Chet Kanojia, founder and CEO of Aereo (Diego M. Radzinschi)
Aereo, the television-over-the-Internet service that suspended operations after the Supreme Court ruled against it, is refusing to disband for good.
The company is now using the Supreme Court’s own language to force broadcasters to treat it just like a cable TV company. In Aereo’s view, that means broadcasters must license their signals to Aereo under a 1976 copyright law.
But the Supreme Court actually stopped short of declaring Aereo a cable company, and previous court rulings have said Internet-based services don’t qualify. Even if Aereo is considered a cable company, a 1996 communications law overrides some of the guarantees that Aereo is seeking.
“It’s probably going to be an uphill battle,” said Seth Davidson, an Edwards Wildman Palmer attorney who specializes in communications and copyright law. “It’s Aereo’s last shot. I see no downside to them in trying.”
Until Aereo voluntarily suspended service on June 28, it was streaming live and recorded television shows to customers’ tablets, phones and other gadgets. Prices started at $8 a month. Aereo claimed it wasn’t anything like a cable company because each customer was temporarily assigned an individual antenna about the size of a dime. Aereo argued that the arrangement was no different from customers who put their own antennas on rooftops.
The Supreme Court rejected Aereo’s argument, saying that the company acted like a cable system, so its service constituted a public performance subject to copyright royalties and licensing.
Now, Aereo says that if that’s the case, it should be allowed to retransmit signals under what’s called a compulsory licensing arrangement. In essence, a cable company is allowed to pick up the broadcast signal without reaching a licensing deal with the station. The U.S. Copyright Office then calculates royalties based partly on the cable company’s revenue.
An Aereo rival, FilmOn, made a similar case after the Supreme Court’s ruling. It used to offer the broadcast channels for free after showing video ads. FilmOn started restricting access to paying subscribers so that it, too, could claim to be akin to cable service.
The matter is now before U.S. District Judge Alison Nathan in New York. Nathan must decide whether to grant broadcasters’ request to ban Aereo, which would prevent Aereo from lifting its voluntary suspension. If the judge agrees that Aereo is a cable company, then Aereo could resume operations, regardless of the Supreme Court’s ruling.
In a separate case, a federal appeals court ruled previously that an Internet-based television service called Ivi didn’t qualify as a cable system and thus wasn’t entitled to compulsory licensing. In a court filing Wednesday, Aereo took the position that the Supreme Court overruled the Ivi decision by deeming Aereo a cable system.
But that’s a stretch, experts say.
“While the Supreme Court’s decision is obviously based on the notion that Aereo looks an awful lot like a cable system, I don’t think it can be said that, as a technical matter, the Supreme Court held that Aereo is a cable system,” said Harry Cole, a communications regulations lawyer at Fletcher, Heald & Hildreth.
Even if Nathan sides with Aereo, it would likely be a short-lived victory. Definitions of cable systems differ under copyright and communications laws, and Davidson said Aereo must count on the Federal Communications Commission not to consider Aereo a cable system under the communications law.
Otherwise, Aereo could be subject to retransmission fees on top of the compulsory royalties. The compulsory fees typically go to content providers, such as the studio that made “The Simpsons” or the musicians behind songs performed on TV. The retransmission fees are what local stations want most, as those compensate them for the actual signals.
“You can’t just cherry pick one fee you want to pay and not pay the other,” said Dennis Wharton, a spokesman with the National Association of Broadcasters.
With the exception of non-commercial, educational stations, broadcasters can simply demand fees that Aereo can’t afford without huge hikes in the rates it charges customers. It’s these kinds of demands that have kept some stations off various cable and satellite TV systems in high-profile disputes in recent years.