ABC v Aereo — Why You Should Care

by Michael Cain

Earlier this week the Supreme Court heard arguments in the case of American Broadcasting Companies v Aereo. This post looks at the case from the perspective of how the eventual decision could affect the technology you use every day.

Aereo has an interesting business model. For a fee of about $10 per month, Aereo leases you a dime-sized television antenna capable of receiving over-the-air broadcasts in a particular city. The bitstream(s) from “your” antenna runs through a virtual digital video recorder. You can watch the content, in either near real time or from storage later, from anywhere on any device so long as you have internet connectivity with enough bandwidth. “Cool,” you might think, “Slingbox that I can rent by the month instead of owning the equipment.” The over-the-air broadcasters, represented by ABC, think otherwise; they think it’s a cable system.

The difference determines whether Aereo has to pay the over-the-air broadcasters a fairly hefty redistribution fee for use of copyrighted material. As cable networks and other internet video services have eaten into the broadcasters’ ad revenue, redistribution fees have become an important revenue stream. Under the current rules, the broadcasters are not entitled to such a fee when their transmission is used for a private performance. But if the performance ispublic, whoever is doing the redistribution has to pay for the content. Cable systems, where a single bitstream derived from the over-the-air signal is delivered to all customers, has been deemed a public performance. Aereo asserts that because each of their customers has a physical antenna and views content using their own bitstream, the performance is private. During the hearing, some of the justices seemed skeptical. Chief Justice Roberts said, “I mean, there’s no technological reason for you to have 10,000 dime-sized antenna, other than to get around copyright laws.”

If Aereo loses this case the company will probably be out of business (the CEO admits as much publicly). One of the points that Aereo argued before the court, though, is that if Aereo loses it will potentially have large impacts on the use of “cloud” storage and computing more generally. Suppose I subscribe to a premium cloud storage service built on Amazon’s technology. The premium services don’t just make one copy of my files; they make multiple copies in different data centers on different continents. Which copy I access at a given time depends on where I am and how the internet is functioning. I have a virtual high-reliability file system rather than a physical one. Even though a RAID-1 disk array on my desktop almost certainly makes more copies of the music than are allowed by copyright terms, TTBOMK no one has challenged the use of RAID storage. Does “virtualness” change the arguments? Justice Breyer, talking about avoiding impacts of this case on cloud services more generally, said “I don’t see how to get out of it.” A finding against Aereo may also be a finding against cloud implementations of a variety of other services and capabilities.

One additional question that hasn’t been asked much is “Why take Aereo to court now but not Slingbox in the past?” The fundamental answer to that, I believe, is not that the broadcasters think Slingbox use across the internet is legal, but rather that Slingbox doesn’t present the same kind of threat that Aereo does. Aereo scales where Slingbox doesn’t. High-speed data services in the US are almost all asymmetric: upstream data from the customer’s location to the internet is a scarce resource. If one household on a run of coax transmits a Slingbox stream to another internet location, things work okay. If a couple dozen households on the same coax run attempt that, things begin to fall apart. This is one of the reasons the terms-of-service forbid operating servers in your residence. If Slingbox were to take off in a big way, it is almost certain that it falls within the definition of “server” under those terms-of-service — albeit a private one — and the HSD companies would move to shut it down. Aereo’s service scales because they can buy the necessary bandwidth on a commercial basis, in any quantity that they require, based on demand.