Aereo and the Supremes

Video streaming company Aereo is fascinating from a technological standpoint. The legal questions it raises are equally intriguing. They will determine whether Aereo proceeds on its merry way or whether it will be shut down. There’s only one way to decide, and that’s to ask the Justices. Yep—another big AV case is heading to the Supreme Court.

Aereo, as you know, is an online video streaming service. It provides OTA HDTV via the Internet; essentially, it is an alternative to basic cable. A subscription fee ($8/month) lets you watch local broadcast TV stations on your PC and Apple computer and tablet as well as Apple TV and Roku. Broadcasts can be viewed live or recorded for playback later. The $8 account gives you 20 hours of cloud-based DVR storage, while for another $4, you get 60 hours. You don’t need to buy or install any equipment. Oh, and there’s a 30-second forward function for skipping commercials.

Aereo is currently available in eleven metro markets (New York, Boston, Detroit, Baltimore, Cincinnati, Denver, Atlanta, Salt Lake City, Miami, Houston, and Dallas) with more markets by the time you read this. Aereo recently released an Android app on Google Play. Although the app will only work in its serviced markets, it broadens Aereo’s footprint to the universe of Android mobile devices.

The legal complication is this: Broadcasters argue that Aereo is infringing their copyright license on their content; in particular, this impacts their retransmission rights. Cable and satellite companies pay billions to broadcasters so they can carry the broadcasts. Aereo pays them nothing. Thus broadcasters have waged war against Aereo in federal courts in the market cities, but so far, the courts have refused to shut down Aereo. However, confusing the issue, other courts have ruled against similar streaming services. To resolve the issue, broadcasters have filed a petition with the U.S. Supreme Court, asking it to decide once and for all whether Aereo violates their copyright. Last month, the Court agreed to hear the case.

One key legal question is whether Aereo is overstepping what any OTA viewer is already doing. Attempting to overcome at least part of that problem, Aereo provides a tiny physical antenna for each viewer, warehousing all of them in central Aereo facilities. When you click on a TV station, an antenna is activated and tunes to that frequency; that signal is transcoded and streamed to you over the Web. Thus, Aereo argues, you are simply watching an OTA broadcast, and the law says that OTA broadcasts are free for viewers. Thanks to Aereo, the advertisers on the broadcast channels reach even more eyeballs. At least in Aereo’s eyes, their venture is perfectly legal.

Interestingly, in addition to its legal challenges, Aereo’s electricity bill may be another speed bump. Each antenna burns 5 or 6 watts of power, and that adds up; The Wall Street Journal estimates that if Aereo is capable of supporting 350,000 subscribers in New York, that would be 2 megawatts of power—and a $2 million annual tab.

In any case, questions need answering: Is Aereo’s OTA viewing legit? Is it right for Aereo to retransmit broadcasts over the Internet without permission? Is Aereo cruising for a bruising because it’s simply profiting from the copyrights of others? Or is it a brilliant reimagineering of traditional content delivery?

Aereo isn’t a bunch of crazy high-school kids with a server they built for a science fair. Rather, it is backed by media giant Barry Diller, whose deep pockets could fund a hundred attorneys for a hundred years. On the other side, broadcasters have a long and storied history of going after anyone it perceives as a threat to their revenue, pirate or otherwise. Let the games begin.

mzaborow's picture

Supreme Court? Buh-Bye Aereo!

In my area, OTA broadcasts originate from local TV stations that are affiliated with the networks.

Affiliation implies that there are financial arrangements between the partners involved (i.e. the stations pay the networks for broadcast rights).

Since Aereo pays nothing for broadcast rights, it's logical to assume that by retransmitting signals that it has no rights to, it's doing so illegally.

Seems open and shut...or am I missing something?

trynberg's picture

It's not open and shut...hence why the case is before the Supreme Court.

The threat to the networks is that Aereo blows apart their business model of ridiculously high carriage fees to cable/sat companies for transmitting what is supposed to be free television for the American public.

I'm sick of companies violating their government mandates to their benefit and my loss. Good luck Aereo.

mzaborow's picture

I was so intrigued by the S&V article on Aereo that I decided to research its business model. I did and found it to be brilliantly simple...

Steal someone else's copyrighted material and then resell it to subscribers who are foolish enough to pay for it!

They teach this at Harvard?

Emotions aside, nothing is free in the United States except possibly for the air we breath.

The television broadcasting industry initially sued Aereo by using the somewhat weak argument that its streams constituted "public performances".

I'm betting that won't be the argument used in front of the Supreme Court Justices in April.