Blog Post

Supreme Court to hear Aereo case, which could define future of internet TV

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

The U.S. Supreme Court on Friday announced that it will hear a closely-watched dispute between Aereo, a start-up that streams over-the-air TV for $8/month, and major broadcasters — including NBC, CBS, ABC and Fox — that say the service should be shut down for copyright infringement.

The news, noted on ScotusBlog, means the court will hear the case sometime in the coming months and issue a decision before early summer.

The case is important because Aereo, which is now live in New York and about a dozen other cities, poses the most serious threat in decades to the “bundle” model of TV where distributors require consumers large packages of channels even if they only watch a handful of them.

Aereo’s CEO Chet Kanojia hailed the Court’s decision to take the case in a statement:

We said from the beginning that it was our hope that this case would be decided on the merits and not through a wasteful war of attrition. We look forward to presenting our case to the Supreme Court and we have every confidence that the Court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.

Aereo this week announced another major round of funding and says it will expand to another 15 markets by the end of March.

The legal issue in the case turns on whether Aereo’s system of tiny antennas, which assigns a personal antenna to every subscriber, amounts to broadcasting to the public, which is illegal; or, if it is like a remote DVR, which is considered private and not a violation of copyright:

Aereo antennas

Aereo won a major victory last spring when an influential appeals court agreed with its interpretation of the law, giving the company the green light to expand in the Northeast. The broadcasters, however, also won an important victory when they persuaded a California judge to shut down a would-be rival to Aereo called FilmOn, which also offered TV-streamed over the internet. The judge issued an injunction that shut down FilmOn in nine Western states.

Aereo claims its technology is different than that of FilmOn and is urging the Supreme Court to view the case on the basis of the New York appeal and a related case in Boston in which a judge also found the service didn’t violate copyright.

Who should pay for over-the-air TV signals?

The TV broadcasters have received support from the NFL and Major League Baseball in their claim that Aereo can’t stream their signals without permission. They point out that both cable and satellite companies must pay so-called “retransmission” fees to include the channels in their packages, even though the signals can also be picked up over the air with an antenna. In New York, many signals are transmitted from the Empire State building:

aereo-window crop

The antenna option, however, is not practical for many urban dwellers that lack access to clear signals. This makes Aereo appealing, as does the DVR storage included in the start-up’s monthly subscription rate that lets viewers record shows for later. Aereo also permits viewers to watch programs on mobile devices, which is another contentious issue at a time when content producers are beginning to sell rights to their programming on a device-by-device basis.

If Aereo prevails at the Supreme Court, it will likely put pressure on Congress and the FCC to introduce a regime whereby Aereo pays retransmission fees like other distributors. Right now, content owners cannot refuse to sell their programming to distributors — like satellite and cable companies — that fall under the regulatory regime.

Aereo’s CEO has stated that he hopes the success of the service will lead to consumers being able to buy a “rational bundle” of channels.

9 Responses to “Supreme Court to hear Aereo case, which could define future of internet TV”

  1. Bob OKane

    Simply do not understand why broadcasters do not use the FCC rule that all broadcasts would have to have a broadcast flag…. The FCC unanimously voted yes to this in 2002.. This is the angle they should take against Aereo…

  2. I agree with the fact that there is and should be a fee involved or it should be paid by advertising as most does. However, the core topic from a consumer point of view is very interesting and overdue discussing. Broadcasters have a choice to stream live content themselves and refuse to do so by catering to the cable TV lobby. Why do consumers need to choose undesired bundles at high prices to enjoy single broadcasts or channels? If content providers/networks streamed their live content true non monopolized TV services would be dictated by the consumer and driven by a favorable customer experience. I don’t see how this can be sold as a simple copyright issue as it takes the issue several notches up. If the Internet is now an official alternate channel and the same consumer opts to pay for advertise filled content as he/she does with cable companies at a lower rate than cable companies, this is simply put pure competition. If network ad content providers feel they can’t make the return from advertising, then for all means stream directly to give consumers a choice! Current TV options are simply no longer holding up with the times. I as a consumer certainly only want to pay for what I watch and not fund and promote poor programming via bundles, which goes strictly against a free market economy.

  3. The scenario you spell out in the next-to-last paragraph isn’t possible. If Aereo wins this case, it’s because the Court agrees that they’re NOT retransmitting. There would be no fees to pay.

    Likewise, the networks can’t refuse to sell Aereo the broadcast rights as there’s nothing to *sell* them — it’s all free OTA programming.

    • ChickenLittle

      The difference is that cable and satellite providers typically have a dedicated feed (either via fiber or satellite transmission) to which they are then granted access for re-transmission. Hence the “selling” of the broadcast. Aereo is just saying screw it, and betting on a solid OTA signal as the feed, knowing that if the broadcaster messes around with their local broadcast signal, they will be in trouble with the FCC and those viewers that rely on antenna in their homes. Now, that means that Aereo needs to incur the hassle and expense of having space for their antennas and equipment in each DMA. Prior to the digital transition, who in their right mind would have attempted such a thing? I think what Jeff is trying to say is that if the Supreme Court decides that the action is legal, you may see Congress and/or the FCC step in a put regulation over such a re-transmission scenario and introduce a way for broadcasters to impose a fee into the process.

  4. “If Aereo prevails at the Supreme Court, it will likely put pressure on Congress and the FCC to introduce a regime whereby Aereo pays retransmission fees like other distributors. Right now, content owners cannot refuse to sell their programming to distributors — like satellite and cable companies — that fall under the regulatory regime.”

    There’s something that’s implied in this paragraph that is not immediately obvious to me: do Aereo and other internet TV distributors not have the same guaranteed access to content in exchange for retransmission feels that satellite and cable companies have? Could someone please clarify?

    • Thanks for the comment, Shenan. I’m not the final authority on on TV distribution rules (which are incredibly complicated) but it’s my understanding that successive updates to the Copyright Act have obliged broadcasters to make their programming available to entities that are designated as MVPD’s (Multichannel Video Programming Distributors). These include cable firms like Comcast or satellite firms like Dish but NOT internet-based distributors like Aereo.

      In plain English, the broadcasters and other content makers can refuse to sell their channels to the likes of Aereo and FilmOn.