Supreme Court to hear Aereo case, which could define future of internet TV

The U.S. Supreme Court on Friday announced that it will hear a closely-watched dispute between Aereo, a start-up that streams over-the-air TV for $8/month, and major broadcasters — including NBC, CBS, ABC and Fox — that say the service should be shut down for copyright infringement.

The news, noted on ScotusBlog, means the court will hear the case sometime in the coming months and issue a decision before early summer.

The case is important because Aereo, which is now live in New York and about a dozen other cities, poses the most serious threat in decades to the “bundle” model of TV where distributors require consumers large packages of channels even if they only watch a handful of them.

Aereo’s CEO Chet Kanojia hailed the Court’s decision to take the case in a statement:

We said from the beginning that it was our hope that this case would be decided on the merits and not through a wasteful war of attrition.¬†We look forward to presenting our case to the Supreme Court and we have every confidence that the Court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.

Aereo this week announced another major round of funding and says it will expand to another 15 markets by the end of March.

The legal issue in the case turns on whether Aereo’s system of tiny antennas, which assigns a personal antenna to every subscriber, amounts to broadcasting to the public, which is illegal; or, if it is like a remote DVR, which is considered private and not a violation of copyright:

Aereo antennas

Aereo won a major victory last spring when an influential appeals court agreed with its interpretation of the law, giving the company the green light to expand in the Northeast. The broadcasters, however, also won an important victory when they persuaded a California judge to shut down a would-be rival to Aereo called FilmOn, which also offered TV-streamed over the internet. The judge issued an injunction that shut down FilmOn in nine Western states.

Aereo claims its technology is different than that of FilmOn and is urging the Supreme Court to view the case on the basis of the New York appeal and a related case in Boston in which a judge also found the service didn’t violate copyright.

Who should pay for over-the-air TV signals?

The TV broadcasters have received support from the NFL and Major League Baseball in their claim that Aereo can’t stream their signals without permission. They point out that both cable and satellite companies must pay so-called “retransmission” fees to include the channels in their packages, even though the signals can also be picked up over the air with an antenna. In New York, many signals are transmitted from the Empire State building:

aereo-window crop

The antenna option, however, is not practical for many urban dwellers that lack access to clear signals. This makes Aereo appealing, as does the DVR storage included in the start-up’s monthly subscription rate that lets viewers record shows for later. Aereo also permits viewers to watch programs on mobile devices, which is another contentious issue at a time when content producers are beginning to sell rights to their programming on a device-by-device basis.

If Aereo prevails at the Supreme Court, it will likely put pressure on Congress and the FCC to introduce a regime whereby Aereo pays retransmission fees like other distributors. Right now, content owners cannot refuse to sell their programming to distributors — like satellite and cable companies — that fall under the regulatory regime.

Aereo’s CEO has stated that he hopes the success of the service will lead to consumers being able to buy a “rational bundle” of channels.