What’s Next For Aereo After SCOTUS Ruling?

Aereo was still operating Wednesday afternoon, since the U.S. District Court in New York must still implement the Supreme Court's findings. But Aereo's options are limited. The ruling may also affect other Internet services, though the Supreme Court did try to limit the scope of its decision. Here's a closer look at the ruling and what it means for Aereo and Internet users.

NEW YORK (AP) — The Supreme Court dealt Internet startup Aereo a major setback on Wednesday in ruling that the television-over-the-Internet service operates much like a cable TV company. As a result, the service violates copyright law unless Aereo pays broadcasters licensing fees for offering TV stations to customers’ tablets, phones and other gadgets.

Aereo was still operating Wednesday afternoon without paying such fees, as the U.S. District Court in New York must still implement the Supreme Court’s findings. But Aereo’s options are limited. The ruling may also affect other Internet services, though the Supreme Court did try to limit the scope of its decision.

 

Here’s a closer look at the ruling and what it means for Aereo and Internet users.

BRAND CONNECTIONS

Q: What does the ruling say?

A: Aereo streams television shows to customers in New York and 10 other markets. It has claimed that the service is legal because each customer is temporarily assigned an individual antenna about the size of a dime, so it’s akin to customers putting up their own antennas on rooftops. By contrast, cable systems typically have one antenna serving thousands of customers in an area.

The Supreme Court rejected Aereo’s argument, saying that it acts like a cable system. Aereo’s use of individual antennas, the court says, “does not make a critical difference.” As a cable system, the court says, Aereo must pay the same retransmission fees that broadcasters demand from cable and satellite TV providers.

Q: Why is Aereo still operating?

A: Although the Supreme Court expressed its thinking on the law, it’s the lower court that must issue a preliminary injunction stopping the service, as requested by broadcasters. That could take a few weeks. It’s not guaranteed that the lower court will halt Aereo’s operations, but it’s very likely.

Once an injunction is issued, broadcasters must prove copyright infringement during a trial. Because it’s now likely that broadcasters will ultimately prevail, Aereo might simply decide to shut down. Even then, broadcasters might still decide to pursue the case and seek damages, possibly as a message to future entrepreneurs contemplating video services that don’t involve licenses.

Q: What’s the big deal? Couldn’t Aereo simply pay the licensing fees and continue to operate?

A: Yes, although broadcasters and Aereo would have to negotiate the amount. Disputes over fees have frequently resulted in channels temporarily disappearing from various cable and satellite lineups. Broadcasters aren’t likely to offer Aereo friendly terms, especially if doing so would alienate the cable and satellite providers from which broadcasters already generate much more revenue.

It’s also not clear whether Aereo can really afford it. Aereo’s service starts at $8 a month, which is much cheaper than cable. The company spends much of that on equipment such as antennas and computers, along with leasing indoor and outdoor space to house all that. If Aereo starts paying fees to broadcasters, monthly subscription rates would likely have to go up significantly— the way cable bills have steadily increased over the years.

Q: What will Aereo do?

A: In a statement, Aereo CEO Chet Kanojia vowed to “continue to fight for our consumers and fight to create innovative technologies.” However, he didn’t offer specifics. The statement also said nothing about how long Aereo plans to keep operating and whether it will offer refunds if it shuts down.

In a spring interview with The Associated Press, Kanojia insisted the company had no backup plan, but had assets it could sell off, such as the technology powering the service.

Q: What does this mean for other Internet video services?

A: Licensed video services such as Netflix and Hulu won’t be affected at all. This case is about content that hasn’t been licensed, and it might discourage future entrepreneurs from experimenting with unlicensed services, even if they are ultimately legal under fair use or other aspects of copyright law.

“Anyone who wants some degree of certainty about the legality of the business needs to make sure content holders get paid, not just in broadcasting, but in other areas of the marketplace as well,” says Bruce Ewing, an intellectual property lawyer at Dorsey & Whitney.

There might be cases where unlicensed content is legal, he says, but “who’s going to invest money in this?”

Q: What about other Internet-based services, such as Dropbox, Google Drive and others that let you store content online?

A. Aereo and its supporters had warned that a ruling against Aereo could kill other Internet-based storage services because, like Aereo, they store digital copies of content and deliver it to customers on request.

The Supreme Court tried to limit the scope of its ruling by saying that context matters. For instance, it isn’t necessarily illegal for a service to store content that the customer actually owns, which is the case with many Internet storage services. And if distribution is limited to just relatives and a small social circle, that likely doesn’t count as a public performance that violates copyright law.

“Trouble is, any time the Supreme Court acts, its actions have effects and implications that extend well beyond the case,” says Harry Cole, a communications regulations lawyer at Fletcher, Heald & Hildreth. “No matter what the justices say, lawyers read these cases and try to figure out what exactly is being said.”

In other words, the Supreme Court offered some guidance but left a lot open for future lawsuits.


Comments (14)

Leave a Reply

Linda Leavell says:

June 26, 2014 at 6:32 am

Aereo is ILLEGAL and Shting Down

Ellen Samrock says:

June 26, 2014 at 11:59 am

It’s time for Aereo to start looking at the provisions under STELA. As an MVPD I don’t think they can be discriminated against–that is to say, broadcasters might not have any choice but to negotiate a rate with them. Cable and satellite probably wouldn’t like it but there is nothing they can do about, certainly not by taking off a network or broadcaster’s signal. That would only be hurting themselves. As for the cost to Aereo, well, broadcast television claims they only receive a few cents per subscriber pop from cable and satellite. I can’t imagine Aereo paying much more then that.

Bobbi Proctor says:

June 26, 2014 at 12:29 pm

Aereo should just sell all of these miracle antennas to Radio Shack, Best Buy and other stores who could then sell them to customers. I’d sure like to have an antenna that is small as a dime.

    Darrell Bengson says:

    June 26, 2014 at 2:45 pm

    make them your self, the principle is known since a long time. A physical small dipole matched and in resonance will perform very close (80-90%) to the full size antenna equivalent. Add a couple of low noise mmic and you are in business. They don’t do anything miraculous, their receive stations still need to be close enough to the transmitter site to get a good signal. Those antennas are not suited to be used at distances that would require anything more than a simple dipole.

    Wagner Pereira says:

    June 26, 2014 at 4:35 pm

    Most people, Chuck included, do not realize that one can receive a satisfactory ATSC signal with a paperclip inserted into the 75 ohm connector provided you are static and in the right location.

Wagner Pereira says:

June 26, 2014 at 4:34 pm

Unfortunately for Broadcasters, the SCOTUS decision made it easier for the next “Aereo” as it defined what the issues and definitions were to a point that is is clear what needs to be done to make a similar system legally without retransmission payment. With that in mind, a rube goldberg device that would pass mustard was easily to put together within 5 minutes of the decision. Fortunately for Broadcasters, the SCOTUS decision would probably slow down an investor for a new venture. Again, as a Broadcaster I am happy for the SCOTUS outcome, even though the outcome was based on flaws in technical understandings by SCOTUS.

Ellen Samrock says:

June 26, 2014 at 5:08 pm

According to NAB Smartbrief, Syncbak is poised to take over where Aereo left off. In this case, Syncbak has been working with, invested in by and has the full blessing of broadcasters. Perhaps Aereo can sell their technology and holdings to them.

    Wagner Pereira says:

    June 26, 2014 at 7:11 pm

    5 years since the CBS investment and essentially a non-functioning website….if CBS wants this to fly, they better move a lot faster. 5 years ago smartphones barely existed and tablets did not.

Jay Miller says:

June 26, 2014 at 6:21 pm

Who Cares..Move on!!!

    Wagner Pereira says:

    June 26, 2014 at 7:09 pm

    Cordcutters and millennials care, that’s who. As long as there is money to be made, someone will try to satisfy the demand. If Broadcast wants to do it, they better do it now, before someone else attempts another try given the new SCOTUS definitions which tells one exactly how Aereo screwed up (and that does not involve paying re-transmission fees). Of course, the other option, which is the correct way for Broadcasters to deal with it is to change the copyright law in Congress, as I have said all along.

Bobbi Proctor says:

June 27, 2014 at 10:00 am

You are right insider. I did not know that a paper clip inserted into the antenna 75 ohm connector on the back of the TV set would work. So I tried it. Lost all 40+ channels that we normally receive. So much for that idea. I will stick with our current antenna.

    Wagner Pereira says:

    June 27, 2014 at 11:48 am

    We also learned Chuck does not have great reading comprehension.

Bobbi Proctor says:

June 27, 2014 at 9:07 pm

I have the right location and can see the top of a TV tower about 5 miles away and the house isn’t moving. Still no signal.

    Wagner Pereira says:

    June 28, 2014 at 2:20 pm

    Still showing that lack of reading comprehension. Obviously you are not in the “right location” as far as rf goes.


More News