On Wednesday, the United States Supreme Court ruled that Aereo, a 2-year-old streaming television startup, violated the Copyright Act and that its services were, in effect, illegal.
In their 35-page ruling (PDF), the Court said that Aereo, whose technology captures over-the-air TV signals without paying broadcasters any fees, is essentially the same as a cable company and not an equipment provider.
Aereo is a television service comprised of two components. The first is a mini-antenna that is stored in one of the company’s server farms and is rented by a customer. The second component is a DVR and cloud storage service that holds recorded TV content. Users can receive around 30 channels with enough DVR space for around $8 to $12 a month on any compatible device. The service does not offer actual live television. However, users can record and transcode in the cloud almost simultaneously for near-live television.
Now, almost all television content is copyrighted work and cannot be rebroadcasted publicly without the content owner’s permission. Cable companies do this by paying billions of dollars in retransmission fees for the right to retransmit broadcast programming television. However, Aereo does not pay anything.
The issue at hand is this: Does Aereo’s service constitute a private or public performance? Since many users watch the content Aereo provides in near real-time at the same time, broadcasters believe that Aereo’s signal is public. However, Aereo argues that since each user inputs his/her own commands to control and tune the antenna, the signal is private and Aereo is an equipment provider. Customers simply rent the antennas and control the content they watch on their own.
Aereo believes that the fact that users tune the antenna to receive signals differentiates them from traditional cable companies who constantly stream content. However, the Court believes that this single difference does not classify Aereo’s services as a private performance and does not distinguish it from a cable company.
The company has said that a decision against it could negatively affect the concept of private versus public performance in the area of cloud computing. This industry was built on the idea that streaming services are legal so long as the streamed content was obtained legally and is delivered to the individual in private.
In the majority opinion, Justice Stephen Breyer said that the decision should not be applied beyond Aereo’s case. And in the dissenting opinion, Justice Antonin Scalia said, “The court vows that its ruling will not affect cloud-storage providers and cable-television systems..” Scalia was joined by Justices Clarence Thomas and Samuel Alito in dissenting.
Aereo has said in the past that they have no plan B if the Court rules against it.
In a statement, Aereo’s CEO and Founder Chet Kanojia said, “Today’s decision by the United States Supreme Court is a massive setback for the American consumer. We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter.”
He also applauded the dissenting opinion saying, “Justice Scalia’s dissent gets it right. He calls out the majority’s opinion as ‘built on the shakiest of foundations.’”
However, he also hinted at a possible future for Aereo: “We are disappointed in the outcome, but our work is not done. We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
In a statement, the broadcasters called the Supreme Court’s opinion a victory saying, “The court has sent a clear message that it will uphold the letter and spirit of the law just as Congress intended.”
Now, Aereo either has to start paying copyright licensing fees or must shut down.
The ruling reverses those made by a federal court and the Second Circuit Court of Appeals both of which had ruled in favor of Aereo.
Broadcaster stocks rose sharply on the news of the ruling.
Vishnu is a producer and the Chairman of the Science and Tech Department here at EB Media. He has a great fascination with technology and science. He enjoys staying up-to-date and voicing his opinions on these topics.