The Supreme Court Is Hearing a Case That Could Completely Change the TV Industry

Analyzing the top news stories across the web
April 21 2014 2:42 PM

Supreme Court to Hear Lawsuit Over Startup Aereo

154115138-republican-presidential-candidate-mitt-romney-watches
TV may never be the same.

Photo by Jim Watson/AFP/Getty Images

This post originally appeared in Business Insider.

It's one of the most common complaints with TV today: Why are we paying so much per month for a bunch of stuff we never watch?

Advertisement

The dream, of course, is to only pay for the shows you want to watch. But there's too much control and bundling by networks and cable companies to make that happen right now.

But that hasn't stopped some from experimenting with workarounds.

On Tuesday, live TV streaming startup Aereo heads to the Supreme Court to not only fight for its own existence, but potentially the future of TV, as well.

Aereo is one of the most talked about companies in the media world these days, and it's the latest demonstration of tech companies trying to find legal workarounds to revolutionize traditional industries.

Here's a quick breakdown of what Aereo is and what the case means for the future of streaming media.

What Is Aereo and How Does It Work?

Aereo is a service that lets you watch live network TV over the Internet for $8 per month. The company assigns each subscriber an antenna that can access network TV over the air. The signal is then transmitted over the Internet to your PC, tablet, smartphone, and some streaming media boxes like Roku. Aereo also doubles as a virtual DVR, so you can record shows on the company's servers and stream them later to your device.

Aereo is only available in a handful of U.S. cities, but the company will likely ramp up expansion if it wins its Supreme Court case.

Aereo has received $100 million in funding so far. Its CEO is Chet Kanojia. Previously he was founder and CEO of Navic Networks, which was a TV advertising company Microsoft bought in 2008. InterActiveCorp, the big collection of digital companies, owns a 10 percent stake in the company.

What Does Barry Diller Have to Do With All of This? (And, Who Is Barry Diller?)

Barry Diller has had a long, successful career in the media industry. He worked at ABC, Paramount, Fox, and USA Networks, before he founded IAC. Through IAC he has become a billionaire. He has become the face of Aereo and its fight because he's a well-known media figure. 

Wait, How Does Aereo Get All That Content for Free?

It might seem strange in the cable/satellite TV era, but a lot of programming is, and has always been, available for free over the air if you have an antenna. Think back to the days when everyone had "rabbit ear" antennas. You can still do that today and get networks like NBC, CBS, ABC, and Fox for free.

Aereo's workaround was to invent a tiny HD antenna that can access over-the-air networks, just like those rabbit ear antennas once did. The antenna itself is pretty impressive. It's about the size of your thumbnail, so Aereo can pack a bunch of them into a tiny space. The signal from the antenna assigned to you is transmitted over the Internet to your device.

Who's Suing Aereo and Why?

The case heading to the Supreme Court is American Broadcasting Companies v. Aereo, but it'll have implications for all networks, not just ABC.

ABC and the networks argue that Aereo is violating copyright by retransmitting their signals over the Internet. Typically, networks get retransmission fees from cable and satellite companies that carry network TV, even though users can get those channels for free over the air. The networks likely want a retransmission fee from Aereo too.

What's Aereo's Defense?

Aereo's argument is that its technology is no different from putting a regular TV antenna on your roof and running a wire down to your TV. But in this case, the "wire" is the Internet. Since Aereo only works if you access it within your town, the company says it's not violating any copyright laws. 

Aereo also says it has a right to provide its virtual DVR service. A previous case in 2008 involving Cablevision determined such remote DVR services are legal.

Does Aereo Have a Chance? And What Does This Mean for the Future of TV?

The big question in this case is whether or not Aereo has the right to let users store copyrighted content on remote servers and then beam it back to themselves on a connected device. Aereo seems to have come up with a clever workaround for existing regulations, but the networks have a strong argument, considering cable and satellite companies have to pay retransmission fees for content.

There are implications for other cloud-content companies, too. If Aereo loses the case, it will likely prevent other startups from trying to let users store and stream copyrighted content on remote servers. That could chill innovation in TV and keep all the power and content control locked up by networks and cable or satellite providers.

If Aereo wins, the case could open the doors for a viable alternative to cable and satellite TV. Imagine just paying a few dollars per month to get all your favorite sitcoms and sports that are already broadcast for free on network TV, delivered to you over the Internet. If you augment that with other services like Netflix and Amazon Instant Video, there's very little incentive for many people to pay full price for a cable subscription.

What Will the Networks Do if They Lose?

The networks have made a bold threat to stop broadcasting over the air for free if Aereo wins. That means you'd have to start paying for those channels either directly to the broadcasters or through your cable provider.

However, Aereo argues that's not very likely to happen since the networks would lose a massive amount of valuable spectrum it gets from the government. When broadcast TV began decades ago, the networks cut a deal with the government that let them use that spectrum as long as they provided their content for free, supported by ads, of course. And if the networks do make good on their threat to remove their free broadcasts, it would make it tough for those who can't afford cable to get news and information. The government likely wouldn't go for that.

What Happens to Aereo if It Loses the Case?

Aereo has already said it does not have a Plan B if it loses the Supreme Court case. That likely means the startup will either have to start paying retransmission fees to the networks or shut down completely.

Steve Kovach is a tech editor at Business Insider. Follow him on Twitter.

TODAY IN SLATE

Politics

Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

IOS 8 Comes Out Today. Do Not Put It on Your iPhone 4S.

Why Greenland’s “Dark Snow” Should Worry You

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Three Talented Actresses in Three Terrible New Shows

Science

The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

The Ungodly Horror of Having a Bug Crawl Into Your Ear and Scratch Away at Your Eardrum

My Father Was James Brown. I Watched Him Beat My Mother. Then I Married Someone Like Him.

  News & Politics
Politics
Sept. 17 2014 5:21 PM Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS But the next president might. 
  Business
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
  Life
Gentleman Scholar
Sept. 17 2014 5:10 PM Should Men Still Open Doors for Women? Or is it ungentlemanly to do so at all?  
  Double X
The XX Factor
Sept. 17 2014 4:36 PM Is Nonfiction the Patriarch of Literary Genres?
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Brow Beat
Sept. 17 2014 5:31 PM Did You Catch Walter White’s Blink-and-You’ll-Miss-It Cameo in Godzilla?
  Technology
Future Tense
Sept. 17 2014 5:26 PM If Fixing Global Warming Is Free, What’s the Holdup?
  Health & Science
Jurisprudence
Sept. 17 2014 4:49 PM Schooling the Supreme Court on Rap Music Is it art or a true threat of violence?
  Sports
Sports Nut
Sept. 17 2014 3:51 PM NFL Jerk Watch: Roger Goodell How much should you loathe the pro football commissioner?