Today, the future of TV rests in the wrinkly hands of the Supreme Court

today future tv rests wrinkly hands supreme court aereo ceo chet kanojia headshot
Aereo CEO Chet Kanojia argues that his company is protected by the same laws that allow home users to own DVR boxes.

After two years of scorched-earth legal warfare, the biggest players in television will butt heads with Aereo in the ultimate arena today: the United States Supreme Court.

The future of television rests in the outcome. If Aereo loses, streaming broadcast TV over the Internet could get a lot harder. If the networks lose, some major players could shut down their over-the-air broadcasts in protest, or even start their own streaming services. Fortunately, you don’t have to be a legal scholar or an engineer to understand the details. Here’s the lowdown of both sides leading up to tomorrow’s battle, and what the decision will ultimately mean for you.

The basics of Aereo

At its core, Aereo is nothing more than a way for users to watch broadcast TV (free to anyone with an HD antenna) through the Internet whenever and wherever they want. For $8 to $12 a month, users rent tiny antennae that are housed in large ‘farms’ where thousands or even tens of thousands of the little gadgets receive over-the-air signals. Through the service, users can watch ABC, CBS, Fox and all the other local stations they could normally watch with a home-based antenna, but from a computer, mobile device, or Roku. The service also allows users to record shows and watch them later, just like with a home DVR.

That distinction between private and public transmission is at the heart of the argument.

The service started in New York in 2012, and now operates in around a dozen metropolitan areas, with hopes to expand to many more. Aereo never sought permission to rebroadcast network feeds, or paid any fees to broadcasters for the right to do so. As such, the company has been under constant litigation from the companies that own networks like Fox, CBS, and NBC, since its inception. While broadcasters maintain that Aereo is stealing their content, and causing “irreparable harm” to it in the process, Aereo argues its service is perfectly legal, referencing legal precedents to back it up. And until a recent District court decision in Utah, the justice system at large has widely agreed with that assertion.

Legal or illegal?

Most of the arguments both for and against Aereo’s legality have centered around the 1976 Copyright Act, in which “public” rebroadcasts of network feeds were deemed illegal, and “private” rebroadcasts were protected. That distinction between private and public transmission is at the heart of the argument. Broadcasters say Aereo’s service amounts to a public rebroadcast of their content, while Aereo argues that, since the content on its service is available only to the individual user who uses the antenna and creates the recording, it is a legal private performance.

Aereo’s argument rests heavily on its proprietary antenna system. Each user rents their own miniature antenna and has recorded shows stored separately. That makes Aereo’s operation  similar to what any user could legally set up at home with an antenna and DVR – but far more convenient. The ability of consumers to make their own recordings of over-the-air broadcasts is protected by a seriously retro 1984 case between broadcasters and Sony, and a much more recent case in 2008, which extended that right to DVR recordings, and helped to open up the innovation and progression of the modern DVR systems we use today.

“No one disputes the fact that a consumer can have an antenna, no one disputes DVR, the argument seems to be ‘Can a consumer have a remotely located combination of those technologies,” says Aereo’s top spokesman and CEO Chet Kanojia. That makes the Aereo issue center more broadly on public access to DVR content as a whole. You know, the kind of technology used by Amazon, Dropbox, and multiple other services that host videos, music, and other media content.

Broadcasters, and even the Department of Justice, argue that Aereo’s service is an abuse of the wording of the 1976 law, and that the service should be treated like any cable company or streaming site such as Netflix, which are retransmitters of federally protected material. As such, they argue, the service directly violates copyright law.

In Chet Kanojia’s recent interview with Katie Couric, he argues that broadcasters are twisting the agreement that allows them to broadcast in the first place. “The deal between congress and the broadcasters — in exchange for free spectrum — was to program in public interest and convenience,” he says. “The (argument) that someone using an antenna is somehow stealing the signal is contrary to the original relationship.” Kanojia also argues that broadcasters make most of their money from advertising, and they continue to do so with his service in place.

Money, money, money

There are many reasons why broadcasters oppose the Aereo model, but all roads lead to the same place: Aereo is making money off content it didn’t produce. However, it’s not just the fact that Aereo is taking a free ride on the network rails that really upsets these titanic media powerhouses, but where that free ride might lead.

Broadcasters see Aereo’s circumvention of the system as a slap in the face.

Although over-the-air programming is free to all, most people use cable and satellite services to get their local TV. And broadcasters make a lot of money selling their content to those providers. Remember when DirecTV didn’t have local channels? It had to pay big bucks to local and national broadcasters to get them, as did cable providers before it.

Broadcasters see Aereo’s circumvention of the system as a slap in the face, like the local Don who approached Vito Corleone in The Godfather II. “Let me wet my beak,” say the broadcasters, but Aereo doesn’t play ball. But more importantly, the Aereo model is one that broadcasters inherently fear as a possible pathway to freedom from their fees for all services. If Aereo doesn’t pay, why should the others? And multiple-system operators (MSOs) like Comcast have already looked into the possibility of starting their own Aereo-style system to rid themselves of the need to pay the networks fealty.

So, what are the possible outcomes of the case?

There are so many political, legal, and monetary facets and implications, many prognosticators are at a loss. Most experts seem to rate the outcome as a coin toss. However, we do have some idea of the likely consequences for either side should the court rule in their favor.

If Aereo wins

The first likely outcome of an Aereo victory will be its own expansion. The company had originally planned to become available in 22 territories by the end of 2013 before legal battles and “technical challenges” kept it from its goal. Once unfettered by litigation, and glutted with political cache and momentum, its likely the company will begin expanding quickly. But there’s a reason people are calling this a battle for the future of TV.

Aereo will also likely see major competition in the field, should it win. Variations of its service are sure to sprout up on all sides, including the possible expansion of similar cloud-base DVR services either already in place or in the works from companies like TiVo, Mohu’s Channels, and Tablo. But bigger players promise to enter into the game, as well.

Aereo Android
The Aereo interface lets users comb through live TV, and even choose shows to record and watch later, without ever installing any hardware.

Les Moonves of CBS promises a no-holds-barred approach should broadcasters lose their case. Speaking with CNBC, the outspoken CEO offered several possible outcomes including, “Putting our shows directly on cable, forming our own Aereo with other networks, going over the top. Lots of solutions. No fear on my part.” ‘Going over the top,’ is a not-so-veiled threat that, should Aereo win, CBS could pack up its broadcasting ball and go home, so to speak, airing its content solely online to cut services like Aereo – and the antenna-owning public – out of the equation. The NFL and Major League Baseball have made similar threats.

As such, some worry that Aereo’s victory will set a precedent that could eventually lead to the end of free TV as we know it. Even disregarding the above threats, Aereo charges for its service, and there have been consumer advocacy groups which argue against the practice of charging consumers for something they should be able to access for free.

If the broadcasters win

If broadcasters succeed, several consequences will come immediately into effect, while other broader results may have a ripple effect for years to come. One outcome that is all but assured is that Aereo, and copycat services like it, will fold and cease to exist. But what of the industry at large?

First of all, there is worry about what such an outcome could mean for all DVR services. Depending on how the ruling is worded, we might see consequences affecting the legality of services from the likes of TiVo, and the aforementioned Mohu Channels, and Tablo boxes, which allow for “timeshifting” of network broadcasts. But what about the broader realm of cloud computing?

Aereo argues that in one nightmarish scenario, the case could affect the very legality of cloud computing as a whole. “If the broadcasters succeed, the consequences to American consumers and the cloud industry are chilling,” Aereo warns on its advocacy website. The entire cloud system we all depend on, from Dropbox to Amazon, could see restrictions on the type of content users are allowed to store.

No matter what happens, there is nothing simple about today’s proceedings. Our current sitting Justices have shown a serious lack of understanding when it comes to modern online systems including Justice Kagan’s admission that the court “hasn’t figured out email.” These same nine technologically slow-witted judicial oligarchs hold the outcome in their wrinkled hands. Regardless of their decision, we will all see a change in the technology we use every day. Stay with us as the story unfolds and we parse through the case that controls the online fate of us all.

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