Aereo Loses Supreme Court Battle

Aereo: What Did the High Court Rule?

You can read the Court’s entire decision but the gist is that th Supremes rules that Aereo did violate broadcast TV networks’ copyrights and must cease operations.

I wrote about Aereo’s clever business model in April. (See The End of Free TV?) For $8 per month, a subscriber gets his own personal mini-antenna, housed among thousands more in an Aereo warehouse. Through it, the subscriber can receive free, over-the-air TV programming. Programs are stored in a private folder on Aereo’s servers and streamed to any Aereo-enabled device the subscriber owns.

These are the same free, over-the-air TV channels that people in those neighborhoods could watch if they had a TV with an antenna. The "value add" of Aereo was the fact that users could stream that content to their smartphones, tablets or computers, and store shows for later viewing.

The broadcast networks object to Aereo because it threatens the $3.3 billion in annual licensing fees that they collect from cable and satellite TV companies, which also charge consumers to watch what the networks broadcast for free. If Aereo can use the networks’ content without paying for it, so can the cash cows at Comcast, Time-Warner, DirecTV, et. al. That would spell the end of broadcast television.

The networks’ legal objection is that Aereo profits by violating their copyrights, delivering public performances of their protected works without permission or compensation to the rights owners.

Aereo claimed that it was not delivering “public” performances, but merely renting equipment to individuals and allowing them to access it over the Internet. The trial court agreed; the appeals court affirmed the trial court; but the Supremes begged to differ in a 6-3 decision.

Righting a Wrong?

Congress closed that loophole in 1976, the Court noted in its decision. The Copyright Act, as amended, prohibits what Aereo was doing. The trial court got it wrong and the appeals court was wrong to let the trial court’s decision stand.

What’s amazing is that over a dozen lower courts had ruled in Aereo’s favor before this case reached the Supreme Court! One might get the impression that even judges are tired of ever-rising television programming profits. But as former FCC chairman Reed Hunt said of this decision, "You can't use technological tricks to bypass [cable network] rules and regulations. Barry Diller (a major financial backer of Aereo) got caught with his hand in the regulatory cookie jar.”

“(T)oday's decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry,” said Aereo CEO Chet Kanojia, calling the networks’ victory “a massive setback for the American consumer.”

He’s trying to rally Silicon Valley and the public to his lost cause. But the Court specifically notes that its decision applies only to Aereo; it’s not a blanket prohibition of all current and future technologies that might enable lower TV viewing costs.

"Aereo characterized our lawsuit as an attack on innovation; that claim is demonstrably false," NAB President and CEO Gordon Smith said in a statement. "Today's decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.”

Smith is trying to declare total and final victory. He’s as mistaken as Kanojia. Like the eternal battle between malware “innovators” and security researchers, the war between copyright owners and “information freedom fighters” has no end.

What Happens Next?

Aereo's next move is unclear. They'll either fold, or offer to pay some sort of licensing fees to the broadcast networks. But the networks, fresh off their legal victory, might rather see Aereo die than play ball with them.

Consumers, however, have options. Streaming boxes such as Roku, Apple TV and others enable streaming from the Web to mobile devices. See Roku and Friends: Can You Cut the Cable? Services like Netflix, Hulu, and Amazon Prime also offer options to cordcutters.

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