Post-Aereo Fallout

Legality aside, I really wanted Aereo to win.

Consumers face unreasonable prices and have few choices when it comes to US TV providers. As a whole, the industry is outdated and in serious need of competition. A decision for Aereo would have driven disruptive innovation and forced Big Cable towards adopting more competitive business practices. As telecom giants like Comcablevisionwarner absorb more competitors, competition could all but diminish. Today, Telecom Oligarchs conquered another competitor while the future of certain cloud services were placed in flux.

Writing the dissent, Justice Scalia warns that the majority’s approach will have cloud tech “looking over their shoulders.” His concern is valid. Arstechnica chronicles the fallout from a similar high-profile decision that resulted in “a lost decade” for online media. As the article points out, it wasn’t until the Cablevision decision of 2008 that cloud-based media tech returned to the market. In our post-Cablevision world, these services have become luxuries of daily life. Many of us couldn’t imagine life without the likes of Spotify, Dropbox, and Netflix Instant Streaming.

So what happened in Cablevision?

Cartoon Network v. Cablevision – the technology at issue was a Remote Storage DVR system in Cablevision’s server room (think cloud-based TiVo).  So kids who just couldn’t get enough of Dexter’s Lab were able to record an episode to watch again later. Cartoon Network objected, and the case eventually reached the 2nd Circuit Court of Appeals.

The Cablevision court found that the remote DVR system did not violate copyright law. Since customers selected the programs to record and play, they would be on the hook for any copyright infringement issues. That holding is steeped in language from the Supreme Court’s landmark Betamax decision from 1984.

Aereo reasoned that like Cablevision, its service does not record or select the programs. Rather, the user selects and records particular content. Thus Aereo argued that it was merely a technology provider. The Court disagreed and interpreted its transmitting of a broadcast as being legally significant for Copyright Act purposes. The court found Aereo’s service factually distinguishable from that of Cablevision. Basically, the service transmission is “near real-time” rather than Cablevision’s “real-time.” Consequently, the Supreme Court ruled that this made Aereo’s activity a public performance subject to the Copyright Act.

Justice Scalia, Dissenting –

The Court vows that its ruling will not affect cloud-storage providers and cable television systems…but it cannot deliver on that promise given the imprecision of its results-driven rule.

In trying to limit the future implications of its holding to only Aereo, the Supreme Court shoehorned Aereo into its ambiguous definition of a Cable Company. The major problems with this opinion are due to the Court’s ambiguous language and side-stepping of the Cablevision case. Rather than adopting a workable analysis, the court opts for the old “we know a cable company when we see one” logic. So what does it mean for a firm to resemble a cable company? Can other companies reasonably predict compliance based on the vague language here? The answer is of course, no. Without a workable rule, startups stand to waste billions in litigation while the lower courts wade through the ambiguity of ABC v. Aereo.

As Aereo CEO, Chet Kanojia points out, the language appears to be wholly disconnected from technological innovation.

Breyer at page 17 – “ 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.”

So let me get this straight. We need a literal “Act of Congress” before pursuing technological innovation?

Sarah Jeong, writing for Forbes refers to what she calls the real tragedy.

We will never know the technologies that could have existed, the services that could have been. We will never know the internet we lost today.

Eric Goldman identifies another area for possible fallout –

An even worse dystopian possibility is that this opinion will chill innovators who want to rely on legislative text to develop innovative technological workarounds. One way of reading this opinion is that it’s not OK to replicate the functions of existing incumbents without complying with the same regulatory obligations, even if the newcomer’s technological implementation differs. But so many of our most cherished technological tools made exactly that kind of end-run on incumbents. If this opinion discourages that kind of innovation, we as a society will be poorer.

Cablevision’s official stance –

“We are gratified that the Court’s decision adopted a sensible middle ground, holding that unlicensed retransmission services like Aereo violate the copyright law, while protecting consumer-friendly, cloud-based technologies, such as RS-DVR.”

Of course they’re going to say that. They’re part of Comcablevisionwarner.

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