Monday, June 30, 2014

When Is a TV Not a TV?

When the U. S. Supreme Court says so, that's when.  Last Wednesday, June 25, the Court issued a split decision (6-3) against Aereo, a provider of over-the-Internet broadcast TV service which used a unique technology to get around the requirement to pay retransmission fees to program originators, as cable TV companies do.  Without such fees, Aereo's service was really cheap—as little as eight bucks a month—and over the last year or two the firm had expanded into several urban U. S. markets.  In response to the ruling, on Sunday June 28 Aereo's CEO Ken Kanojia pulled the plug on the service "temporarily," although it will be surprising if Aereo ever makes a comeback, at least in its present form.

For readers who missed my blog on Aereo last February 3, a little background is in order.  Copyright laws exist so that creators of original content won't starve to death while unscrupulous people copy or retransmit the content without paying for it.  It seems to this non-lawyer that there is a happy medium of copyright law between two extremes.  One extreme is that of no law at all, which stifles originality because nobody can make money doing creative stuff.  The other extreme is copyright control, by the originators, of everything in perpetuity, which leads to permanent monopolies that work against the interests of the consumer.  Copyright law is largely a federal matter, so the U. S. Congress is where it comes from, and the proper job of the courts, including the U. S. Supreme Court, is to interpret the law the way Congress intended.

When cable TV arose in the 1950s as a way of providing TV service for isolated communities beyond the reach of TV signals, the content providers (mostly the big three networks back in those days) were miffed, because here was a bunch of companies taking money from their customers for signals they didn't pay for.  In response, Congress amended the copyright laws in 1976 to make it clear that cable TV was a "public performance," legally speaking.  The basic idea is that if you as a content provider take somebody else's content and make it available to all comers, you are profiting from it and should compensate the parties that you got the content from.  Hence, the big retransmission fees that cable companies pay to content providers.  The only exception to this rule is the end user or consumer, for whom the whole system operates.  If you sit in your own house and watch an over-the-air broadcast on your own TV using your own antenna, then it's not a public performance, and you don't have to pay retransmission fees because you're not retransmitting.

It was Ken Kanojia's dream to take that exact situation, and just stretch it out technically while staying within what he thought was the letter of the law.  An Aereo subscriber was at the end of a long chain of technology that started with a paperclip-looking antenna at an Aereo "head-end."  Each head end had thousands of individual antennas, so that every active subscriber controlled a different antenna.  The signal the consumer selected was picked up by the assigned antenna, converted to digital form, and sent over the Internet to the receiver of choice—a phone or computer or iPad or what have you.  The effect, broadly considered, was not essentially different from what a cable TV company would do:  a lot of hardware delivering someone else's content to a lot of consumers.  But technically, each consumer controlled a virtual TV of his or her own, so Aereo claimed it wasn't like cable TV at all—it was just a whole lot of individual TVs controlled by individual consumers.  And therefore, Aereo didn't have to pay retransmission fees.

Naturally, the service providers hated this into the ground, and quickly got their lawyers to sue Aereo.  Back in February, the lawsuits were working their way up the legal ladder to the Supreme Court, which heard the arguments in April, and finally last week the Court issued its decision.

The basic argument of the Court's majority was what I would call the duck approach:  if it walks like a duck and quacks like a duck, it must be a duck.  If you ignore the technical insides of how Aereo provides its service and just treat it like a black box, it's not that much different from a cable TV provider.  Hence, Aereo has to pay up just like the cable companies.  With his whole business carefully tailored to the assumption that his firm would not have to pay such fees, Kanojia recognized that the jig was up, and shut it down.

Three conservative members of the Court—Alito, Thomas, and Scalia—sided with Aereo, but not because they think Aereo should be left alone to go about its business.  Even the dissenters agreed that what Aereo is doing smacks of copyright infringement, but the dissenters thought that the similarity argument with cable TV was a weak one.  The dissenters are concerned that the adverse decision against Aereo will stifle technological innovation, and wanted to see a more technically savvy argument as to exactly what Aereo was doing wrong besides looking broadly like a cable TV company.

They may be right, but frankly, I'm not sure Aereo's kind of innovation is the sort we need.  Remember, if it weren't for lawyers and copyright laws, Aereo never would have designed their system the way they did in the first place.  It was a brilliant technical dodge designed to evade the retransmission fees by configuring the system to imitate a legal technology.  Unfortunately for Aereo, a majority of the Supreme Court justices didn't think the technical details made that much difference.  And when all is said and done, I tend to agree with them.

It seems to me that we need people like Ken Kanojia engaged in technical challenges that really matter, rather than spending his time devising clever ways to avoid legal obstacles.  I'm sure Kanojia believes that what he was doing was a true service to the consumer, but at least in the U. S., his Aereo venture looks like it has made its final performance—public or otherwise. 

Sources:  I consulted these news items on the Supreme Court Aereo decision:
and  As mentioned, I last blogged on Aereo on Feb. 3, 2014.

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