Aereo Vs. the Broadcast Network Industry — The Supreme Court Case that will Change TV Forever.

Tomorrow, the US Supreme Court will hear possibly the single most important case of the technological age.  This case will likely change television, and the way Americans watch TV, forever.

Disney (parent company of ABC), Comcast (parent of NBC), 21st Century Fox (parent of FOX Television Network), and CBS (owner of CBS Television Network and co-owner of The CW) are all suing Aereo, Inc. for copyright infringement.

But before we get into all the legal mumbo jumbo, let’s start with the basics.

Aereo is an online tv streaming service that spent nearly two years on research and development of a new, simplified way to legally provide customers with live, free over-the-air (OTA) broadcasts and a DVR solution without having to pay $70+ a month for a cable service.  They figured out a way to take the old rabbit-ear antenna technology, shrink it down to about the size of a dime, and install them in mass quantities around the country.  Each antenna is connected to it’s own, individual DVR, and that DVR is streamed online to the customer through Aereo.  In this situation, Aereo is simply renting out equipment to the customer and handling the upkeep of that equipment.  The customer must live in the same broadcast market in which the Aereo antenna is installed (for example, a customer in Orlando could not rent an Aereo antenna from New York , it must be in Orlando).  In essence, Aereo is nothing but a really long cord, no different than if you lived in an apartment, installed an antenna just off of apartment property and ran a cord from the antenna to your apartment yourself, only Aereo is handling the upkeep of that antenna and cable.

At least, that’s Aereo’s defense.

The broadcasters disagree, claiming copyright infringement on grounds of public performance. What does that mean?

Under US copyright law, you do not have to pay royalty/license fees to a copyright holder as long as you’ve legally obtained the copyrighted material and are using it for personal use only, or ‘private performance’.  This is why we can watch OTA TV in our living rooms right now, we’ve obtained the material legally over the airwaves, and are privately watching that content.  However, if you were to invite the whole neighborhood to your house to watch tv and charged a fee to get in, that’s a ‘public performance’, which is in violation of copyright law.

The broadcasters are claiming that Aereo is a public performance because they are obtaining the OTA broadcast themselves, which is legal, but offering it to others at a charge.

Now the US Supreme Court must decide whether simply charging customers makes this a public performance, or if it’s simply a rental charge and service fee, which could be argued is simply an alternative to buying rabbit-ears from your local electronics store and fixing them yourself if they break.

The ramifications of this ruling, either way it goes, cannot be understated.  If the broadcasters win, Aereo, and it’s entire business model, are completely out of options and must shut down, leaving customers with fewer options and the broadcasting industry keeps the status quo.  A status quo that is increasingly being challenged by the age of the internet and on demand content.  A status quo that will eventually need to be rethought.

On the other hand, if Aereo wins, it could mean an entirely new way to watch TV and a huge paradigm shift in the entire television industry.  Not only could this open up a whole new market of services like Aereo, but cable/satellite TV operators like Bright House, Time Warner, DirecTV, Dish, and many others could set up similar systems and offer local channels themselves.

And that is exactly what broadcasters don’t want.  With the current model, for those cable and satellite providers to offer local channels, the cable and satellite providers (in most cases) have to pay the local affiliates for the right to rebroadcast their signal, and the broadcast networks get a cut of that money.  If cable providers begin picking up the signal free OTA, that means less revenue for local affiliates, and in turn less for the networks.

This is why the major networks, including CBS, FOX, ABC, and NBC, have all said if Aereo wins, they will pull all of their popular programming from their broadcast networks and go exclusively cable-only, leaving their local affiliates with nothing but ‘public service’ and ‘educational and informational’ programming that is required by law.

However, more likely than not, backlash from customers will force broadcasters to rethink that decision, or at least offer the popular content via the internet easier and faster (as opposed to behind paywalls, verification logins, or an 8-day broadcast delay that most networks use currently).  Eventually, the broadcasters will be forced to rethink their current model one way or another in this situation.

No matter which way the Supreme Court rules, the decision will undoubtedly cause major changes to the way Americans watch TV.  Whether that change comes sooner or later, that’s the major question.

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