By a six-to-three vote, the U.S. Supreme Court reversed the decision of the US Second District Court in ABC vs. Aereo.
The bottom line: The Supreme Court has ruled that Aereo's over-the-air (OTA) TV over the Internet service is illegal.
According to the SCOTUSblog, "This ruling appears sweeping and definitive, determining that Aereo is illegal." At the same time, the Court claimed that "its ruling does not endanger other technologies." How that can be is an open question. Aereo had claimed that a decision against them might endanger other cloud-based media services.
It appears, however, that "the essence of the Aereo ruling is that Aereo is equivalent to a cable company, not merely an equipment provider." That, according to the court's decision, Aereo's "behind-the-scenes technological differences do not distinguish Aereo's system from cable systems, which do perform publicly."
Aereo was a service that lets you watch over-the-air TV over the Internet for $8 per month. It offered you the same network television shows that are available to anyone with an antenna. To do this, Aereo sets up clusters of miniature antennas in your local area.
For example, If you lived in New York, you'd be able to watch WABC, WCBS, and WNBC; when and if Aereo had expanded to in to Washington, you would have been able to watch WJLA, WUSA, and WRC; and so on.
When you signed up for the service, you were assigned two of those antennas. One is for watching live shows and the other is for recording programs. Your chosen local OTA shows are then also kept in cloud-based digital video recorder (DVR).
"This ruling appears sweeping and definitive, determining that Aereo is illegal."
This isn't just cloud DVR, though. Whether you were watching a "live" show or a recorded one, you're creating, the company stated, "three separate unique copies of the show, each in a different bit rate optimized for different streaming conditions. The lowest bit rate file is ideal for streaming over 3G connections. The medium rate file will work well over most Wi-Fi connections. The highest rate file is intended for really fast broadband connections. While watching, you can choose the video quality on your device. If you select 'auto', you will automatically choose the best bitrate for your current network conditions."
At the time of the decision, Aereo was available in eleven Eastern and Midwest cities. The company had had plans to offer its services in 19 more US cities.
ABC and other networks — including CBS, the parent company of ZDNet and sister-site CNET — had argued that Aereo was violating copyright by retransmitting their signals over the Internet. Legally, the question in ABC vs. Aereo is whether Aereo "publicly performs" a copyrighted television program when it retransmits a broadcast of that program to paid subscribers over the Internet.
Aereo's counter-argument was that, in essence, all they're doing is renting you an antenna with a very, very long cable that just happens to go over the Internet. Since Aereo will only let you watch network shows that are available from your local OTA TV stations, their position was that the company was not violating any copyright or retransmission laws. As for offering a DVR service, Aereo argued that the case of 20th Century Fox vs. Cablevision had already shown that remote Internet-based DVRs were legal.
In addition, Aereo argued that a strike against them is a blow against all cloud media storage. The Supreme Court disagreed on both counts.
What happens now? Good question.
Is Aereo out of business now? The company has always insisted that if its loses it has no alternative plan.
On the other hand, in Fortune, Aereo CEO Chet Kanojia "suggested that Aereo could explore several alternate options in the case of a loss, including perhaps even paying some sort of retransmission fees to broadcasters." This appears to be Aereo's only option for the business to survive.
Whether the networks would agree to such a deal is another question. While, the networks have never been averse to making more money, they all disliked both Aereo's model and their persistence in pushing it through the courts. Still, sooner rather than later the networks must come to terms with the cordcutters in a more sensible way than their current mishmash of network specific Web sites and rerun-specific deals with Amazon, Hulu, and Netflix.