Aereo Loses Supreme Court Battle

Category: Television

A business plan based on exploiting perceived loopholes in the law is seldom a good bet. If the powers that be don’t perceive the law the same way you do, it’s game over. Aereo, the upstart would-be broadcast-TV killer, learned that lesson from the U. S. Supreme Court on June 25, 2014.

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.
Aereo Loses in Supreme Court

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.

Your thoughts on this topic are welcome. Post your comment or question below...

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Most recent comments on "Aereo Loses Supreme Court Battle"

Posted by:

26 Jun 2014

We cut the cable and are using over-the-air antenna plus Roku and Chrome. However, did you know that AT&T is starting to monitor internet usage and limit to 100Gigs per month? Not in all markets, yet, but we switched from the ever-increasing-fees of AT&T to Comcast. So far, they don't monitor and we are streaming.

Posted by:

26 Jun 2014

No matter how you cut it, there's now no such thing as "free" over the air broadcast TV anyway. Pretty soon someone will be charging us for rain, air, and sunshine.

Posted by:

26 Jun 2014

I think the Supremes got it wrong.

I do not have cable, ditched it 6 years ago when OTA went digital. I have enjoyed HD quality programing from all of my local stations since then with a simple antenna ... for free*.

I have a TiVo DVR to record those shows and watch them when I want (including on my computer, phone, or laptop) and I can fast forward through commercials. *I do pay TiVo for their DVR service which gives me an on-screen guide, and numerous other features like built in Netflix, Youtube, Pandora, and lots more.

What I am doing is essentially the same as what Aero is doing. The only difference is the antenna and recording equipment are located at my house rather than somewhere else.

Posted by:

26 Jun 2014

I have Dish and I pay $95.00 a month and I don't watch it much because the commercials drive me nuts. The better half doesn't mind them so I'm stuck with it, otherwise I think I would cancel my subscription or go with basic.
Can't get much off an antennae in this area!

Posted by:

26 Jun 2014

I'm in Canada. I watch Netflix quite a bit. Lately my ISP has complained about my bandwidth usage, indicating Netflix is approx 2Gb per hour and YouTube is a bit of a hog as well (so they say). My cable bill is over $200/Month for Internet, Phone, and HDTV.

I'm a retired techie but I can see the day where everything will be broadband. No analogue cable. Perhaps fiber optic, but that will be expensive at $1,000,000 a mile to install, plus the street peds and lining into to each individual home.

Over the air is not an option (way too much lag time), so I think if we want entertainment delivered to our homes in a fast and seamless manner, we must open our wallets and pay up; because making all this happen is not cheap.

Posted by:

Frank Klett
26 Jun 2014

As an Aereo subscriber I am a bit upset with the use of big business money to control what should almost be a "public utility". In fact, Comcast owns NBC and other stations and by pursuing Aereo to this point is not in their best you noted we can now turn to other options including the newly announced Google entry....thanks for your coverage and inputs Bob!

Posted by:

26 Jun 2014

I have always had free OTA (over-the-air) TV, with an antenna. I pay nothing, zilch, nada.I have enough stations for my needs, about 15. But reception is better in metro areas such as mine than in rural areas.

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