Supreme Court rules for broadcasters in fight…
Supreme Court rules for broadcasters in fight with startup Aereo
Aereo CEO Chet Kanojia, standing next to a server array of antennas, holds one of the dime-size devices. The antennas capture TV signals, which are transmitted to subscribers who pay as little as $8 a month.
PUBLISHED: June 25, 2014 at 2:36 a.m. | UPDATED: April 26, 2016 at 10:54 p.m.
WASHINGTON — The Supreme Court ruled Wednesday that the disruptive Internet TV startup Aereo Inc. has to pay broadcasters when it takes television programs from the airwaves and allows subscribers to watch them on smartphones and other portable devices.
The justices said by a 6-3 vote that Aereo is violating the broadcasters' copyrights by taking the signals for free. The ruling preserves the ability of the television networks to collect huge fees from cable and satellite systems that transmit their programming.
Had services such as Aereo been allowed to operate without paying for the programming, more people might have ditched their cable services, meaning broadcasters would have been able to charge less for the right to transmit their programs.
Aereo looks a lot like a cable system, Justice Stephen Breyer wrote for the court in rejecting the company's attempts to distinguish itself from cable and satellite TV. "Aereo's system is, for all practical purposes, identical to a cable system," he said.
Aereo — available in New York, Boston, Houston, Atlanta and other metropolitan areas — 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. Because each subscriber is temporarily assigned the individual antenna, Aereo had made the case that it wasn't like a cable company and wasn't doing anything customers couldn't do on their own at home.
The company began service in Denver in October but in February was ordered by a Utah court to stop.
Company executives and prominent investor Barry Diller have said their business model would not survive a loss at the Supreme Court.
Aereo CEO Chet Kanojia called the decision "a massive setback for the American consumer" and said the company would continue to fight, without being specific.
"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," he said in a statement. "This sends a chilling message to the technology industry."
Some justices worried during arguments in April 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.
But Breyer said the court did not intend to call cloud computing into question.
Justices Antonin Scalia, Samuel Alito and Clarence Thomas dissented. Scalia said he shares the majority's feeling that what Aereo is doing "ought not to be allowed." But he said the court has distorted federal copyright law to forbid it.
Congress should decide whether the law "needs an upgrade," Scalia said.
Broadcasters, including ABC, CBS, Fox, NBC and PBS, sued Aereo for copyright infringement, saying Aereo should pay for redistributing the programming in the same way cable and satellite systems must.
The National Association of Broadcasters praised the court for rejecting Aereo's argument that the lawsuit was an attack on innovation. "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," NAB president Gordon Smith said.
Smaller cable companies, independent broadcasters and consumer groups backed Aereo, warning the court not to try to predict the future of television.
Indeed, Scalia himself noted that the high court came within a vote of declaring videocassette recorders "contraband" when it ruled 5-4 for Sony Corp. in a case over recordings of television programs 30 years ago.
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