A nonprofit organization that provides free online access to broadcast TV stations has accused TV networks of colluding to limit access to those channels.

The nonprofit that runs Locast, the free TV service, made the allegations in an answer to a lawsuit filed by ABC, CBS, Fox, and NBC. The networks alleged in July that Locast is violating their copyrights and are seeking a permanent injunction to shut the TV service down. The Locast operator filed its answer to the TV networks' complaint yesterday and tried to turn the tables by making several counterclaims against the TV networks.

"Plaintiffs have colluded to limit the reasonable public access to the over-the-air signals that they are statutorily required to make available for free," Locast's court filing says. "[The networks] have opted instead to use their copyrights improperly to construct and protect a pay-TV model that forces consumers to forgo over-the-air programming or to pay cable, satellite, and online providers for access to programming that was intended to be free."

Locast cites nonprofit exemption

While broadcast TV networks are available for free over the air with an antenna, the networks reportedly collected $10.1 billion in 2018 via retransmission fees they charge TV providers for the right to carry those channels. The networks want to shut Locast down because free, widespread availability of their channels over the Internet would threaten their retransmission business.

The TV networks' lawsuit was filed in US District Court for the Southern District of New York against Sports Fans Coalition New York (SFCNY), the nonprofit that operates Locast, and SFCNY founder David Goodfriend.

Locast, available in 13 US markets so far, retransmits local broadcast signals via an online streaming service and detects users' locations so that each channel's stream is available only in the local broadcast area. SFCNY argued in its court filing that US copyright law "unambiguously states that retransmissions by non-profit entities do not constitute copyright infringement." Specifically, the law says that secondary transmissions are not copyright infringements if they are made by a "nonprofit organization, without any purpose of direct or indirect commercial advantage."

Locast doesn't charge users for its service but solicits donations to pay for its operation.

Locast: Broadcasters limit reach of channels

Broadcasters have deliberately made it difficult to access their channels over the air despite the US government granting them "free licenses to portions of the limited, publicly owned broadcast spectrum," SFCNY alleged.

"The broadcasters have colluded to limit practical access to the over-the-air signals by broadcasting signals that they know are of insufficient strength to be accessed by all members of the public within the relevant local geographic areas," SFCNY wrote. The broadcasters thus are not fulfilling their spectrum-license requirement "to operate in the public interest," SFCNY wrote.

The SFCNY/Locast filing continued:

This failure has led to poor quality over-the-air transmissions in many markets, forcing consumers to pay for video services that include local or national television programming, including: (i) through cable or satellite providers; (ii) online through the cable or satellite providers' authenticated video services; (iii) over-the-top streaming services offered by the broadcasters for a monthly fee (e.g., CBS All Access); or (iv) virtual pay-TV providers (e.g., YouTubeTV).

SFCNY claims that broadcasters "intentionally purchase low-end equipment even though other equipment is available for sale that could provide better over-the-air coverage," but doesn't seem to have direct evidence for this claim. The filing says that Goodfriend got this information "from a major market participant" who had in turn been given the information "by vendors of transmitter equipment."

SFCNY also wrote that networks have prohibited their local broadcast affiliates from providing online streaming of over-the-air live television broadcasts, the court filing said.

No Locast on YouTube TV

TV networks have also pressured TV providers to avoid partnering with Locast, according to Locast's filing. For example, when Locast met with senior executives at YouTube TV in April 2019, "the executives indicated that they had been told that if YouTube TV provides access to Locast, then YouTube TV will be punished by the Big 4 broadcasters in negotiating carriage agreements for other non-broadcast programming channels," SFCNY's court filing said.

Pay-TV providers have complained about the high cost of retransmitting broadcast TV channels and could benefit from an expansion of Locast service. Locast received a $500,000 donation from AT&T but says the TV networks pressured others to refrain from donating.

In addition to filing "a sham copyright infringement claim" against Locast, networks have been "threatening business retaliation and baseless legal claims against any current or prospective donors, supporters, or business partners of Counterclaim-Plaintiffs," Locast claimed. Cable company RCN "committed to donating $750,000 to SFCNY" but later decided not to because of "intimidation from the broadcasters," SFCNY claimed.

The TV networks argue that Locast isn't eligible for the nonprofit exemption under copyright law because it has "commercial purposes." The networks' evidence for this is AT&T's $500,000 donation and the fact that Goodfriend is a paid lobbyist for Dish. SFCNY says it hasn't received any funding from Dish.

SFCNY accuses the TV networks of conspiracy in restraint of trade and other violations of competition laws and seeks financial damages and an injunction that would prevent the networks from continuing their copyright infringement lawsuit. "Plaintiffs' litigation is meant to intimidate Defendants into shuttering the Locast service—and should that strategy not work, to bury Defendants under costly and needless litigation," SFCNY wrote.

The law firm representing broadcast networks in the case contacted Ars with the following statement responding to the Locast filing: