Light Reading

Supreme Court Halts Aereo's Flight

Mari Silbey
6/25/2014
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After years of legal wrangling, the US Supreme Court has finally dealt what may be the fatal blow to video streaming company Aereo.

In a much anticipated 6-3 decision, the high court announced that Aereo Inc. 's system of using dime-sized antennas to capture over-the-air (OTA) TV signals and then deliver them to consumers as individual online streams is equivalent to creating a public performance. As such, Aereo must pay retransmission fees to broadcasters, just like any cable TV, satellite TV, or telco TV provider. (See CBS Financials Fuel Aereo Angst.)

From the official Syllabus or summary of the decision in the case of American Broadcasting Cos., Inc., Et Al. v. Aereo, Inc., FKA Bamboom Labs, Inc:

    Aereo claims that because it transmits from user-specific copies, using individually-assigned antennas, and because each transmission is available to only one subscriber, it does not transmit a performance 'to the public.' Viewed in terms of Congress' regulatory objectives, these behind-the-scenes technological differences do not distinguish Aereo's system from cable systems, which do perform publicly. Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies.

The Supreme Court's decision, which reversed a ruling by the United States Court of Appeals for the Second Circuit, was written by Justice Stephen Breyer. Justice Antonin Scalia led the dissent, joined by Justice Clarence Thomas and Justice Samuel Alito.

Because Aereo has based its entire business model on combining free OTA content with web video in an inexpensive online subscription service, the company now has no way to generate revenue without a significant shift in strategy. Presumably there is still value in Aereo's technical process for capturing video over the air and efficiently transcoding it for delivery over the web. But whether that will translate into a successful business in the future is unclear.

Meanwhile, the ruling is a major win for broadcasters. While OTA networks have historically made the bulk of their money from advertising, their income from licensing fees has grown substantially as a share of total revenue in recent years. If Aereo had prevailed in court, there would have been nothing to prevent other service providers from following a similar model and bypassing retransmission fees to deliver OTA content.

Related posts:

— Mari Silbey, special to Light Reading

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jabailo
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jabailo,
User Rank: Light Sabre
6/29/2014 | 7:15:57 PM
Re: Intent
There are a lot of things different between city and suburban living.   You pay more, but you get cultural amenities.   It's expensive to own and house a car, but you might not even need one with transit.   On and on it goes.

Yes, it is a disadvantage to living in a tall apartment building admidst a sea of tall apartment buildings when it comes to radio signals.  That is one price to be paid for high density living.   There is no law that I am aware of saying that every citizen of the United States has a right to receive a clear, strong television signal no matter where he lives, and for free.   I would welcome any hyperlink to such a law, if it exists.

You are not required to live in a tall apartment building.  You can live somewhere else, and since there is the option of cable, fiber and satellite...there are things you can do acquire entertainment.    

Even if you were totally isolated from entertainment, there would still be no justification based on current law for you to construct an elaborate system to take a signal, copy it to digital, and send it as a binary stream over the internet without any agreement with the orignal owner. 

The limit of RF is like a fence.   Think of going down a country road.  You see these wooden corral fences.   How hard would it be for you to climb over one of these fences in the middle of nowhere?   Not very hard.   You could easily go onto someone's private property.   But that is not the point.  It is not the responsibility of the owner to do anything more than mark his property.   He should not have to electrify it with barbed wires.  The fence is reasonable information as to where the property line begins and ends.

With broadcast TV, the "property line" ends where the signal ends.   Any attempt to grab it where its strong and reroute it with a different tecnology is violating a property boundary. 

 
brookseven
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brookseven,
User Rank: Light Sabre
6/29/2014 | 6:13:47 PM
Re: Intent
jabailo,

The challenge is that apartment dwellers in major cities often can not place antennas or dishes.  Being inside a building means that reception is often poor.  In the old days, apartment buildings encourged people to put antennas on the roof.  Now, not so much.

Your notion of space rental is exactly right and that is Aereo's way around things in my estimation.  Instead of renting the kit required, sell it and rent the space to hold it and power to activate it.  At that point, I think the model ends up at about the same point as they are today.

And I agree with you it is not a disruptive service, just very useful to low end consumers.

seven

 
jabailo
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jabailo,
User Rank: Light Sabre
6/29/2014 | 4:56:33 PM
Re: Intent
Is Aero really disruptive?

To me it's like the people who would sell cable descramblers.

They are merely taking a restricted resource, and offering a technology to steal it.

I don't think they have a leg to stand on legally.

The only equivalent of what they are doing is for someone to take a long cable, and run it themselves all the way to someplace near the broadcast antenna.

If you are willing to spend money for the right-of-way to do this and rent space on someone's roof you are free to do so.   I doubt if it would be competitive with a $35/mo satellite tv service!

 
nasimson
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nasimson,
User Rank: Light Sabre
6/29/2014 | 4:39:46 PM
Re: Intent
@jabailo:

> I have a carton of eggs.   The truck takes it to the loading dock.  
> Now you come along and take a dozen and put it in your car and
> sell it by the roadside.  How can that be legal?

Not a correct analogy. Do we exactly know on which legal grounds did court decided against Aero?

Disruptive technologies always disrupt the existing business models. Its one of those!
nasimson
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nasimson,
User Rank: Light Sabre
6/29/2014 | 2:50:41 AM
Re: Whats Next?
> The service still works, you can still sign up as a new customer

No it does not. Now there's nothing on the website but this letter:

 

wanlord
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wanlord,
User Rank: Light Sabre
6/28/2014 | 7:58:21 PM
RE: Intent
I guess they didn't waste time. They stopped streaming & replaced their home page with a letter. Cute little paperclip shaped like their antenna. Somehow I think they have something up their sleeve and this isn't the end...
SachinEE
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SachinEE,
User Rank: Light Sabre
6/28/2014 | 5:27:20 AM
RE: Intent
In my view, getting broadcast TV signals over the internet seems like 'not a good idea'. It's not worth the trouble since you can get them through computer browsers. Besides, you can use them almost anywhere you want. We need to start thinking clearly and get our facts and priorities right especially when it comes to chucking any dollar from our pockets. Maybe Aereo should think of renting some space and power to house the consumer equipment rather than sticking to the idea of owning the equipment.
brookseven
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brookseven,
User Rank: Light Sabre
6/27/2014 | 4:43:53 PM
Re: Intent
So why do you think that having an external antenna is proscribed. Before there was lots of cable lots of people had external antennas. We are simply talking about a way to wire my antenna to my tv. Seven
mendyk
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mendyk,
User Rank: Light Sabre
6/27/2014 | 10:29:50 AM
Re: Whats Next?
Barry Diller (a.k.a. The Money Guy) isn't likely to stick around. Fade to black.
wanlord
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wanlord,
User Rank: Light Sabre
6/27/2014 | 9:38:59 AM
Whats Next?
So what happens next? Does Aereo just cease operations/service? When? The service still works, you can still sign up as a new customer, so what are the next steps?

 

 
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