After the Aereo decision: The future of Internet TV

After the Aereo decision: The future of Internet TV

Summary: Defeated in the Supreme Court, Aereo remains defiant. Serious questions remain about what this decision means for the future of Internet TV and cloud media services.


Aereo may have gone down to defeat to ABC in its Supreme Court case, but the company remains defiant. Whether Aereo can come from legal death seems unlikely, but the greater issues the case brought up are far from resolved.

Aereo CEO Chet Kanojia, shown here holding a single Aereo antenna in front of a rack of them, remains defiant even after the company's Supreme Court defeat.

In a letter to subscribers, Aereo CEO Chet Kanojia announced that "We have decided to pause our operations temporarily as we consult with the court and map out our next steps." In a classy move, Kanojia also said, "All of our users will be refunded their last paid month."

Aereo hasn't given up. Kanojia continued, "The spectrum that the broadcasters use to transmit over the air programming belongs to the American public and we believe you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud." Therefore, despite this "massive setback to consumers…our journey is far from done," concluded Kanojia.

The CEO also encouraged Aereo supporters to support their efforts at the Protect My Antenna site. Pragmatically speaking, the only way Aereo seems likely to come back is by striking a deal with the major broadcasters. I very much doubt this will happen.

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Supporters of the same-old, same old  business models celebrated the media companies' victory. Keith Kupferschmid, general counsel and senior VP of intellectual property for Software and Information Industry Association (SIIA), the principal trade association for the software and digital content industries, said, "We are pleased that the Supreme Court decided this case in a balanced manner. The decision protects legitimate cloud computing businesses from risks of infringement, while also protecting copyright owners and incentivizing them to continue innovating."

Mark Schultz, co-founder of the Center for the Protection of Intellectual Property at George Mason University School of Law, also sees good news in the case's results.  "This decision is a boon, not a threat, to innovation. Studios and TV networks are investing hundreds of millions of dollars into new business models and are licensing their creative works to dozens of new entrants."

I'd find that theory more believable if I saw the media companies investing in Internet broadcasting. I don't.

Instead, I see the media companies, which work arm-in-arm with cable companies, doing their best to slow down Netflix. The one online video network that does have big media company support, Hulu, has had a revolving door in its executive suite as its owners — including News Corp., Walt Disney, and NBC — seem unable to decide what they want to with the service.  [Media companies challenging Aereo include CBS, the parent company of ZDNet and sister-site CNET.]

Aereo is far from being alone in its unhappiness over this decision. James McQuivey, Forrester VP and principal analyst, said, "What we’re seeing is not a victory for copyright so much as a victory for the broadcasting industry, specifically using copyright as an excuse, even if it is a good one, to preserve the existing broadcasting business so we don’t undermine decades worth of value." In other words, this is a decision that protects the old media broadcasting business.

As for the decision being "balanced," Mark Cooper, the director of research for the Consumer Federation of America, disagreed. "This decision is bad for video consumers, who have lost an important low cost option for viewing the programming they want whenever, wherever and on the device they prefer. However, its full impact may be to unleash a flood of law suits that challenge much content distribution through the Internet cloud."

That's because the decision is not balanced from where Cooper sits. "When a decision says we don't know how we would rule in other cases, it is an open invitation to litigation, Cooper said. "Its failure to recognize the passive nature of Aereo's service will invite all manner of mischief with copyright holders suing anyone who simply passes signals to consumers of any type of content. In short, a cloud of lawsuits now hangs over cloud computing."

Cooper is not the only one who sees danger to cloud-based video services from this decision.

University of Notre Dame Law professor Mark P. McKenna, who specializes in intellectual property, trademark, patent and copyright law, said, "The Supreme Court today found that Aereo is similar to cable companies and publicly performs copyrighted works when it re-transmits over-the-air signals to its customers. Despite the Court's assurances that this is a narrow decision, it made no meaningful distinction between Aereo and other cloud computing services. The decision could therefore have enormous effect well beyond its particular context."

The most immediate affect of this decision won't be new services from the media companies, or an agreement that brings Aereo back online, but an increase in video piracy. 

Cloud vendors are worried too.

Albert Lai, CTO of Media at video cloud services provider Brightcove, stated that "The industry takeaway from this case is the desire by consumers to have this type of (paid) access to broadcast content to satisfy their demand for any time, any screen consumption – we all need to work on a legal approach that creates value, not friction."

He's right, but I see no reason for the media companies to see it that way after their victory.

Still, as Mark Buff, CEO of cord-cutting startup and over-the-air (OTA) antenna OEM Mohu, observed, "The reason Aereo existed and became so popular was because it filled a real and growing consumer need: the freedom to watch the TV they want at a price they can afford – something cable companies couldn’t deliver. Even without Aereo, consumers still feel this way, which will continue to drive the ‘cord-cutting’ movement forward."

Buff has a point. In a world where cord-cutting is slowly but surely building up steam, these media companies may have cause to regret this "victory." By enabling the preservation of the status quo, I see the media companies sticking to its current hodgepodge offerings of Internet-borne TV sites and services. This in turn, annoys users.

These are the same users who are sick of pricey cable and satellite packages and want a la carte network and TV show access.  I think the most immediate affect of this decision won't be new services from the media companies, or an agreement that brings Aereo back online, but an increase in video piracy. 

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Topics: Networking, Broadband, Legal

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  • Broadcast media trends cannot be stopped, will be irrelevant in a decade.

    And it will happen from both ends; viewer demos will continue to drop and media companies will be under pressure to move content to pay models. Cash-strapped government will be under pressure to auction off more bandwidth to paying telecom companies instead of freeloading broadcasters.

    Faced with limited and expensive options, the public will indeed resort to unsanctioned and free content providers (pirates) who operate from international locations not beholden to the media cartels. Congress and the courts will continue to churn out new laws paid for by the cartels, but they will be ineffectual at best.

    Tech-savvy consumers will reap the full benefits of alternative content delivery, leaving the Average Joe to pay through the nose and suffer high bills and insulting content restrictions.
    terry flores
    • Alternative content delivery?

      So what will this content be? Re-runs from the 70's and 80's? Movies from 5 years ago? How will one watch MLB, NFL and other sporting events?

      I'm sorry but whether your paying a cable provider or someone else - content will ALWAYS cost money. I'm so tired of this "We want to pay nothing - but want everything" entitlement.

      This is entertainment - either you can afford it or you cannot. You either value it - or you do not. No one is forcing you to pay for it.
      • Re-runs from the 70's and 80's? Yep.

        Alternative content ranges from Youtube and other free video sites to low-cost options like Netflix and Amazon Prime. Many of these services provide access to old as well as new content, including a lot of recycled TV series and movies. Is that a bad thing?

        As far as your screed about wanting stuff for free, I never advocated that. I simply pointed out that abusive cartel pricing and anti-competitive legislation will not be blithely accepted by people who have the know-how and means to look for alternatives.
        terry flores
      • Study your history.

        Let's not forget that we are only discussing the advertising-supported "free TV" broadcast networks (ABC, NBC, CBS, PBS, etc.) which, in theory, anyone should be able to receive "for free" via a rooftop antenna. That is how ALL TV worked for decades before cable companies were invented and started charging customers for providing a better-quality picture than most antennas could provide in the days of analog TV, and for access to new "non-broadcast" cable networks like TNT and CNN. Broadcast TV has traditionally paid the bills by selling advertising that we must watch in order to be rewarded with entertainment programming. Half the ads are sold by the network, and the rest by the local affiliate. The very idea that the local affiliates could charge cable companies for something that the broadcast affiliates give away for "free" via over the air antennas is a relatively new one in the history of broadcasting. Even after cable TV was well-established, many years passed before a court decided that a local broadcast affiliate could charge cable companies for rebroadcasting their signal. And don't forget that cable and satellite companies sell and insert ads into their signals, which is different than the pure unchanged signal that Aereo was providing.
        Unfortunately, in many areas (like mine) the free "over the air" antenna signal is blocked by topographical features such as mountains or tall buildings. So a company that could "wire" my antenna to a better location (topographically) that is not blocked by a mountain seems like a no-brainer, especially since there are no cable companies in many rural areas (and often no DSL, either), and if you live on the north side of a mountain, you may not even have access to satellite TV providers. I actually know people who just wish they could watch the local affiliate on their cell phone, because that's the ONLY connectivity they have available other than dial-up. A few hundred feet up the road, their neighbors can all get Dish and DirecTV, but the mountain on the east side still blocks broadcast antennas. So by painting Aereo customers as a bunch of whining freeloaders who want programming for nothing, you do a disservice to those who might just want a better antenna to pick up what someone on the other side of that high-rise condo (that they just built) is already getting for free with rabbit ears. (For those of you city-dwellers who have never received TV except by paying a cable company, "rabbit ears" refers to an inexpensive TV antenna still used by millions to receive "free" advertising-supported broadcast television programming.)
        • Good points

          I really despise the fact that I pay so much per month and yet the majority of channels only offer 10 minutes of programming followed by 5 minutes of advertising. What in the world am I paying for, to watch advertising?
          • bills

            Maybe people lump their broadband and cable bill together. A good connection to the internet is vital if you want to stream video. Typical rate is $50-75 for this.

            The traditional cable package is anywhere for $30 - $150 depending on the channels and content you want.

            When I watch the major networks a typical hour show is 40 mins of content and 20 of commercials. On your cable bill the major networks are a small percent of that cost. The bulk of the cost are major cable networks (ESPN, AMC) Sadly many of these are now owned by the same companies with Comcast owning both network (infrastructure), the network itself etc.

            It's not going to get better as pay wall is what they all want. All major sports are moving to cable as the bulk of quality content.
    • Freeloading broadcasters?

      Flores, you don't have the slightest clue about how things work. In return for the use of broadcast spectrum, broadcast television stations pay substantial annual fees to the FCC--in the case of the largest markets, well into six figures.

      On top of that are the requirements that TV broadcasters dedicate three hours a week, without profit, to "educational" children's programming that nobody watches. That's a confiscation of hundreds of thousands of dollar a year in the largest markets.

      Go get a clue.
  • Antenna?

    I seem to have problems understanding the American market. Over here (Europe), most content providers (BBC, ITV, DMAX, SIXX, Sky ARD, ZDF, Pro7Sat1 etc.) have their own apps and on their web sites you can call up their complete library of programming - in Germany you can even pay 1€ to watch tomorrow's episode today, if you are that desperate! DMAX are even allowing web users to watch complete series ahead of their on-air release schedule over their website.

    With these libraries, catch-up services etc. there isn't really any need to an antenna or cable any more - most people still have satellite or cable, because it is easier and more convinient than hooking a PC up to a TV. But as more and more smart-TVs appear with apps for the channels and built-in webbrowsers, it will become more and more common to use the smart-TV and the Internet than plugging a Cable-TV cable or satellite cable into the back of the TV.
    • State owned/funded...

      You have a hard time understanding it because most of Europe is socialized and the state funds the majority of the operations of 'entertainment.' In the USA, it's mostly privately or corporately owned so they want their money.

      That said, I find it deplorable that after initial monetization, that all these media companies STILL want to prevent me from recording anything I have interest in recording and being able to re-watch at any future time I wish.
      • You what?

        Whilst some countries do have a TV licence, which is used to fund an independent public TV network, the vast majority of channels, such as ITV, C4, Pro7Sat1, DMAX, SIXX, RTL, TLC etc. are privately run networks, just like in the USA.

        In fact DMAX programming seems to be 90% US imports, with things such as Mythbusters, Ice Road Truckers, Fast 'n' Loud, Overhaulin', Aircraft Express, American Chopper etc.

        The online catalogues of most of them, at least in Germany, let you recall any previous episode - although some imports aren't allowed on some devices.
        • Another channel

          filled with cheap "reality" shows, the worst of US TV is even in Europe.
    • Sounds better than over here.

      Well, that's not true a-la-carte TV, but it obviously works better for European consumers than what we have in America. Over here, cable and DSL are still unavailable in many rural areas. I live in the mountains, and before we signed the papers to finalize the purchase of our house, we made them install DSL there, just to make sure it was really possible to get high-speed Internet. Millions of Americans can still only get dial-up, slow-speed Internet, unless they pay ridiculously high prices for metered Internet data one their cell phones or via 2-way satellite. As of January, 2011, the US was number 27 in high speed Internet availability, behind Iceland and the Slovak Republic.
      That said, I wonder when the TV content makers will finally wise up and figure out that since they control the content, they could/should only consider signing contracts with the cable companies that also allow the content makers to sell their channels directly to viewers a-la-carte over the Internet.
      In the US, to get one single cable channel like the BBC America (which isn't even the "real" BBC) you have to sign up for an expensive package of channels which contains much more expensive channels you may not want, like ESPN, Disney, and dozens of others. On top of that, many companies want you to sign a two-year contract!
      I only have the time/desire to watch a few shows on 4 inexpensive channels. US cable and satellite companies charge $30-$50 a month for a package with those 4 channels, because people who only watch a few shows on a few channels are forced to subsidize viewers who want expensive sports and many other channels.
      If they offered 4 of the inexpensive channels I watch (2 broadcast networks and two variety cable channels) for $5 a month, I would pay the $20 in order to save $30 a month. Instead, because of their greed, I'm thinking of joining the cord-cutters and giving up doing business with cable and satellite companies and their expensive packages. And without me and others like me sending in big monthly checks, perhaps the delivery model and/or offerings will change. How's your local printed newspaper doing these days? How many people do you know who no longer have a wired voice telephone line? We can change what these greedy companies offer through our purchasing choices!
    • Antenna?

      They mostly like to whine! They can go to lets say FOX , or CBS and watch full episodes full screen on their PC or what ever they want to use on the internet (for free, and most go back a number of years). I have been looking at this site (ZDNET) for about 6 mo. now and find that there are a few gigantic cry babies here. I will not use Win 8 because I am not smart enough to see how it works in 30 sec. WaWaWa I do not like the Surface because it is to much like a PC WaWaWA I do not like the Surface because it is to much like a Tablet WaWaWa

      What you have here is a bunch of people who think it is OK for a company to steal the work and investment in making a show from the producers of the show and sell it to them for a small price. It is OK and legal for me to record a show and then watch it. It is not legal for me to use broadcast shows to make money, If I do I have to pay for its use. Aereo wanted to make money from it, but not have to pay for it.
      earl harbeson
      • Actually

        Aereo thought that they were just making money to act as your antenna.. I was not aware that they recorded anything but merely passed along exactly what came in on the antenna. Do you know that in a lot of places where reception is really poor, people have gotten together to put up a very tall mast with a very high gain antenna in order to get clear reception to all the channels in the air around them. This feed is run into amplifiers and a network of cables connect everyone who is a part of this cooperative to the amplifiers. I wonder if you would consider that illegal too. They all contribute to whoever, or whatever entity, makes sure the amps are working and powered up.. and the antenna mast is stable and in good repair, including the high gain antenna. I am sure someone is making a little money there, if only for the service end of things to do the upkeep just mentioned. Oh, but they are making money out of "re-broadcasting" the signal, eh?
  • Content viewing

    It seems there continues to be a group of people that feel how THEY want to view content is the status quo for the masses.

    I have no desire for a la carte model. Why - it would cost me a fortune to watch the amount of content my family consumes. A family will have varied viewing interest so even if shows were $1.00 an episode / $15 a season that would be 2x the current cable bill for all the shows we watch which will likely not even include sports which I presently watch NFL, NCAA, MLB, NBA etc. Would we all want the equivalent of NFL Sunday ticket ($350) for each sport we wish to watch?

    For all those that hate whatever is on TV - tune out, read books and do whatever you prefer. For those that complain it's too expensive - blame the content creators who pay millions to actors who then need to increase costs yearly.

    Last time I went to the Met or a concert I paid a fortune and I didn't see anyone complaining for cheaper options. Entertainment is a luxury people so I'm sorry the world is made of haves and have nots.
    • The key question is "How BIG is this 'A La Carte Market'?"

      "It seems there continues to be a group of people that feel how THEY want to view content is the status quo for the masses."

      Mobile consumption is increasing - I see that every day on my way to work. You appear to believe that it is a niche market, but are *quite sure* that it's not YOU who are becoming the "niche"?
      • A la carte

        It's only appealing as people have this assumption it will be cheap. The content owners are not stupid. Their purpose is to make money. Just like any other business.

        So how much is HGTV worth? The Weather Channel? Would you pay $10 each / monthly? ESPN alone is rumored to be $25-30 of your cable bill but would you prefer paying per sport at a higher rate? How about paying per game? That could get really expensive quickly if you follow many teams in say college football and basketball.

        Consuming you tube in 5-10 min chucks is not the same as streaming last nights episode of your show. Other things are in play that will prevent that (data caps) so unless you have constant WiFi (that is fast) it's not an ideal way to view content. Maybe I am a niche but I didn't spend 20k on a man cave with high end A/V setup to watch content on a 4" screen.
    • a la carte vs. all you can eat

      Don't see why a la carte and all you can eat cannot co-exist. For those who watch limited content a la carte makes great sense. Similarly, others consuming large quantities of varied content can get volume discounts. IMO, they are not mutually exclusive.

      What I resent is Grand Slam tennis events being gobbled up by ESPN (e.g., Wimbledon in 2013, U.S. Open in 2015) and placed behind a pay wall where I have to buy lots of other unrelated content in order to get ESPN programming. What I really want is to be able to purchase a fraction of ESPN's content those sporting events I am interested in. I might sign-up for Monday night football too.
      Rabid Howler Monkey
      • And if one purchases large quantities of a la carte content,

        a volume discount could also be offered.

        In my own case, I want a small quantity of a la carte content.
        Rabid Howler Monkey
      • that would have been great but

        I guess ESPN just does not have the technology to do this.
        When my father-in-law - who watches ethnic channels - learned just how much he'd have to pay to buy ESPN to watch the world cup, he figured it is not worth it. And he is a great soccer fan. He is an old guy, and he is not going to pirate anything, he'll just watch soccer coverage from the ethnic channel.

        Now, ESPN has just lost that little bit of the revenue.

        Even though the content can not be totally free, it is only worth as much as people are willing to pay for it.