What the Aereo decision means for TV viewers

Could the Supreme Court’s decision endanger cloud storage services?

The Supreme Court’s ruling against Aereo is a huge deal — not because it’ll upend the TV industry, as some may have hoped, but because of the disruption it won’t cause. What is (was?) Aereo, and what does the decision mean for the way we watch TV? Read on for more.

What is Aereo?

Based in New York City, Aereo was founded by chief executive Chet Kanojia in 2012. The company uses tiny antennas to grab TV signals out of the air. Those antennas feed the broadcast programming to a DVR, which then plays the programming back to you on your PC, tablet or phone on demand. The technology is cloud-based, meaning it works a lot like Dropbox or Google Drive: The TV shows are stored online, then served to you over the Internet. The service is available in roughly a dozen cities.

In Aereo’s server rooms are circuit boards with thousands of tiny antennas. When a user logs into the service, the system assigns the user his own unique antenna. When users select programs to record, the system makes a unique copy of the program for each user. Users can then stream these copies to their computers.

Why is it so controversial?

At issue was whether Aereo should have to pay money to TV broadcasters for their content. Right now, Aereo pays nothing — it gets the TV signals for free just as you or I might with our own televisions grabbing signals over public airwaves. But unlike us, Aereo gets to make money off of relaying those transmissions over the Web. Broadcasters challenged Aereo on that around the country, accusing it in court of stealing their work and infringing their copyright. They’d much prefer Aereo do what cable companies do, which is to pay “retransmission” fees for the right to carry broadcast content on cable.

What did the Supreme Court decide?

The court held in a 6-to-3 vote that Aereo wasn’t simply providing equipment for consumers to watch their own taped shows later, as the company claimed. Instead, Aereo was found to have violated copyright law: Every time the company made a recording available to the consumer, it was engaging in a “public performance” that required paying for a content license.

Does this reading of the situation actually make sense?

Well, the majority of the justices believe Aereo is really no different from a cable company, which also pays for content and transmits broadcast signals to the public.

Three conservative justices disagreed. They argued in a dissent that Aereo doesn’t transmit anything, publicly or privately. It’s simply facilitating what customers would do on their own if they had the equipment.

Is Aereo dead?

Not immediately, but pretty much. Even top Aereo investor Barry Diller admits as much.

“We did try, but it’s over now.”

Aereo’s whole business model depends on avoiding paying retransmission fees. Now that the Court has said that model is illegal, what can Aereo do? Maybe it can eke out a living selling people their own digital antenna kits, or something. But Aereo’s future certainly doesn’t seem very bright. Same goes for the various Aereo copycats that would’ve sprung up had the court ruled in the company’s favor. Now, those companies will likely be deterred as a result of this ruling.

The real question has always been whether a ruling against Aereo would have implications for other online services. Aereo advocates warned the Court’s justices that a broad ruling against Aereo would have chilling effects on the cloud industry, a growing part of the U.S. economy. In its opinion, however, the Court said it didn’t expect its decision to have any bearing on future technologies.

Many of the arguments broadcasters made against Aereo could just as easily be made against conventional cloud storage services such as Google Music and Dropbox, which also transmit copyrighted content to consumers.

The Supreme Court in this case not only failed to provide clarity, it blew up the legal principle that has served as the foundation for the cloud storage economy since 2008.

That principle was developed by the Second Circuit Court of Appeals, the same court that ruled for Aereo last year. The cable company Cablevision had developed a “remote storage DVR,” a system located in Cablevision’s server room that allowed customers to record and play back content. Content companies sued, arguing that the system infringed its copyright.

In 2008, the Second Circuit disagreed. The court ruled that because customers, not Cablevision, decided which programs to record or play back, the customer was responsible for copyright issues.

Ever since, cloud storage services have relied on this “volitional conduct” principle to avoid copyright liability. If you upload a pirated movie to your Dropbox account or fill your Google Music account with pirated music, you might be guilty of copyright infringement. But Dropbox and Google don’t have to worry. It’s probably not a coincidence that cloud music services blossomed a couple of years after the Cablevision decision.

Now, Grimmelmann says, “the reasoning of Cablevision is dead.”  This lack of clarity could cause legal battles for years.

What does this mean for the way I watch TV?

The justices’ decision makes life a lot harder for cord-cutters. To continue watching broadcast TV, you’ll need to grab a digital antenna and hook it up to your TV. Or, you’ll have to pay your cable company for those channels.

A ruling the other way would have fundamentally changed the economics of TV.

Overall, this decision means we keep the system we have. Broadcasters will still bring in much of their revenue from retransmission fees, cord-cutters will continue mixing and matching ad hoc combinations of Netflix, Hulu and other services, and the rest of us will keep on paying for our TV, one way or another.

What does this mean for Internet Services?

Well, this is definitely a setback for Internet Services, and internet technology advancement in general.  Liberal lawyers (once again) manage to create roadblocks as their fear of the free market manifests itself, and protectionism rules.  I completely disagree with those who claim this decision has little significance.  It’s nothing new to have lawyers, bureaucrats, and small-minded big corporate spreadsheet generals squashing cutting edge innovation.  But, this is a very innovative and convenient medium for communications.  This could have paved the way for so many other types of real time data flow, stored remotely for later use.  Now similar technologies may just not appear at all, as their creators fear similar retribution.  Putting a ridiculous, Pollyanna, positive spin on this issue is as stupid as the folks deciding to put the kibosh on Aereo’s product.   Oh yea, this is a “narrow decision”…not to Aero I’d imagine.  Oh well…have a drink.  Onward and upward.

Read more of this story at www.washingtonpost.com.