Aereo Supreme Court Case Could Change TV & Cloud-Based Tech Forever, Regardless Of Who Wins

Many big court cases involve one side arguing to maintain the status quo while the other contends that the current situation needs revising. But tomorrow, the broadcast TV networks face off against startup streaming video service Aereo in front of the U.S. Supreme Court in a case that could have far-reaching implications no matter which side is victorious.

THE BASIC FACTS
• Aereo is a streaming video service that takes freely available over-the-air broadcast signals and makes them available online to paying subscribers. It is available in around a dozen markets around the country.

• It is being sued by the major broadcast networks. They allege copyright infringement because Aereo is retransmitting their signals without consent and (more importantly) without paying the huge fees paid by cable and satellite operators for retrans rights.

• Aereo says it is not violating copyright or retransmitting broadcast signals. In each market it operates, Aereo uses arrays of tiny antennae to capture the broadcast signals. Each antenna within an array is dedicated to just one end-user. Aereo contends that this one-to-one connection is no different than a consumer having a really nice rooftop antenna on her roof to improve reception.

• In each region where Aereo has launched, the broadcasters have sought injunctions that would halt the service pending the outcome of a trial. In all but one case, the courts have sided with Aereo and refused to issue an injunction. A U.S. District Court in Utah is the lone legal victory thus far for the broadcasters, shutting down Aereo service in six states.

• Top executives at News Corp (owner of the FOX channels) and CBS have both threatened to take their networks off the air if Aereo wins. Similarly, both the NFL and Major League Baseball have threatened to take their balls over to basic cable.

• In its petition to the Supreme Court, the broadcasters try to double-down on the copyright claim by alleging that Aereo’s cloud-based DVR violates copyright because each time a recorded program is stream constitutes a new “public performance.” Broadcasters made similar claims in recent years in a lawsuit over Cablevision’s cloud DVR, but a federal appeals court disagreed and the Supremes opted to not hear that case.

IF THE BROADCASTERS WIN
Had the broadcasters not tried to involve the legality of cloud-based recording, it’s possible that an Aereo loss would only mean an end to the service and the establishment of a precedent blocking similar services in the future.

But their decision to bring up the DVR question means that a broadcaster victory could put all cloud-based technology at risk.

Cablevision, which believes that Aereo is violating copyright law but thinks the broadcasters are going too far with their attack on cloud technology, recently issued a white paper arguing that the networks’ argument against the Aereo DVR “threatens a whole host of innovative cloud-based services offered by companies such as Google, Amazon, and Apple.”

While the broadcasters claim that their attack on Aereo’s DVR is focused enough that it won’t affect established cloud-based storage and computing services, Google and others counter (in a brief [PDF] filed by the Computer & Communications Industry Association) that the broadcasters fail to adequately distinguish between Aereo’s cloud service and those offered by others.

Even if it’s not the broadcasters’ intention to spoil cloud-based technology, a win before SCOTUS would open the door for legal challenges from those that do oppose cloud tech.

“If the Supreme Court rules in favor of the broadcasters, their opinion might create liability for various types of cloud computing, especially cloud storage,” Mitch Stoltz, an attorney for the Electronic Frontier Foundation, recently told ArsTechnica.

IF AEREO WINS
In recent interview, Aereo CEO Chet Kanokia has tried to downplay the impact of SCOTUS siding with his company, saying Aereo will just continue to expand and that it will take years before the TV landscape changes.

He’s right that it won’t happen overnight, but that slow change could have huge, long-lasting results.

Expect copycats. An Aereo win would legitimize the underlying idea behind its one-antenna/one-user setup. Multiple cable operators (DirecTV, Time Warner Cable, Charter) have already been quietly working on similar technology that would allow them to capture over-the-air signals and transmit them directly to specific end-users. The cable/satellite companies could use this tech to avoid paying billions in retransmission fees to the networks. Not that any of these savings would be passed on to consumers…

The big question is whether the broadcasters and sports leagues will make good on their threats to flee the airwaves and go cable-only. That possibility seems highly unlikely for the foreseeable future.

Aereo is not a cable competitor, as it only offers channels that are already freely available over the air and only to users within their local markets. So while it appeals to a number of consumers who simply want good reception and DVR service without having to pay out an orifice for basic cable, it will never replace the hundreds of cable channels full of reality shows about really loud people.

And even if Aereo becomes more popular, that is actually good news for broadcasters as viewers are watching network TV shows. Considering that the service is most widely used in densely packed urban areas where TV reception is poor. Many of these Aereo subscribers are people who likely weren’t watching TV before the service, so the networks should be happy to have additional eyes on their programs (and more importantly on their ads).

Aside from the occasional weekend game and parts of the playoffs, Major League Baseball has long disappeared from network TV, so MLB’s threat to leave completely if Aereo wins rings hollow. The NFL is a different story, as its highest-rated games are almost always on network TV each weekend. That’s partly because the people who pick the Thursday and Monday night games for the NFL Network and ESPN, respectively, are really bad at their jobs, but it’s also because many American TV watchers — whether they have cable or not — still look first to the networks when they sit down in front of the tube.

An Aereo win won’t lower your cable bill or convince the networks to finally start streaming their feeds live online, but it will insure that a disruptive, positive force remains in the market while clearing up some lingering questions about the legality of cloud-based technology.