorders, or DVRs, do not violate copyright law.

The Aereo decision reinforces the vitality of both of the earlier decisions and their application beyond the specific technologies they addressed. The court rejected the broadcasters' argument that those cases were limited to "time-shifting," where the consumer starts watching the recording after the broadcast is complete.

So to the plaintiffs -- the cab commission and the broadcasters -- I say let the consumers choose what they want with their wallets. Cab companies should instead consider lobbying the DC Taxicab Commission to release them from mandated cab fares, thus creating competition in the market. Meanwhile, broadcasters can't have it both ways -- keeping their spectrum and trumpeting that it is a great, free service while also forcing consumers to get broadcasts only through cable companies that must pay them fees.

Innovation is good. Choice is good. Long live a government that will allow innovation to prosper!

Gary Shapiro is president and CEO of the Consumer Electronics Association and author of the New York Times best-seller "The Comeback: How Innovation Will Restore the American Dream."

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