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: http://www.huffingtonpost.com/2014/06/28/aereo-suspension-operatio_n_5539559.html
and http://www.businessinsider.com/aereo-supreme-court-ruling-2014-6. As mentioned, I last blogged on Aereo
on Feb. 3, 2014.
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