Aereo case: A skirmish in the war over the future of television

A smartphone displays the Aereo app. Image copyright Getty Images
Image caption Broadcasters accuse Aereo of exploiting a loophole in copyright law

Executives at Aereo think they have found a clever way to allow subscribers to watch over-the-air television programming on their internet-connected devices without running afoul of federal copyright laws.

The traditional broadcasting companies disagree, and are trying to sue the tech company into nonexistence. The case has made its way to the US Supreme Court, which heard oral arguments on Tuesday.

Americans are free to watch TV programmes transmitted over publicly owned airwaves using their old-fashioned television antennas. Federal law, however, broadly prohibits the rebroadcasting ("public airing", in the legal jargon) of network content without permission from - and invariably payment to - the originating network.

In order to get around this, Aereo has set up thousands of antennas the size of a coin connected to banks of web servers in 13 major US cities. Users can "rent" an antenna to tune in to television stations and either record the programmes for later viewing or directly stream the video to their computer, phone or tablet.

By putting the recording in the hands of the user, Aereo argues that it serves as the functional equivalent of an off-site digital video recorder (DVR) - a technology that a federal appellate court in 2008 ruled was legally permissible.

The broadcasters, led by ABC, contend that the technical details of Aereo's business model are less relevant than the fact that they are profiting by taking free over-the-air content and making it available to users. (BBC's Brajesh Upadhyay gives a thorough run-down of the technology involved and details of the case.)

During Tuesday's arguments, writes SCOTUSblog's Lyle Denniston, "the Court moved back and forth between killing that novelty by forcing it to pay sizable fees to download copyrighted TV programmes, or giving it a fighting legal chance to survive as a cheaper alternative to cable".

He says that Chief Justice John Roberts' concern that Aereo's setup was just a complicated way to exploit a loophole in the law was "fairly widely shared across the bench".

However:

Most of the energy, at least from the bench, was about the risk that the Court might rule in this case in a way that would smother the infant of digital innovation in its electronic crib.

Aereo's supporters have argued that the company is operating as the latest in a long line of technological revolutionaries.

The case turns on "the question of whether online broadcast television is to remain in the hands of a stodgy industry that once declared the VCR the enemy", writes ArsTechnica's David Kravets,

"If broadcasters are beaming their programmes for free to antennas in my community, and someone offers to rent me a better antenna than the one I might buy at the local electronics store, why should I have to pay broadcasters for that?" asks Jon Healey of the Los Angeles Times.

"If the justices decide how to treat Aereo by ignoring its technology and looking only at the market segment it occupies," he continues, "that would be troubling news for innovators."

BusinessWeek's Joshua Brustein says broadcaster concerns have a sky-is-falling character to them.

Aereo only offers the small number of stations that are broadcast over the air, he says. It has struggled to provide enough capacity to meet current demand - let alone expand into new markets.

Finally, he says, broadcasters could pull their programming off the airwaves and rely only via cable and satellite. It's not an empty threat, since over-the-air amounts to only 10% of total television viewership. Such a move would effectively end Aereo's business.

Consumerist's Chris Morran points out that internet companies like Google, Amazon and Apple are concerned that the broadcasters' arguments also could be applied to cloud-based storage services. If it's illegal for Aereo to stream television content for personal use, it might also be illegal to stream legally acquired music via the cloud-based Google Play.

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

Roger Parloff of Forbes counters that it's the internet companies that have been exaggerating the possible implications of a contrary court decision with "overwrought 'you'll-break-the-internet'" rhetoric.

"With narrow language and a few disclaimers the Court can rule against Aereo without dooming the cloud-service industry," he writes.

John K Hane writes in the Wall Street Journal that Aereo is skipping over "troubling legal questions" in an attempt to paint the broadcasters as "greedy enemies of innovation demanding excessive retransmission fees".

"Broadcasters are called price-gougers while Aereo poses as a champion of the consumer," he says. "In reality, broadcasters still provide a free service to consumers, and they are the only television distributors that do. Aereo profits from selling copyrighted content the company does not own."

He also provides his own doomsday forecast of a world with no NCIS or The Voice:

The outcome could determine the future of the television industry. High-quality television can no longer be supported exclusively by advertising, as broadcasters now must compete with highly profitable pay networks. As revenues decline, broadcasters cannot afford to subsidize competing platforms like cable, satellite and Aereo, while still providing free high-quality programming to those unwilling or unable to pay.

One way or the other, writes USA Today's Michael Wolf, change is coming to television.

"Digital technology undermines traditional notions of not only who owns what, and who should pay whom, but, in effect, of right and wrong," he writes. "Digital technology creates, for better or worse, a de facto license to steal intellectual property. In some sense, that fact, or ethos, has propelled the digital revolution, the nation's most important economic growth area."

When the lines between piracy and fair use are blurred by technology, does that make us all pirates? Here's how he breaks it down:

On one side, you have insurgents and speculators who understand that the gain for them is all in the loss to the other side - that it's a struggle for territory and power. On the other side, you have the existing television business, which genuinely sees a way of life, together with its profit margins, threatened by the law-onto-itself status of the digital industry.

The broadcasting industry, he says, is trying to slow down change and "negotiate its terms".

"It's true that the establishment is often weak and dumb and loses badly in such negotiations, but the television establishment is prepared and armed to the teeth," he writes.

In the end, Aereo is a small player in a game dominated by deep-pocketed traditional networks and cable and internet companies. It's a battle over the eyeballs and bank accounts of consumers across the country, and it's difficult to tell who is going to end up on top.

The decision in the Aereo case could give one side or the other an upper hand - or it could simply forestall the determining battles to another day.

That day, however, is coming.

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