April 22 - The future of both television and cloud computing was at stake when the U.S. Supreme Court heard arguments from broadcasters and web TV start up Aereo, about payments to transmit content. Bobbi Rebell reports.
The Supreme Court justices raised a lot of questions as online TV start up Aereo made their case Tuesday- in a copyright fight with the major media companies. But it also became clear they will have to walk a fine line should they rule against Aereo- because of the broader implications. SCOTUSblog's Amy Howe: SOUNDBITE: AMY HOWE, EDITOR, SCOTUSBLOG (ENGLISH) SAYING: "There was certainly no love for Aereo as a business model at the court this morning. But the justices were really concerned about what their decision; in this case, if they were to rule against Aereo, it might mean more broadly for cloud computing and so you could see them trying to navigate, how are we going to write a decision that won't affect everything that happens when people store things on the Internet and then play it back." Aereo, which is backed by media mogul Barry Diller's IAC /Interactive- charges consumers a low monthly fee to watch live or recorded broadcast TV channels on devices. They don't pay broadcasters, arguing the little antenna's they use are for individual use- and therefore it's not a public showing. Lower courts have ruled in Aereo's favor. But broadcasters claim they are skirting the law, and Aereo violates the copyrights on TV programs- content that cable companies now pay billions of dollars to carry. Hogan Lovells' Neal Katyal, is a legal advisor for the broadcasters. SOUNDBITE: NEIL KATYAL, PARTNER, HOGAN LOVELLS (ENGLISH) SAYING: "You are selling the right to use the antennas to the entire American public, and selling it for a fee. And if someone came off and did that, if you, for example, put an antenna on your roof, piped in the Super Bowl and then started selling it to your entire neighborhood, everyone thinks that would flatly violate the copyright law. That is exactly what Aereo does." The case hangs in part on prior rulings- including a 2008 appeals court decision that allowed the use of remote storage DVR technology to let consumers watch TV when they wanted it. Gary Shapiro, CEO of the Consumers Electronics Association: SOUNDBITE: GARY SHAPIRO, CEO, CONSUMER ELECTRONICS ASSOCIATION (ENGLISH) SAYING: "The law is clear. The law is being followed and big broadcasters don't like it. And people are saying you know for $8 a month, I may not have to subscribe to cable. I can get a really good signal and it makes sense. So I think the Justices were struggling. And even if they want to rule with the broadcasters, how could they do it without hurting cloud computing? Without hurting all the other sorts of innovation? They don't want to foreclose in the future." The future is exactly the issue. During the hour long oral arguments, several justices seemed troubled about the impact a ruling against Aereo might have to increasingly popular cloud computing services, in which personal files, including TV shows and music, are stored remotely on the Internet on servers from companies like Google, Microsoft and DropBox. It all comes down to money. If the broadcasters lose, cable companies could argue they shouldn't pay either. And for Aereo, losing the case would be devastating. BTIG's Rich Greenfield: SOUNDBITE: RICH GREENFIELD, ANALYST, BTIG (ENGLISH) SAYING: "I think Aereo is toast in that scenario. I can't envision a scenario where they are going to compete if they have to go out and license the same content. Then they basically have to become a cable operator, and they are no different than any over the top cable player. That is a very challenging business model." No decision is expected until late June.