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6/23/2014
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Aereo Vs. Broadcasters: 5 Questions For Supreme Court

Should accessing an antenna and a DVR through the cloud be treated as any different under the law than doing so in your own home?

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Within the week, the US Supreme Court is expected to decide whether TV broadcasters have made their case for shutting down Aereo, the cloud service giving consumers a remote antenna/DVR alternative to cable.

Broadcasters charge that Aereo is violating their copyright by retransmitting TV signals without their permission and without paying the same sort of retransmission fees as cable TV companies. Aereo contends it merely provides a cloud-based, remote control extension of two technologies consumers can legally operate in their homes -- an antenna for picking up over-the-air TV transmissions, plus a digital video recorder for spooling up content to be played back later. The Supreme Court clarified the legality of the later back in 1984, in the era of videotape. According to a Boston Globe report on the legal issues, prior to launching the service the Aereo founding team studied a 2008 US Appeals Court decision allowing Cablevision to operate a remote DVR system under the same principle that consumers have a right to record programming for their own use.

[Rural bandwidth: Federal Broadband Program Falls Short.]

The Supreme Court did not issue a ruling on Monday, as some court watchers had expected it would, but more rulings are expected Wednesday, Thursday, and possibly next Monday.

Rather than rebroadcasting TV video feeds in bulk the way a cable channel does, Aereo assigns each customer a tiny TV antenna (the size of a dime) for tuning into the TV channels available in a specific metropolitan market. It charges $8 per month for access to the antenna and cloud storage sufficient for up to 20 hours of programming (or $12 for a two-antenna, 60 hours of recording package). So far, it's in 11 markets including Atlanta, Boston, Dallas, Detroit, and Miami.

(Image: Aereo)
(Image: Aereo)

From a consumer standpoint, the service also provides a handy means of getting live TV on a phone, tablet, or any other Internet-connected device. For those who want to "cut the cord" and stop paying for a cable TV subscription, now that so much good video content is available online, Aereo is a way of still getting access to live news and events coverage.

Yet for broadcasters Aereo is a nightmare, cutting out one source of revenue, those retransmission fees, and undercutting another, since broadcast advertisements are less valuable when the consumer has the option of fast-forwarding through them on pre-recorded content, DVR style.

Even if Aereo prevails, broadcasters will likely turn to the FCC, asking to put Aereo in the same regulatory classification as a cable TV operator, making it subject to the same regulations. Otherwise the broadcasters could go to Congress. Aereo is up against NBC, ABC, CBS, and Fox.

Here are five questions we're eager to see answered with the court's decision:

  • Does Aereo's business model violate copyright law's division between personal use and public performance? Your purchase of a DVD doesn't allow you to make pirate copies or show the video to hundreds of people, because you only purchased the right to view it as an individual (or a household). That's essentially the logic that has allowed broadcasters to compel cable companies to pay retransmission fees for signals freely available over the air.
  • Does it make a difference that Aereo maintains a one-to-one subscriber to antenna ratio, rather than rebroadcasting the same signal to everyone?
  • Does the economic harm to broadcasters outweigh the consumer benefit of a new, innovative service? The court is supposed to rule based on the law, rather than on a balancing of economic interests, but there's a lot of money at stake here.
  • To rule against Aereo, the court would have to rule that a digital recording service in the cloud is different from a VCR or DVR in the home. If so, what makes it different under the law? Or perhaps the court will disagree that Aereo is functionally equivalent to a very long distance remote control.
  • Given that there are two components of the service -- the remote antenna and the remote DVR -- might the court invalidate one and not the other?

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David F. Carr oversees InformationWeek's coverage of government and healthcare IT. He previously led coverage of social business and education technologies and continues to contribute in those areas. He is the editor of Social Collaboration for Dummies (Wiley, Oct. 2013) and ... View Full Bio

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Lorna Garey
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Lorna Garey,
User Rank: Author
6/23/2014 | 4:34:15 PM
Watching with interest
It's hard to see how SCOTUS agrees with the cable companies here. Though as you say, I am sure their next stop will be the FCC and congress, and they'll come armed with big bags of cash for donations.
David F. Carr
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David F. Carr,
User Rank: Author
6/23/2014 | 4:40:26 PM
Re: Watching with interest
A worry for the broadcasters is that if Aereo prevails, the cable companies might decide they can do something similar rather than paying retransmission fees as they have in the past.
Lorna Garey
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Lorna Garey,
User Rank: Author
6/23/2014 | 5:42:23 PM
Re: Watching with interest
Oh for sure, this case has the potential to be incredibly disruptive -- think Lyft and Uber to taxicabs or AirBnB to hotels. No business model is immune.
Info-withheld
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Info-withheld,
User Rank: Apprentice
6/23/2014 | 6:37:58 PM
Change is inevitable
A ruling for Aereo will likely cause a change by the broadcasters to move their most revenue generating properties to their cable only channels. Fox will move these to FX, ABC to ESPN or ABC Family, etc. Broadcast TV will have more re-runs and infomercials. This is not a doomsday situation for the networks, the market wants mobile streaming solutions and the broadcasters that figure out how to monetize this can compete against Aereo.
anon1467210625
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anon1467210625,
User Rank: Apprentice
6/23/2014 | 6:54:03 PM
Re: Watching with interest
AEREO is right but the judges will rule against them and hen cash the big fat checks they get.

No one believes the judges are fair honest or relate to the common man.There old greedy and on the take if you ask me.
Moribund_Man
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Moribund_Man,
User Rank: Apprentice
6/23/2014 | 8:02:59 PM
It's not really a tiny antenna...
These are not really tiny antennas. These are large antenna arrays, made up of a bunch of tiny antennas. If there really were a single tiny antenna, all alone you wouldn't recieve much even in the city. So, IMO it's no different than a cable co. bringing in a signal with a giant dish. So, the networks are right and Aereo isn't good for us cord-cutters because they're bringing the heat. A great explanation here: http://www.hdtvexpert.com/tag/aereo/
Charlie Babcock
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Charlie Babcock,
User Rank: Author
6/23/2014 | 8:15:43 PM
Is Aero a content hyjacker?
Seems incredibly facile to me for Aero to argue it's only using what any consumer can use. Capturing and reselling other people's content has been historically barred by copyright law, and that's what it looks to me like what Aero is doing. The 1984 Supreme Court decision didn't anticipate this fresh gray area materializing and shouldn't be allowed to rule in this case.
David F. Carr
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David F. Carr,
User Rank: Author
6/23/2014 | 9:19:53 PM
Re: It's not really a tiny antenna...
Thanks for that link, which goes much deeper into the radio frequency engineering part of the story than anything else I've seen. I wonder how much of this the justices understand.
rradina
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rradina,
User Rank: Ninja
6/24/2014 | 8:07:48 AM
Re: Watching with interest
And...cable companies should. The only problem is they'll still charge the same fee they charge for retransmission except it will be for a remote antenna + DVR service. Needless technology to provide us with something we should get for free. It was a poor decision to let OTA broadcasters charge a fee in the first place.

SCOTUS needs to strike down the retransmission fee and save everyone a lot of hassle. Do we really need to enrich the folks who provide Aereo their tiny antenna's?  That's what will happen if SCOTUS rules Aereo legal and all the cable company's duplicate Aereo's architecture to avoid the fees.
rradina
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33%
rradina,
User Rank: Ninja
6/24/2014 | 8:33:45 AM
Re: It's not really a tiny antenna...
The link has merit regarding how the tech works but Aereo's primary claim is they lease the equipment to the consumer.  That means the consumer is the one that's converting the RF signal to MPEG, storing it in a "cloud" DVR and transmitting it to their device.  If it's legal for a consumer to own a Sling Box in their home, record content and stream it to their devices, what changes if the equipment isn't in their home and someone else owns it?  Would it be legal for a rural resident with poor signal strength to lease rack space at an ISP in city and duplicate the in-home Sling Box?  If so, what changes when that resident pays someone else to own it and they rent it from them?
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