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Can the Big TV Networks Kill Aereo?

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The ultimate Internet-age copyright case goes to the Supreme Court.

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Last Saturday was a big day for Aereo, the best buddy of cable cord-cutters and mortal enemy of the big broadcast networks.
 
The company's founder, Chet Kanojia, was in Austin, Texas, at the big, loud, and impossibly hip venue that is the SXSW conference, to announce his company's expansion to Austin. It's the 13th on the map of cities whose residents can dump big cable in exchange for access to broadcast television for just $8 per month.
 
Meanwhile, that morning his company was forced to yank its service away from customers in Denver, Colorado, and Salt Lake City, Utah, after a US District Court injunction against it was upheld by a federal appeals court.
 
For better or worse, the legal roller coaster will end sometime after April 22, when the US Supreme Court takes up the question of whether it is legal for Aereo to provide its customers with Internet access to 20 hours of broadcast network television for $8 per month.
 
Aereo provides network television broadcasts over the Internet via a remote system of television antennas. One tiny, dime-sized antenna is assigned to each subscriber. When a subscriber tunes in, the antenna records the live programming to a cloud-based DVR, while the subscriber views the program on an Internet-enabled device, or records it for future viewing.
 
The company is Kanojia's brainchild, growing in only two years from its home base in New York City to 13 more cities (minus two, since Salt Lake City and Denver got yanked). Its website lists 16 more cities where Aereo is "coming soon," presumably as fast as Kanojia can fill a warehouse with tiny antennas.
 
It's clear why the broadcast networks hate Aereo. Up to 10% of their revenue now comes from licensing fees that the cable companies pay for the rights to carry their programming.
 
It's less clear, at least from the consumer viewpoint, how It could be illegal to offer a service that sounds like a souped-up modern version of the old rabbit ears on top of the television.
 
After all, about 7% of Americans still get broadcast television over an antenna, according to the latest figures from the Consumer Electronics Association. (About 83% pay a cable subscription fee.)
 
Nobody's accusing them of piracy. And, after all, isn't broadcast television supposed to be "free" TV, as opposed to "premium" TV?
 
But that's consumer logic, not lawyer logic. It's also pretty much the logic used by Aereo to defend its business. Consumers may buy antennas to receive television broadcasts for private entertainment. Aereo rents them an antenna and keeps it at a remote location.
 
Lawyer logic -- as expressed in a brief filed with the Supreme Court by ABC (NYSE:DIS), CBS (NYSE:CBS), Fox (NASDAQ:FOX), and NBC (NASDAQ:CMCSA) -- argues that Aereo's business is the sale of broadcast television programming. And that, they argue, constitutes "unauthorized exploitation of the copyrighted works of others."
 
Interestingly, that suggests that Aereo's service might be legal, if it were just supplying aerials that transmit programming. But by storing programming in a cloud-based DVR, the networks argue, it is retransmitting content in violation of one piece of copyright law.
 
While we're splitting hairs, Aereo argues that its tiny remote antennas serve the same purpose as the old rabbit ears on top of the television. But one of its biggest opponents responds that all the antennas for an entire city share a common facility, which represents an integrated system.
 
Unfortunately for Aereo, that argument was made by the US Justice Department, which is siding with the broadcast networks in this case.  The entire brief filed by the government has been published online by The Hollywood Reporter.
 
The broadcast networks have gone so far as to threaten to remove their programming from the free broadcast spectrum and recreate themselves as pay-TV networks, if Aereo wins its case. The National Football League and Major League Baseball, fearing for their license fees, say they may move their programming from broadcast to cable if Aereo isn't stopped.

For now, Aereo's founder denies having any contingency plan whatsoever to deal with a loss at the Supreme Court.  In fact, he told NPR in an interview in Austin that his company had urged the highest court to take up the case now, because the networks were trying "to kill us by suing us in every possible jurisdiction."
 
Meanwhile, Aereo also is reportedly working on an app that brings Aereo to Chromecast, the Wi-Fi streaming-media adapter from Google (NASDAQ:GOOG). In its first public comment about Chromecast, an executive told a crowd at SXSW in Austin that Google has sold "millions" of the $35 adapters since introducing it only last summer.

Related stories:

Aereo Online Broadcast TV Announces Austin Launch Despite Legal Battles Elsewhere

Help Us, Aereo! Streaming TV Is Our Only Hope Now

Apple's Buttonless Mouse Came From Steve Jobs' Misunderstanding, Says Former Design Exec
 
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