The case is important to the future of television, for media
companies and consumers alike, in part because a win for Aereo could
spur innovation in the industry by paving the way to new, cheaper
ways for consumers to watch shows. It could also threaten the
estimated $3 billion in so-called retransmission fees that
broadcasters get from cable and satellite TV systems.
Some broadcasters such as CBS Corp have even threatened to cut off
their free-to-air broadcast signals or create their own low-cost
Internet feeds of the channel were Aereo to win. A loss for Aereo,
backed by media mogul Barry Diller's IAC/InterActiveCorp, could
force it to shut down.
Aereo charges users a low monthly fee to stream live broadcasts of
TV channels on mobile devices using miniature antennas that the
company hosts. Aereo, which is available in 11 U.S. cities and
estimated to be tiny compared to 100 million paying TV customers,
says its service does nothing more than what a personal TV antenna
Introduced in 2012, Aero has not disclosed its user base and does
not pay the broadcasters.
Aereo's fate was placed in the hands of the high court when Walt
Disney Co's ABC network, CBS, Comcast Corp's NBCUniversal and
Twenty-First Century Fox Inc appealed a decision by the 2nd U.S.
Circuit Court of Appeals in April 2013 that denied their request to
shut down Aereo while litigation moved forward.
In court on Tuesday, several justices appeared troubled about a
ruling that would deal a blow to increasingly popular cloud
computing services in which personal files — including TV shows and
music — are stored remotely on the Internet on servers from
companies such as Google Inc, Microsoft Corp, DropBox Inc and Box
Aereo argues that cloud computing services use the Internet in the
same way as it does to store and transfer copyrighted content. A
ruling against Aereo could therefore raise legal questions about
whether accessing material stored on a remote server such as Google
Drive, could also violate copyright law.
"MAKES ME NERVOUS"
Justice Stephen Breyer told the networks' lawyer, Paul Clement, that
his legal argument "makes me nervous about taking your preferred
Justices Anthony Kennedy and Samuel Alito were among others who
raised similar concerns. They cited a 2008 appeals court ruling that
upheld Cablevision Systems Corp's cloud storage video recorder.
[to top of second column]
The decision by the 2nd U.S. Circuit Court of Appeals in New York
was appealed to the Supreme Court but the justices declined to
review the issue. The ruling therefore remains on the books,
although the Supreme Court is not bound by it.
Aereo relies heavily on the Cablevision decision. Its service is no
different to buying a song on iTunes and then listening to it later
on a cloud storage service like Google Drive, the company says.
Alito questioned Clement about whether the Cablevision service at
issue in 2008 was any different than Aereo. Clement said the court
could rule narrowly and not reach the cloud computing issue.
"I don't find that very satisfying," Alito said in response.
Some justices seemed skeptical about Aereo's business model.
Chief Justice John Roberts questioned whether the technology used by
the company had any purpose other than skirting copyright law. "I'm
just saying your technological model is based solely on
circumventing legal prohibitions that you don't want to comply
with," he told Aereo's lawyer, David Frederick.
A decision is due by the end of June.
The case is American Broadcasting Companies Inc, et al, v. Aereo
Inc, U.S. Supreme Court, No. 13-461
(Additional reporting by Liana Baker in New York
editing by Will
Dunham and Grant McCool)
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