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The US Supreme Court has ruled that Aereo has to pay broadcasters when it takes television programmes from the airwaves and allows subscribers to watch them on smartphones and other portable connected devices.
The justices voted by 6-3 vote that is violating the broadcasters’ copyrights by taking the signals for free. The ruling preserves the ability of the television networks to collect ‘retrans’ fees from cable and satellite systems that transmit their programming.
Aereo is available in New York, Boston and Atlanta among 11 metropolitan areas and uses thousands of dime-size antennas to capture television signals and transmit them to subscribers who pay as little as $8 a month for the service.
Some justices argued that a ruling for the broadcasters could also harm the burgeoning world of cloud computing, which gives users access to a vast online computer network that stores and processes information.
Broadcasters including ABC, CBS, Fox, NBC and PBS sued Aereo for copyright infringement, saying Aereo should pay for redistributing the programming the same way cable and satellite systems.
Aereo CEO and Founder, Chet Kanojia described the decision as “a massive setback” for the American consumer. “We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry. It is troubling that the Court states in its decision that, ‘to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress.’ (Majority, page 17) That begs the question: ‘Are we moving towards a permission-based system for technology innovation?’”
“Consumer access to free-to-air broadcast television is an essential part of our country’s fabric. Using an antenna to access free-to-air broadcast television is still meaningful for more than 60 million Americans across the United States. And when new technology enables consumers to use a smarter, easier to use antenna, consumers and the marketplace win. Free-to-air broadcast television should not be available only to those who can afford to pay for the cable or satellite bundle,” he declared.
Kanojia said that Justice Scalia’s dissent gets its right. “He calls out the majority’s opinion as ‘built on the shakiest of foundations.’ (Dissent, page 7) Justice Scalia goes on to say that ‘The Court vows that its ruling will not affect cloud-storage providers and cable television systems, see ante, at 16-17, but it cannot deliver on that promise given the imprecision of its results-driven rule.’ (Dissent, page 11)”
“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,” he concluded.
Barry Diller, the main backer of Aereo, earlier described the tactics of the US broadcasters in the case as “obnoxious” and warned that stopping the service was stopping technology.
Leslie Moonves, Chief Executive Officer, President and Director of CBS, in May described Aereo’s operation as “theft” suggesting he was not losing any sleep over the outcome of the copyright case brought by CBS and fellow US networks against the Barry Diller-backed company.
Anticipating an analyst question on CBS’s Q1 2014 Earnings Call, Moonves said: “I suppose this is the time to save you the question later by briefly addressing a topic that has gotten way more attention than it deserves, and that is the lovely Aereo. Aereo is theft. Pure and simple. Some are trying to shift the issue by erroneously suggesting it has to do with our prevention of the cloud or either future innovation. This couldn’t be further from the truth,” he stated.
NAB President and CEO Gordon Smith said the broadcasters’ advocacy body was pleased the Supreme Court had upheld the concept of copyright protection that is enshrined in the Constitution by standing with free and local television. “Aereo characterised our lawsuit as an attack on innovation; that claim is demonstrably false. Broadcasters embrace innovation every day, as evidenced by our leadership in HDTV, social media, mobile apps, user-generated content, along with network TV backed ventures like Hulu,” he declared.
“Television broadcasters will always welcome partnerships with companies who respect copyright law. Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.”