[NYDutch]

DISH's breakout is a national rate. It costs the same for locals in NY and LA where there are multiple channels to uplink as it does in smaller markets where there are only five or six channels to carry, That does not show the cost of the locals on a per market basis. We can see what we are paying DISH for the locals but we cannot see what DISH is paying the stations for carriage rights.

The breakout has provided DISH the same benefit Xfinity and other providers have ... the ability to advertise a lower price. In DISH's case it is legal for them to make locals optional. Although they are required to offer carriage to all local stations in all markets, they are not required to force their customers to subscribe to local channels. They are required to sell the locals as a group (can't sell Sinclair separate from Gray separate from Tenga). Due to "lifeline service" laws passed decades ago, cable companies ARE required to force their customers to subscribe to local channels.

Neither cable or satellite are required to accept any carriage deal offered by a station that chooses "consent to carry". The station could request a penny per subscriber per year and could be refused carriage if the cable/satellite company does not want to pay. Based on industry reports it is more likely that most network stations are charging over $1 per month and looking to raise that fee as high as the market will bear. When a carriage agreement cannot be reached or expires carriage ends.

I *HOPE* that stations are not getting paid for DISH customers who opt out but I can see the major conglomerates asking for such a fee. Most stations do not care whether or not their signal reaches the subscribers - they just want to be paid for those subscribers so asking for a fee based on the total number of DISH subscribers in a market instead of the number of local channel subscribers in a market would not surprise me.

I noted just above your post that the price broken out was the subscriber price, not the actual per station costing. I'd think Dish would not offer the locals opt-out option if they still had to pay the stations for those subscribers since there would be no benefit to Dish, just a loss of revenue.

 

[NYDutch]

"Court Ruling Against Locast Gets the Law Wrong; Lets Giant Broadcast Networks Control Where and How People Watch Free TV"

Court Ruling Against Locast Gets the Law Wrong; Lets Giant Broadcast Networks Control Where and How People Watch Free TV

 

[NYDutch]

Streaming service Locast permanently barred from operation

Appeals to follow...

 

[NYDutch]

It would probably be best to stick with the facts of the case and not get to far into wild speculation.

Locast charged a fee to provide uninterrupted service for a period of time. That was the deal subscribers accepted when they made their payment/commitment. Locast subscribers (yes, subscribers) who were cut off before the end of the period of time they paid for would have every right to be annoyed that they did not get what they paid for. It was a fee for service. Subscribers were able to pay more than the required base fee for service (call that a voluntary donation) but the base minimum donation required to unlock the service was a fee for service - and income from that fee, by law, could only be spent on the service.

And that's where things get a bit foggy. The subscribers paying the minimum $5/month in served areas could be considered as paying a fee for service, but the excess donations over that, including donations like the reported half-million from AT&T and whatever other large donations they received, including those donations received from unserved areas, would rightfully be donations and outside the stipulations of the copyright law exemption. I don't know if Locast needs better lawyers or better accountants for the appeals...

 

[NYDutch]

This has been a glacier slow process. It took years from Locast's launch until the suit led to the permanent injunction. It could take years for process to be reversed - and I'm not sure it can be. (The EFF believes it can.) Can a permanent injunction be lifted or would it take congress writing a law that would allow the injunction to be lifted under certain circumstances that Locast could actually meet?

A permanent injunction can be removed or changed at any time by the issuing judge on petition by either party or by a date set in the original order. A higher court can also overturn the original ruling on appeal which would have the same effect of course.

 

[NYDutch]

That is kind of where I was going with my comment. In addition to the legal mess that Locast is already involved in, Locast may very well have to fight a class action lawsuit from their own subscribers. It seems to me that it would be in Locast's best interest to at least offer a refund to any donor who wants one, whether or not Locast is actually required to do so.

Now, back to the discussion about what portion of the fees collected was a service fee, and what portion was a voluntary donation. Before I get to my point, I would like to discuss the reason why I chose an annual subscription. Locast charged a $0.50 payment processing fee for every payment made to them. So, why pay a total of $6 per year in extra fees ($0.50 x 12 months) when I could get an entire year for the same monthly fee ($60 / 12 = $5 per month) and only pay a total of $0.50 extra? I chose to save the $5.50 per year.

So, I would argue that the first $0.50 processing fee paid by any subscriber per year (12-month period of service) would still count as a service fee, since that was part of the bare minimum payment required to activate service in the first place. Any additional payment processing fees paid by monthly subscribers throughout the year would count as voluntary donations, since Locast did give the option to avoid those fees by pre-paying for an annual subscription.

Therefore, that payment processing fee was an additional source of revenue that could legally be spent on expanding their service, or any other operational expenses that are not directly related to delivering service. I just thought I would throw that out there as an idea, to see if it sticks.

Given that Locast/SFCNY is a 501(c)(3) non-profit soliciting tax deductible donations per the IRS, I think a reasonable case could be made that any money received beyond the actual expenses incurred for the service per the recent court determination are in fact donations. Since the court made no determination as to how much of each donation was ruled to be a fee for service, any excess money beyond the actual service already received would not be refundable on that basis. SFCNY could decide to offer refunds of course, but that would be voluntary with no legal requirement in my opinion.

 

[NYDutch]

It appears that Locast/SFCNY considered ALL payments to be donations. "In the meantime, in order to keep Locast up and operating, we're asking users to contribute once a month about what it costs to get a Starbucks Caramel Macchiato. They can do so, or, they can contribute nothing and sit through our corny contribution requests. The choice is theirs."

The IRS confirmed Locast's "501(c)(3)" status, but they do not regulate copyright law. Locast had "outside counsel" confirm that interrupting programming was permissible. "Section 111(a)(5) expressly contemplates the "assessment" of some charge to cover some or all of the cost associated with running a translator service. That is exactly what we're doing." Where the court disagreed was where the "assessment" exceeded the cost associated with running a translator service. (Locast's explanation can be found here.)

As for the 50c processing fee, that went to their payment processor (Recurly) and not Locast. Those paying monthly instead of annually were giving additional fees to the payment processor, not Locast.

Yes, Locast did consider all payments to be donations in accordance with the IRS determination. All I was saying in relation to Crodrules post regarding refunds, is that if the court determined that the income used to support the service was fee for service rather than donations, then all payments received above and beyond that already used to operate the service could be considered donations, and not subject to refunds. Whether SFCNY has any moral or ethical obligation to offer refunds is a different issue.

 

[NYDutch]

Isn't that entirely the question at issue here? Sticking to the facts of the case, there has been a court ruling that Locast has violated the law. (Not a ruling from the Supreme Court, and one that is still in the process of being reviewed for a possible appeal.) Nothing is final yet. Locast may still solicit donations for other purposes, just not for the purpose of providing a streaming service while the injunction is in effect, correct?

And that gets to my point about the time frame in which Locast must spend that fee for service (assuming they can / could do so legally). Was the entire payment for an annual subscription required to be spent toward the service at the time when the payment was received? Was any payment above and beyond the service fee for the current month of service considered a donation? Or could that payment be put in a fund to cover the future delivery of service, as the subscriber had intended? Then the question becomes what happens to the portion of that fund that covers service that has not been delivered, and now cannot be delivered? If Locast cannot legally spend that fund on anything other than providing service, then doesn't that payment need to be refunded? Or is the answer "Locast broke the law when they collected that payment, so they can continue to break the law by spending that money (collected for service) on anything they wish"?

At the time you made the donation, and yes, lacking a court ruling at the time, you considered it a donation at the time you made it, no part of it was designated as a "fee for service". The court ruling, if it sticks, makes some part of the donation a fee for service, but how would a fee for service be determined for the unspent portion after that service ends? At that point it can no longer be a fee for service since no service exists, therefore it must be a donation.

 

[NYDutch]

One nit pick to keep in mind, all of the donations in question were made to Sports Fans Coalition of NY, not their Locast service brand. I have no idea what, if any, effect that has on the legal status of the excess donations.

 

[NYDutch]

I find it odd that Locast is not mentioned on the Sports Fans Coalition of NY website at Sports Fans Coalition (where they accept donations).
Retransmission of local TV isn't listed as a priority on the Coalition's website (Mr Goodfriend and the board are listed).

Locast.org was specifically set up to promote the Locast service and solicit support for the Locast service with donations tied to removing the interruptions on the Locast service.

All true, but "Locast" is not the organization that the IRS certified as a 501(c)(3) non-profit, nor does it exist except as an operating service of SFCNY.

 

[NYDutch]

All true, but "Locast" is not the organization that the IRS certified as a 501(c)(3) non-profit, nor does it exist except as an operating service of SFCNY.

 

[NYDutch]

Did you ever donate to Locast/SFCNY ? If not, perhaps Crodrules can answer. Under what name did the donation/fee show up on the credit card? Recurly? Locast? SFCNY?

My monthly payments appeared similar to Crodrules. I took the listing as showing the donations were made to the locast.org owner's account.

 

[NYDutch]

The part I found interesting is that it is clearly listed as a "purchase." (Exactly what is being purchased is not exactly clear.) The one word that is conspicuously missing from that line is "donation."

That's a PayPal issue, not a Locast issue. I've made nuerous donations to other organizations through PayPal with no "donation" indicated on their part.

 

[NYDutch]

This is the first year that I have donated to Locast. For those who have donated to them in previous years: Do you receive some kind of form in the mail from them around January (when other tax-related documents usually arrive) showing your tax-deductible donation, so you can submit it with your income tax form? If so, that is the form that would show how much of your contribution is actually considered a donation.

I've not gotten any annual statement from Locast or any other organization I've donated to except on request for large donations. I've never requested one from Locast though.

 

[NYDutch]

Yeah, I figured that communication must have broken down somewhere in the chain: Locast, Recurly, PayPal, Huntington (my bank) - any one of those could have misinterpreted and/or misreported the type of transaction.

It would be interesting to see how they itemize it. A "service fee" would not be tax-deductible. I can't deduct my Dish bill, right? In years past, Locast was not under as much scrutiny. Now, with the court ruling, and Locast seemingly needing to show how much was collected for "service" to have any chance on appeal, that may change things.

It seems to me that the "service fee" ruling is the worst-case scenario for Locast subscribers: Not only did we not receive the service that we paid for, but now we can't claim the donation as an income tax deduction, either? Yes, this sounds like a class action lawsuit waiting to happen.

Apparently the IRS still says you can deduct the Locast donations. I haven't seen anything to change their determination of Locast's status. I haven't read the full court rulings though. There is nothing wrong with non-profits using some of their donations to support their infrastructure without breaking those costs out to those donating.

 

[NYDutch]

I got it now. Thanks! So, this would be no different from making a contribution to my local PBS station during a pledge drive, in exchange for a DVD box set. Only in this case, I only received half of the DVD box set (half a year of service from Locast) that I was expecting.

But you were never promised any service in exchange for your donation, just the removal of the donation pitches. I'd say they've held up that end of the bargain fully at this point...

 

[NYDutch]

Oh really? Because I still see a huge "donate" button at the locast.org site. That is not exactly a full removal of donation pitches.

So, if they had said "You can watch our service for free as long as you sit through our ads, but as soon as you donate any money to us, you will no longer be able to watch our service at all" that would be completely okay, even if that last part was not disclosed until after the money had already been paid? At least I got almost half a year. I really feel sorry for someone who paid for an annual membership that started on August 31.

The point is that Locast only promised to remove the ads in exchange for your donation. The service was already there and available to you both before and after your donation. At no point were you asked to pay any specific minimum amount for the service. Take your donation as a tax deduction if it'll make you feel better. I make lots of donations with no expectation of any direct benefit to me, just the hope that my money will be used to aid others in some way. I freely donated to Locast knowing full well that a part of that donation would go towards expanding the service to areas that would have no direct benefit to me.

 

[NYDutch]

Like I said earlier, the Locast website would not let me cancel my existing donation. However, just for the heck of it, I went ahead and submitted my Locast Cares application anyway. Who knows? Maybe I will get a year of free service if and when they ever resume operations.

You're basing that on the court's "fee for service" determination instead of it being a donation with no strings attached other than removing the promos. If/when an appeals court over rules the early ruling, what will you base your claim on then?

 

[NYDutch]

it would be interesting to see the breakdowns of the cost per stations along with who makes what..

Yes, just like it would be interesting to know the actual dollar figures involved in the retrans agreements. But don't hold your breath waiting for either one to be made public...

 

[NYDutch]

I still say that must leave Locast with a whole lot of money that they are now no longer allowed to spend on anything. Somebody must be earning interest on those funds, unless Locast's access to the money is now locked completely (seized by the government).

SFCNY is the underlying non-profit entity that received the donations. I don't believe the government would have any basis for seizing any Locast related funds from them since the court ruling did not include any financial penalties.