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Get the Facts on a Supreme Court Case That Could Change TV Forever

Television broadcasters are suing over-the-air subscription provider Aereo.
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At first glance, the case seems like David vs. Goliath: Aereo, the company that says it'll rent you a tiny antenna to watch over-the-air TV, is being sued by the nation's broadcasters for copyright infringement. On April 22, the Supreme Court heard ABC v. Aereo, but we're not likely to see a verdict until June. Speculators on all sides of this case have already said the outcome could have serious implications for the future of television.

In the meantime, we decided to take a look at this case from the consumer's perspective. The Supreme Court's decision could affect not only Aereo customers, but traditional antenna users as well. Read on for our breakdown of how home antennas work, why Aereo is different, and how this case affects everybody.

The Aereo Controversy

This is a complicated case, involving sections of copyright law that some say haven't kept up with rapid changes in technology. The argument from Aereo goes something like this, according to the New York Times: "If it's legal to set up an antenna and record a TV show at your own house, which it is, shouldn't it also be legal to rent an antenna and server space at a big data center, and then stream the show over the Internet to your computer, tablet or set-top box?"

However, the broadcasters say that this sounds like Aereo is re-transmitting their signals without paying them the requisite fees — in other words, broadcasters claim Aereo is illegally operating as a cable provider in violation of the 1992 Cable Act. "Aereo's business model is essentially grabbing those signals from over the air, bundling them together, and then selling them for a profit. Well, then the entire model and the entire premise of copyright law is going to be disrupted," Neal Katyla, the former acting solicitor general of the United States and legal adviser to the broadcasters, said on PBS Newshour. "Everyone else who wants to grab content has to pay for it."

What's at Stake

If the Supreme Court wants to hand down a consumer-friendly verdict, they've got their hands full. A ruling against Aereo could upend the cloud storage industry, something no one wants to see happen. "Aereo is exploiting a seam in copyright law that implicates fair use, performance rights, and how these rules apply to cloud computing," The Washington Post explained. "The justices seem to be struggling to find a way to slap Aereo down without damaging the legal framework that today protects cloud companies like Dropbox from the copyright plaintiff’s bar."

Of course, if the decision comes down on the side of Aereo, then the broadcasters could revolt. "It’s possible that networks may decide to move their popular programming over to a paid service if the Supreme Court should rule in Aereo’s favor," said Grant Whipple, Consumer Electronics Product Manager for Winegard Company, an antenna manufacturer not affiliated with Aereo. In an interview with DealNews, Whipple said antenna producers like Winegard are watching this case very closely, as such a negative reaction from broadcasters could hurt antenna sales — and antenna users — in general.

Aereo vs. Traditional Antennas

There's no question that antennas provide a vital service for cord-cutters and other non-cable customers. "For viewers wanting to tune into regional news and weather or the major sporting events local broadcasters carry, an over-the-air antenna easily fills the gap," Whipple said. Aereo claims that it provides a similar service, renting a customer a tiny antenna at one of its remote facilities. An Aereo customer also gains the ability to record these shows and store them in the cloud.

It's no mistake that Aereo wants everyone to know that each customer gets their own little antenna; that model purportedly differentiates them from a cable company. Unfortunately, the model may not be technically accurate. "The problem here is that a single miniature antenna ... can't (due to very well understood physics) receive VHF and UHF television signals," explained the Huffington Post. "The technology does not appear to be a passive television antenna in a remote location. It appears to be an array of antennas and a system for multiplexing transmission, which closely resembles an MVPD or, in other words, a cable operator."

Of course, the Supreme Court will decide whether to interpret Aereo's tech in this manner. If the company is allowed to continue, then it will be up to customers to decide whether paying Aereo for arguably better access to free content is a good idea. "The one thing to remember is Aereo charges a monthly fee for programming that is currently free," Whipple noted. "Why pay for something that is already free? The consumer is far better off purchasing their own antenna (a one-time cost) and enjoying free programming from that point on."

A Customer-Friendly Decision

So what's the best possible verdict in this case for consumers? An Aereo win could shake up the broadcasting industry in a good way, according to the New York Times: "The best outcome of this case is for Aereo to win, and then scare broadcasters into streaming their content directly to users, either for free or for a lower price than Aereo charges."

The Obama administration, on the other hand, would like to see the Supreme Court side with the broadcasters while leaving cloud-based technology intact. According to Consumerist, the Solicitor General filed an amicus curiae brief with the court in March stating that Aereo should be required to pay retransmission fees like a cable company. However, the brief also said the court's decision "should not call into question the legitimacy of businesses that use the Internet to provide new ways for consumers to store, hear, and view their own lawfully acquired copies of copyrighted works."

The worrying aspect of this case is that it could go so many ways. The Supreme Court will recess at the end of June, and some have speculated that this leaves little time for the Justices to reach a consensus. A divided court could lead to a less consumer-friendly verdict with a muddier interpretation of copyright law. Whether or not Aereo wins, it's really the television consumer's fate that's on trial.

Readers, which side are you on? Do you want an Aereo win, even if it could mean the death of free over-the-air TV? Or do you side with the broadcasters, and hope that cloud tech doesn't get taken down with Aereo? Give us your verdict in the comments below!


Features Writer

Marcy pens consumer news stories of all sorts, in addition to adding pithy prose to many of the roundups you see every day. Her work for DealNews has appeared on sites like Lifehacker, the Huffington Post, and MSN Money. She is by far the most metal member of the DealNews staff, and you can see why by following her on Twitter @ThatBonebright.
Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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15 comments
jsgreenfield
The comments attributed to Huffington Post regarding the physics of antennas were not independent news coverage but spin from an on-air personality, employed by two of the broadcasters suing Aereo, who lacks a technical background, and almost certainly lacks personal knowledge of what he claims to be "well understood physics." Rather, he was parroting broadcaster talking points.

In fact, the broadcasters challenged this factual issue in court, with claims the court rejected as not reliable. In contrast, it found that "Aereo presented significant evidence that each antenna functions independently." Signal levels at Aereo facilities were 30 dB (1000x) above the level required for reliable reception, and even the broadcasters' expert conceded that "a sufficiently strong signal would overcome the problems he identified relating to small antenna size."

The broadcasters abandoned their challenge in court, but continue to raise the issue in public, as part of a dishonest PR campaign.
Greg the Gruesome
@everyone

We're talking about antennas here. It's insects* and aliens that have antennae.

*I know spiders aren't insects but do they have antennae?
Greg the Gruesome
@jcauthorn

"When's the last time you bought a full album/cd instead of a song or two you like? Do you remember how the music industry was so unwilling to bend to accommodate the new sales model of buying a single song?"

You're implying that the music industry's fear of change was unfounded and that it's doing well now despite the change. The last time I checked, digital sales didn't come close to making up for the decline in revenue from physical sales. And now of course consumers are shifting from downloads to streaming, which provides even less revenue, according to reports.
anield
hope Aero loses as they must charge a fee for their service and are thus gaming the system. i use an antennae and fear that i might lose my free TV if Aero wins. free TV is already under attack by the cell phone industry to steal bandwidth.
ksanger
Aero's tiny antennae's can not work by themselves. In our area we would need VHF and UHF. A tiny array like in our cell phones doesn't pick these up.

As a consumer I'm not allowed to rent out my over the air antennae. If I did I'ld have to pay the retransmision fees. I don't see how this hurts my storage of personal files on dropbox. Unless dropbox and google don't keep a one for one copy of my files. Then they should have to pay retransmission fees too.

iTunes, Amazon, Microsoft, Hulu, Netflix and Google+ might be able to make a deal with content owners to store one copy and relay it customer's who have paid for a digital license. If they are cheating and using one customer's copy to serve others to save disk space, then they should rightly pay the copyright owner a royalty as they are making money by copying the original work.

The world isn't going to come to an end when the justices shut Aero down.
bond007taz
so big broadcasters want to sue to keep their model the same while the world changes? I hope Aereo wins. If Aereo doesn't win then big broadcasters will lose viewers because with every win on their side society finds way to get what they want and wont go through the big broadcasters.
streamco
I cut the cord in 2008 and haven't looked back.

I currently subscribe to HULU and Netflix. I use rabbit ears to bring local signals into my house.

Through the 3 sources of transmission, two of them Hulu and Off-Air are inundated with advertisements. So while watching these programs, regardless of what the broadcasters are saying, I am already paying for programming, and with HULU I pay twice (monthly and through ads).

Aero is definately shaking up the wireless world, but the threat from the Networks is that they will pull their wireless transmissions if they loose, which makes people like me loose out. That would suck, because I will never pay for cable/satellite again.

The little man is always the one who has to succumb to the rich and powerful. I hope they consider the little guys when they pass judgement.
jcauthorn
Two points:

1. Is it legal? Hopefully the courts will agree that it does in fact pass legal muster because of they way it is being done.

2. Is this additional option good for consumers? Heck yes! More options are always better, reduce costs, and improve quality.

The broadcasters, networks, and cable operators want to hold onto antiquated models because they have worked in the past and they perceive them to make money for them in the future.

When's the last time you bought a full album/cd instead of a song or two you like? Do you remember how the music industry was so unwilling to bend to accommodate the new sales model of buying a single song?

More choice for the consumer ALWAYS wins. That's the free market at work!
jcauthorn
I'm really hoping that Aero wins because it seems like they are in fact following the letter of the law. The free "over-the-air" broadcasts are free for anyone to receive. Anyone can own an antenna. You can even rent that antenna to someone else. As long as they are following those technical rules, they are following the law. What the renter does is their own business. This is in fact different from a cable operator. If the major broadcasters choose to stop broadcasting content, that is their choice at their expense.
It seems that the broadcasters want to squeeze Aero for money like they do with cable operators so they can double-dip - both get paid advertising -and- a payment from the cable operators.
illkitty
I'm sure I don't know all the facts here, but Aereo just seems to be renting the hardware, so that the consumer can record the content they want.

The concept of what's being done here is no different than what a consumer would be doing if they purchased an antenna them self & hooked it up to their TV. The technology isn't illegal. Nor are the broadcasts being obtained.

The only real argument I see here is if Aereo is in fact going about this the right way, or if they are cutting corners somewhere.

Anyway, the Cable companies are collecting money already for the internet, and most channels like Fox, ABC, NBC, CBS, and TheCW put their quality prime time shows on the air to watch for free (with limited commercial interruptions).

I just pay for internet, and use my Netflix, Amazon Prime steaming, and the fore mentioned networks' sites to watch my shows. I only read news on Google & check the weather from my phone.

If this is deemed illegal, should owning an antenna be too?
spzim
I live in an apartment in a semi-rural area and, therefore, cannot put a large antenna on my rooftop. Because of this, I cannot even receive all of the basic networks. I have tried using multiple varieties of antennas to no avail. While Aereo is not available in my immediate area currently, I would hope the SCOTUS will allow them to continue operating and provide this service to the minuscule overall demographic who both cannot receive traditional OTA broadcasts and are interested in this niche service.

All I want is the ability to watch live television via the internet. I do not care if that ability comes from Aereo or directly from broadcasting companies. I just don't understand why we are still using technology that has been around for decades to receive television signals. If the broadcasters have a problem with Aereo, maybe they should innovate and develop a product of their own. If broadcasters came out with a similar product for a similar fee, I would support it.
LonnieMcClure
Regarding cable and satellite providers setting up their own systems:

1. It would be impossible for satellite. For them to comply with how Areo does it, they would need an individual satellite stream for every subscriber. They can't get away with just doing the traditional method for subscribers without broadband either, as TV stations could simply refuse a retransmission license if only part of their subscribers were covered.

2. For cable, there is a question if it would scale for larger markets. I suspect even in NYC, Areo's subscriber base is a fraction of the local cable company's, and they've already ran out of capacity once. Many networks also own multiple cable channels, and could play chicken with cable networks if they decided to try an avoid retransmission fees for one of their network owned stations in a major market.
Heyitsrick
While a lot of people are in this "stick it to the man" (aka the broadcasters) mode, the implications are these: If Aereo wins, the cable/sat companies would almost certainly implement their own "one antenna per subscriber" regime, thereby circumventing retransmission fees to broadcasters. The broadcasters are relying on these fees to fund a lot of programming. Lose those billions in revenue $$$, who, then, pays for the programming development? Seemingly everyone wants entertainment for nothing, and that includes no ads (and advertising does not cover all programming and distribution costs). The real world doesn't work that way. If you want the entertainment you're used to getting, you're going to have to pay for it somehow. If it becomes infeasible for broadcasters to spend gazillions of dollars on a series like "Lost", for example, you just won't get them. Enjoy "Housewives of Des Moines", though, lol.
mmodra11
"The consumer is far better off purchasing their own antenna (a one-time cost)"

One thing that's missed in this comment is that Aereo can place those antennae in an optimal location for reception. They can rent the highest rooftop. That's part of their value add. The individual user that buys an antenna would be at the mercy of the surrounding environment. If you're in the woods or in a small building surrounded by large ones, you may be out of luck.
greengroupallen
I love how Whipple (the guy that sells antennas) is saying that you "are far better off purchasing your own antenna" claiming can do the same thing with an antenna. Any moron that googles Aereo can see that there are additional benefits like streaming to AppleTV, smartphones and tablets. Oh, and a DVR in the cloud. I hope Aereo wins and becomes available in my area.

Here are my personal thoughts regarding the legality of Aereo's technology, (I'm not an attorney). I would think it comes down to the technology of the antennas. If the small antennas can each receive the signal independently, then it should be allowed. If the antennas are required to be a collective array to receive anything, then it starts to get a bit shady. The defendant is claiming that this allows them to build antennas as they grow versus paying for one large antenna up front. That problem is that IF they purchased one large antenna, then they would be "rebroadcasting" versus providing individualized 1to1 streams.
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