Technology
Joshua Roberts/Bloomberg via Getty Images
The Supreme Court heard arguments Tuesday in the heated battle between major broadcast networks and the subscription-based streaming TV service Aereo.
The court’s decision has the potential to disrupt the way consumers view and record their favorite shows — and to undermine the way U.S. broadcasters make their money.
The case arrived in the nation’s highest court after two years of fierce legal battles. The major broadcasters — NBC, CBS, ABC, Fox and PBS — are suing Aereo for copyright infringement, arguing that Aereo should pay distribution fees, just as satellite and cable systems do.
Distribution fees paid to major broadcasters were estimated at $3.3 billion last year, according to the Associated Press.
Aereo is a tech startup that lets users watch local TV on their mobile devices and store recordings of their favorite shows online. The service works by utilizing thousands of small antennas about the size of a dime.
When an Aereo subscriber wants to watch live TV or record a show, he or she is temporarily given access to one of thousands of little antennas in an Aereo data center, and the antenna sends the desired show to the subscriber via the Internet to any supported device.
Users pay $8 or $12 per month, depending on the package they select, and can view programming from roughly two dozen local over-the-air stations and the Bloomberg TV channel.
Because only one user at a time can use an antenna, Aereo says it’s the same as when a user pays nothing to catch a signal over the air at home with an antenna. The only difference, the company says, is that it provides more options in terms of how and where a user can view programming.
So far, Aereo hasn’t lost a case. The federal appeals court in New York ruled that Aereo did not violate copyright law. In 2008 the 2nd U.S. Circuit Court of Appeals ruled that Cablevision could offer its own remote digital video recording service without having to pay retransmission fees. The court determined that each playback transmission of a recorded show was made to a single person viewing a unique recording of a particular show.
But in the Aereo appeals court ruling, Judge Denny Chin dissented, saying the decision would sabotage the country’s copyright law. He called Aereo's setup a sham and said the individual antennas are a "Rube Goldberg–like contrivance" that exists for the sole purpose of skirting copyright law.
Even though the networks offer their programming for free, the vast majority of Americans pay for it via cable or satellite TV subscriptions. Cable and satellite companies must pay fees to the networks to carry their programming.
Those retransmission fees have become a crucial source of revenue for the cash-strapped networks, which are fighting more than ever for viewers' attention and ratings, which translate to advertising dollars.
If Aereo loses, consumer groups say it could embolden major broadcast and media companies to seek new ways to charge for their content or restrict how and where it may be viewed.
The Electronic Frontier Foundation, the Consumer Electronics Trade Association and a handful of special interest groups have filed a brief stating, “The court should not attempt to predict the future of television.”
Barry Diller, the venture capitalist backing Aereo, has said in numerous interviews that the company doesn’t have a plan B. If things don’t go its way, it may have to shut down immediately.
If Aereo wins, some broadcasters have threatened to pull their signals.
CBS said in March 2014 that if Aereo wins the case, the company would offer its programming over the Internet without a cable or satellite subscription or switch to being a cable network.
"If the government wants to give them permission to steal our signal, then we will come up with some other way to get them our content and still get paid for it," CBS chief executive Leslie Moonves said.
FOX has also suggested it would consider going subscription-only if Aereo prevails.
Aereo has 11 million subscribers and has plans to double that number. The service is currently available only in a handful of cities — including New York, Boston, Houston and Atlanta — but has outlined a major expansion plan on its website.
The major broadcasters have the support of the Obama administration, Major League Baseball, the National Football Association and a variety of actors and artists, while smaller cable companies, independent broadcast companies and consumer groups support Aereo.
With The Associated Press
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