Aereo Loses Supreme Court Copyright Battle to Networks’ Delight

By Joseph Mandour on July 8, 2014

cableOrange County – The U.S. Supreme Court has ruled that Aereo TV service, the start-up tech firm that distributes local television signals over the Internet, is a copyright infringement. The case, ABC v. Aereo, which has generated much controversy, culminated in a 6-3 decision this week will also mark the end of this small company. Aereo launched about two years ago as the cheaper option for consumers who are paying high prices for cable and satellite television.

The plaintiffs in the case were the major broadcasters, ABC, CBS, Fox and NBC, who argued that Aereo’s service was a simple ruse around the U.S. Copyright Act. Aereo basically streams shows over the Internet using tiny antennas stored in a remote location. This allows subscribers to watch shows on their televisions, computers, and tablets. Aereo argued that was merely helping consumers capture the free TV signals so it was not a copyright infringement.

If this decision had gone Aereo’s way, the major broadcasters worried that consumers might no longer subscribe to their current service. There was also the concern that cable and satellite operators might also follow Aereo’s lead and use similar technology instead of paying higher prices for the so-called retransmission fees.

While this decision was a major win for broadcasters, cable and satellite operators also have a reason to cheer because consumers could have opted out of cable and satellite television by taking a combination of Aereo and streaming services, such as Netflix and Amazon, thereby saving a bundle. Also on the side of the networks and satellite television was the National Football League, which feared that Aereo’s victory might threaten the attractive fees they get from the networks.

Aereo, which was available in 11 major metro areas, has never been available in California because of a prior court decision against such a service. A subscription to Aereo cost a fraction of what one might pay for cable or satellite service – about $12 a month, which also includes a cloud-based digital video recorder.

The Supreme Court’s decision overturns a 2nd Circuit Court of Appeals ruling that Aereo did not violate the Copyright Act. Justice Stephen Breyer said Aereo was acting like a traditional cable system, but did not pay the required licensing fees for transmitting copyrighted television signals. A majority of the justices agreed with Breyer. The case will now head back to the judges in New York who are likely to order Aereo to stop transmitting signals – a decision that would shutter the ambitious start-up.

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