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Would A Legalized Aereo Survive?

Posted on 6.26.2014

:: By Diana Zelikman, Fueled ::

On April 22, 2014, the Supreme Court heard ABC v. Aereo which is a case that seems like an epic, ‘David vs. Goliath’ confrontation. On one side you have Aereo that’s a small tech company that rents tiny antennas, allowing their customers in 11 select markets to watch all major network channels for only $8-$12 per month. 

On the opposing side you have the very powerful and extremely angry, ‘big four’ broadcasting networks: ABC, CBS, NBC & FOX – who are using all their resources without remorse to sue Aereo for copyright infringement.

The way the networks look at it, Aereo is an immediate threat to their major source of revenue. Outside of advertising, the networks make their ‘real’ money – we’re talking billions and billions of dollars - by charging cable operators carriage fees. The technology and innovation Aereo provides at a low cost to customers means they’re able to easily circumvent that carriage charge – which is causing the problem because Aereo is a cable company without any of the fees or restrictions.  

The broadcasters claim Aereo is re-transmitting their broadcast signals without paying the networks’ mandatory fees (which they are.) This is a violation of the 1992 Cable Act. 

Neal Katyla, the former acting Solicitor General of the United States and legal advisor to the broadcasters put it like this, “Aereo’s business model is essentially grabbing those signals over the air, bundling them together and then selling them for profit…”

The Supreme Court handed out a verdict this week and ruled 6-3 that Aereo is violating copyright law. 

Aereo still has options –

Aereo could sell its own cloud service to small cable operators who can’t afford to develop their own technology. The juggernaut Comcast Cable already offers a similar service that allows customers to schedule television recordings from their phones and computers. 

Aereo could take advantage of their transcoding technology to offer broadcast streams to consumers for only a fraction of the price that their competitors charge. This would help provide more content options for the majority of television patrons, those who are also watching shows online.

Aereo could get very inventive and place the ownership of its ‘over the air antennas’ to the users themselves and simply charge a maintenance fee which to secure recurring revenue. 

But Aereo’s most wild option is to simply become what they say they’re not a ‘cable provider’ that will license material from content providers. 

A win for Aereo would have put the company in a whole new arena, one where they’re no longer a small, unregulated start-up business but instead a fast growing ‘cable provider.’ It would have brought about strict regulations by the FCC, and ultimately make new enemies, like major cable corporation Comcast.

Instead, the Supreme Court ruling indicated that Aereo violated a four-decade-old copyright law and that customers won't be able to decide the future of television.

Hulu Plus, Netflix, HBO Go and countless other HD internet subscriptions – including several live sports streaming options - are the wave of the future, and people across America are cutting their cable cords for the broadband services and their cheaper monthly subscriptions, but this ruling is a set back. 

On a large scale, ABC v. Aereo revealed the complexities of the way that we prefer to get our information. 

As the culture shifts, so should the laws and the standards – what worked 80 years ago isn’t relevant anymore. Regardless, the case will certainly open the doors for new arguments and discussions over what are acceptable and what are unacceptable uses for this sort of technology.

Diana Zelikman is an editor at Fueled, the leading iPhone app builder in New York City, renowned for its award winning mobile design and strategy.

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