So much trouble over a bunch of nickel-sized antennas. The fight between the TV networks and Aereo -- a start-up which allows subscribers to "rent" tiny antennas based in a warehouse, then stream broadcast programming to their laptop or phone -- has gone all the way to the Supreme Court, where each side presented their arguments on April 22. Broadcasters say that Aereo is stealing their content. Aereo argues that their business model is perfectly legitimate, and that by cracking down on Aereo, broadcasters are putting the entire future of cloud computing at risk.
It's just the latest twist in a much longer saga, in which broadcast companies have repeatedly resisted technological innovations. Betamax, anyone? Or what about the lawsuit that broadcasters unsuccessfully pursued against Cablevison's RS-DVRs, a device that lets people record and keep broadcast programming in cloud storage?
Aereo has faced legal challenges practically since it was established in New York two years ago. The Supreme Court is expected to issue a decision by June, and the fight is unlikely to be resolved unless that decision addresses a couple of the following points:
1. Who Controls What?
Aereo has presented their business model as a way of giving viewers exactly what they want: greater control over what they want to watch. Instead of setting up 35-inch antennas that pick up a huge range of frequencies, Aereo rents miniscule antennas only capable of tuning in to one at a time.
This fits into the larger media revolution that broadcasters are struggling to contend with. This is no longer a world in which traditional media produces and then distributes all creative content -- it's a world in which viewers want television on their own terms and their own timetable.
The broadcast networks recognize that television viewing habits are changing -- hence, the greater amount of content that can be streamed online via subscription services like Hulu. Arguably, the TV networks are primarily concerned over who gets to control the streaming of their content: the networks themselves, via authorized Internet viewing sites, or those whom they view as "subverting" this model -- including brash start-ups like Aereo.
If broadcasters don't have control of their programming ahead of independent video streaming companies like Aereo, this would cut their revenue to an unacceptable degree, the TV networks have argued. And should the broadcast networks suffer, the public will end up suffering even more, as broadcasters like to say the public is the "ultimate beneficiary" of their programming.
In many ways, that's what the Aereo Supreme Court case boils down to: who gets to control the future model of how viewers watch TV?
2. What's a "Private" Versus "Public" Performance Anyway?
These are terms that were supposed to have been defined under the 1976 Copyright Act. The airing of a TV show is considered a "public" performance -- that's why cable and satellite companies need to pay broadcasters millions for the right to show their programming. Watching a DVD at home is a "private" performance, and doesn't require paying a fee to those who own the copyrighted material.
The Copyright Act was written at a time when the idea of something like Aereo was unfathomable. So it's no small wonder that the courts have struggled to define what kind of online, audiovisual content counts as a "public performance" these days.
One judge in Los Angeles has suggested that there should be two standards by which an online "performance" should be defined as "public" or not. First, if a significant number of people are downloading or streaming the material, it shouldn't be considered "public." Neither should it be considered "public" if viewers already have to pay a subscription fee or a downloading charge in order to watch a video online. It may not be a perfect solution, but at the very least it's one attempt to grapple with the shifting definition of "public performance" in the face of new technologies. Soon, it'll be the Supreme Court's turn.
3. Shouldn't Aereo Just Pay Royalties Like Cable Companies Do and Then Everyone Can Go Home Happy?
The first question from a U.S. Supreme Court Justice during the Aereo arguments came from Justice Sotomayor, who went straight to the point: Why isn't Aereo considered a cable company? "I look at the definition of a cable company, and it seems to fit," she observed, adding, "Do we have to go to all of those other questions if we find they're a cable company? We say they're a [cable] company, they get the compulsory license." Problem solved?
Under U.S. copyright law, cable and satellite companies benefit from compulsory license provisions, allowing them to air broadcast TV material for a set fee. If Aereo were treated like a cable company, they'd have to do the same.
The problem is that other Aereo-like companies have tried to make that argument, and haven't gotten very far. Ivi, a company that streamed broadcast television programming in real time on the Internet, was shut down by the Second Circuit in 2012. Ivi tried to argue that it should be considered a cable TV system, but the courts disagreed.
Another Aereo-like company, FilmOn.com, faced a similar lawsuit from broadcasting companies when it launched in 2010. Like ivi, FilmOn.com tried to argue that it should be considered a cable company, but once again, the courts ruled otherwise.
Aereo has taken a different approach. The company has described its technology as a type of "cloud DVR," a word choice apparently meant to imply that while Aereo is novel, the company is not much different from two technologies -- cloud computing and DVR recorders -- that the courts have already deemed legitimate. Rather than trying to present itself as an untraditional cable system -- as ivi and FilmOn.com attempted to do -- Aereo is essentially arguing that its technology is an updated version of a VCR. That is, with Aereo, users can "rent" the tiny antennas based in Aereo's offices, and use these for "private" viewings of broadcast TV content.
Moving Forward
Both sides of the Aereo case have weighed in on what an unfavorable ruling could mean for their respective futures. One Aereo backer put it bluntly: "If we lose, we're finished." Meanwhile, broadcasters have implied that should Aereo be allowed to continue, they would consider making it more difficult for Aereo-like companies to access their content. Last year, the president of 21st Century Fox said the company would consider shifting to cable distribution if Aereo prevails. "We can't sit idly by and let someone steal our signal," he said.
However the Supreme Court ends up deciding Aereo, the justices will need to grapple with these three key questions. There's a lot at stake for both sides, but it's doubtful that any Aereo decision would be satisfactory if it doesn't address the compulsory license issue, or if it doesn't take a harder look at what truly constitutes a "public performance" these days. And it's now up to the SCOTUS to answer what's arguably the most important Aereo question of all: What's the future of TV going to look like?