A Wednesday U.S. Supreme Court decision passed 6-3, striking down Aereo technology company’s platform for business, citing copyright laws.
The American Broadcast Company challenged whether the service that Aereo provides is infringing upon the copyright material of "live performance" by retransmitting it for money.
Cable companies are referred to as providing the secondary transmission in the Copyright Act of 1976, retransmitted from the primary transmission given by broadcasters, locally or nationally. The Copyright Act mandates that cable companies, and later satellite companies, pay royalties to these broadcasters who are licensed by the FCC.
Aereo, a New York City-based business that uses tiny antennas to capture over-the-air local TV broadcasts and feed them to users via the Internet, doesn’t really seem to be acting as a secondary transmitter.
The court’s decision in ABC et al, v. Aereo treats Aereo’s service no differently than as if it was a cable company.
Aereo argued that it provides content in an Internet cloud service by renting out small antennas that pick up broadcasters’ digital signal for a fee. Aereo is really just exploiting a new technology demand for otherwise free digital content .
We don’t necessarily disagree with the court’s decision: That Aereo should not be taking advantage of that demand simply by redirecting and recording content at the consumer’s demand for money.
We do, however, disagree with the basis of the court’s decision, which could have broader implications for new media.
"For all practical purposes," Aereo was acting like "a traditional cable system," said Justice Stephen Breyer.
"The many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here."
The dissent led by Justice Antonin Scalia in this case is critical: Recognizing that cable systems transmit constantly. In contrast, Aereo’s system remains inert until the subscriber indicates he or she wants to watch or record a program, like a DVR for Internet mediums.
Cable and Satellite Companies offer more than a service. They are multicast networks (one-to-many or many-to-many communications), providing more content than what is solely transmitted by the broadcast networks. They package content and work with broadcasters to localize advertising for a profit.
The difference between the time the Copyright Act was enacted and now is that cable was then a new idea, Internet was hardly a thought and broadcasters were restricted by the electromagnetic spectrum of an analog television system.
Today, cable companies are losing money, channels are being canceled and subscribers are canceling service.
Today, the infrastructure of the Internet works as an IP multicast in and of itself.
Today, broadcast companies have grown into giant media conglomerates and are no longer limited in number by fixed airwaves.
Aereo, and streaming services such as Hulu, Apple TV and Netflix use the infrastructure laid down by Internet providers to relay content for this new technology user demand.
They pose a threat to broadcast companies on more levels than just relaying copyrighted content for money: Some of these services are providing content using infrastructure laid down by companies with competing interests, such as Comcast.
Aereo simply rents out a small antenna, one which could otherwise be bought and used on someone’s home computer, like Pinnacle. The remarkable thing about Aereo is its cloud service to provide ease of use and multi-platform on-demand broadcast content. The small antennas that are Aereo’s infrastructure are now worthless.
If this service was offered for free it might be one thing, but Aereo was exploiting somewhat of a loophole without providing any original content. It does not pay content providers like streaming services do.
The problem with this decision is not the result, but the reasoning behind the decision, which takes even more precedence.
The court may be laying broader implications that Aereo, and maybe even streaming services, are themselves multicast companies providing secondary transmissions, no different from cable and satellite companies.
The U.S. Supreme Court’s continued favorability with broadcasters in Comcast v. FCC and ABC v. Aereo may result in stagnant media progress.
Media conglomerates create, own and distribute a full line of content and control the entire process, constraining competition and advancement of new technology according to consumer demand.
Innovative solutions to consumer demand like the service Aereo provides should be given the opportunity to function, perhaps with some restraints. The decision focused too much on copyright law without considering the FCC mandate on the broadcast companies to transmit free digital content.
Aereo CEO and founder Chet Kanojia said in a public statement, "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."
There is no possible way Kanojia may follow through with this statement.
There is no way to work his business model around the court’s decision.