Aereo: a ground breaking case
The outcome of the Aereo case, which has attracted widespread media attention in the United States, could have huge consequences for the way that we watch television, as well as on the future of the industry’s main players. At the same time, it will also impact on the complex relationship between innovation and intellectual property rights, and even on the future of technological development.
So what is Aereo and why did its case landed in the US Supreme Court? Aereo is a company that provides the remote installation of a micro-antenna controlled and maintained by the company, along with a storage facility for recorded programs, with a series of applications allowing subscribers to see or request recordings from any device. The company, run by Chet Kanojia, with backing from, among other others, the flamboyant Barry Diller, has garnered almost $100 million in financial support, currently operates in nine US cities, and plans to expand into many more.
US Law states that the radio spectrum used for transmitting television signals is a public good, and that therefore, signals are open and can be seen free of charge by anybody able to tune into them. That said, although the use of individual home antennae is perfectly legal, the majority of households in the United States receive their signal via cable or satellite, in many cases adding premium channels, and these companies pay the main broadcasters a set amount per subscriber.
What sets Aereo apart is replacing home antennae, which are usually low quality and are only of use for watching the device to which they are connected, with a remote antenna located in a place where it will pick up a good signal, and to then transmit that signal to its subscribers by internet. Aereo typically charges between $8 and $12 a month, which is much lower than the cable or satellite channels. It is able to do this because it doesn’t pay the broadcasters for using their wavebands.
The company’s argument is that it is simply installing a remote control antenna in its subscribers’ property, something that they could do for themselves free of charge, and therefore avoid paying anything to the broadcasters for using their content. So why would anybody bother paying Aereo to install an antenna when they could do it themselves? Because they are going to get better reception, and more importantly because the idea of being able to organize what you watch when and how you want to watch it is an attractive one.
If Aereo proves popular, then broadcasters and cable companies can expect to see their income fall. This process has been dubbed cord-cutting, whereby growing numbers of users are canceling their cable and satellite contracts and simply watching programming via internet-based providers such as Netflix, Hulu, Amazon, and others. What’s more, the good reviews of the service, along with the Supreme Court case, have raised Aereo’s profile and popularity even further.
Aereo has clearly found an extremely profitable loophole to avoid paying broadcasters: the tiny antennae it fits on enormous grids are not actually necessary from a technical standpoint. But if the company received the signal itself and then retransmitted it, it would be subject to the same rules as other broadcasters. The company argues that it is simply managing an “antenna in the cloud”, and that there is no public broadcasting, but simply the retransmission on an individual basis of what each household’s antenna picks up, a service for which it charges, adding storage space for recorded programs, but which does not oblige it, at least in theory, to pay the channels that produce this content, because in reality, the user is subcontracting a service that he or she would have the right to watch free of charge at home.
In essence, this is copyright dispute—based on the Copyright Act of 1976, whereby rights owners have control over the transmission and retransmission—and those trying to protect technological development. It has been compared to the Betamax case that pitted Universal against Sony in 1984, and which the latter won. The 12 judges overseeing this case are doing their best to get up to speed on the issues involved, and the likely repercussions of their decision. The cable and satellite industry has the support of President Obama, who has described Aereo as “clearly infringing the law.” The technology sector, cloud-service providers, the Electronic Frontier Foundation, and many others, also have a stake in the outcome. This is a complex case, with any number of third parties filing amici curiae briefs and providing testimony before the judges overseeing it. A resolution is expected sometime in June.
For the moment, the panel of judges seem relatively skeptical toward the company’s arguments: they attach importance to the fact that Aereo is the only company offering these kinds of services without paying for them, although they have also recognized that this is precisely the kind of legal nitpicking that any lawyer would try out, and that what it is doing could be an opportunity for technological progress. Should it lose, Aereo says that it does not have a Plan B. If it wins, some broadcasters have said that they will move to cable only transmission, which would significantly affect their ability to attract advertising.
A ground-breaking case if ever there was one, and that will have a big impact on technology in the coming years.
(En español, aquí)
