Supremes Stand Clear of RS-DVR Case
Cablevision Systems Corp. (NYSE: CVC)'s controversial and ambitious RS-DVR was cleared for takeoff today when the U.S. Supreme Court declined to hear an appeal from studios and networks that were trying to delay or stop the new service over copyright concerns.
Last month, the U.S. Department of Justice suggested that the Supreme Court keep its nose out of the case, arguing that it doesn't deserve the court's attention and that Cablevision's RS-DVR offers essentially the same functionality as a home-side VCR or digital video recorder. The Supreme Court asked the DoJ to weigh in on the RS-DVR matter in January. (See DoJ: Butt Out of Cablevision RS-DVR Case .)
Cablevision has long held that the same copyright rules governing VHS and DVR machines (via the 1984 "Sony Betamax" case) should also apply to the MSO's cloud-based approach. The RS-DVR requires customers to make their own recording requests and that the system writes individual copies of those recordings. For example, if 10,000 customers place a recording request for tonight's episode of The Bachelorette on ABC, the RS-DVR system will create 10,000 discrete copies for individual playback. [Ed. note: Then, I'm guessing, the system would vomit uncontrollably.]
Programmers and studios, including ABC, NBC Universal, and Paramount Pictures, filed a complaint in May 2006, claiming that the RS-DVR would infringe on their copyrights and wreak havoc on the TV ad model. Although a court originally ruled in favor of that position, the U.S. Court of Appeals for the Second Circuit reversed that lower court ruling in August 2008, holding that the RS-DVR, as designed, does not directly infringe copyright rules. (See Court Resurrects Cablevision's Network DVR , Inside Cablevision's 'RS-DVR' , and Net DVR Still Appealing for Cablevision.)
Summer launch a go
Cablevision recently revealed intentions to deploy the RS-DVR service sometime this summer. However, the MSO has yet to finalize a debut date or to set a price on the service, which will be capable of running on any of Cablevision's digital boxes. (See Summer Debut for Cablevision Network DVR.)
"This is a tremendous victory, and it opens up the possibility of offering a DVR experience to all of our digital customers," Cablevision COO Tom Rutledge said in a prepared statement. "At the same time, we are mindful of the potential implications for ad skipping and the concerns this has raised in the programming community," he added.
Rutledge said there are ways to make this model work for programmers, but didn't go into detail. Sources have told Cable Digital News that Cablevision may attempt to obtain licenses for the most popular content so that a single copy could be streamed to multiple subscribers. That scenario would help the MSO avoid placing too much stress on the RS-DVR's video ingest function, considered to be the system's Achilles' heel by some engineers. (See Cablevision Girds for Remote DVRs.)
More RS-DVRs on the way?
Now that Cablevision's RS-DVR appears to have cleared its final legal hurdle, other MSOs may give the concept a much closer look.
Time Warner Cable Inc. (NYSE: TWC) has already indicated that it was keeping a close eye on the Cablevision RS-DVR proceedings and might consider something similar. TWC has championed "Start Over," a quasi-network DVR that allows customers to restart some shows that are already in progress. The caveat is that the MSO has obtained permission for all the Start Over-enabled programs. To preserve the ad model, the fast-forward function is disabled for any programs viewed in Start Over mode.
"The engineering attraction of the network DVR is clear," TWC president and CEO Glenn Britt said last August during the company's second-quarter earnings call. "What isn't clear is the law." (See Time Warner Cable Eyeing Network DVR Case .)
— Jeff Baumgartner, Site Editor, Cable Digital News