Networks and cable companies alike are aligned against television streaming startup Aereo in a case with significant implications for both television providers and cloud services. The case, currently in front of the United States Supreme Court, has garnered significant attention in the media and from multiple industries, due to its importance pertaining to U.S. copyright law. The possible precedent set with this case has strong implications for cloud providers and media companies alike.
The Aereo service and why it worries the networks
Television networks use the freely available, publicly-owned airspace to transmit their signals with approval from the U.S. government. This usage is available because they allow the public to access this content at no charge, supported by lucrative advertising content. Because cable or satellite subscription has become the norm across the country, despite free access to these networks via antennas, many households simply pay for a cable subscription service to meet their television needs, and access their free, local networks in this way.
Aereo’s service takes advantage of this prior arrangement by renting antennas to viewers who can then stream the networks on their devices and record network television, saving it in the cloud. Each customer is assigned his own antenna, housed at Aereo’s Brooklyn headquarters and any episodes recorded are only accessible to that customer. While this method employs a less efficient system than would be possible if Aereo only recorded one episode and served it to multiple viewers, by creating a new copy per viewer request, the service closely aligns with existing copyright precedent, set in the 2008 Cablevision case (Cartoon Network, LP v. CSC Holdings, Inc. and Cablevision Systems Corp). Cable companies offer similar services, but they pay a retransmission fee to the networks for the privilege.
The history of network TV streaming by Aereo
On October 11, 2013, ABC and other broadcasters sued Aereo for copyright infringement and requested an injunction primarily based on hardship. The networks were unable to get an injunction, and were unsuccessful once again on appeal. In both cases, the courts found that the service was akin to a DVR and cited the 1976 Copyright Act, requiring copyright holder’s permission to broadcast a performance of their work. Citing the Cablevision decision, the courts insisted the performances of the works were not akin to a “public performance” but instead represented many private performances. The decision was appealed again and the Supreme Court heard oral arguments on April 22, 2014.
What is at stake
Television networks stand to lose a considerable revenue source if cable companies are no longer the primary outlet for their viewership. In fact, they expect to lose so much revenue that they have threatened to completely move to a paid subscription model to protect their content and their revenue. This will financially affect many viewers who continue to access the networks for free. If they don’t move to a subscription model, what is to stop the cable companies from using Aereo’s tactics to avoid paying copyright fees as well?
Cable and satellite providers will be heavily affected in that they will lose advertising revenue and potentially a large volume of subscription revenue. They already face real competition from services like Hulu, Netflix and Amazon, so the addition of a network provider, like Aereo, that could bolster local offerings and support cord cutting by customers, would not be welcome.
Just as important is the potential impact of a copyright ruling affecting cloud providers like Box and Dropbox, because if content that is uploaded by one person is considered a public performance, and copyright law is violated, much damage is dealt to the burgeoning cloud industry. Many of them banded together to file an amicus brief asserting the decision could affect “the entire internet economy.”
How the court will rule is anyone’s guess. While one can look to political bent to guess how they will rule on many issues, copyright law is a wildcard. In fact, some worry that the court will make a decision that is not good for any side, due to lack of expertise in this realm. The Electronic Frontier Foundation asserts that decisions like this should be made in Congress, not in the courts.
The media companies hear multiple death knells in a case like this, and will do all in their power to stop it from succeeding. Each side has a compelling case, and whatever the outcome, the potential ramifications are dire. Expect a decision from the Supreme Court in late June.
