Television — or, at least, the experience of watching broadcast shows on a television — is not the wave of the future. The television ratings company Nielsen classifies nearly 5 million households as “Zero-TV,” meaning that they either have no television or that they use it only for DVDs, games and other activities unlike traditional TV watching — and this is a 150 percent increase in the number of Zero-TV households since 2007. TV ownership is steadily declining, while more and more Americans are seeking entertainment on the Internet.
Yet, because of a loophole in federal law, television programs broadcast over the Internet can be treated very differently than programs broadcast via cable or satellite. While cable and satellite companies must pay a fee to broadcast copyrighted material that they ultimately transfer to consumers, a company known as Aereo has found a workaround to this fee. Under federal law, broadcast programs are free as long as the consumer owns and controls the antenna used to catch the broadcast signals. As Aereo CEO Chet Kanojia tells ThinkProgress, his company uses an antenna array that it uses tap into the “over-the-air” signals. Customers pay $8 a month to “rent” their own mini antenna that works like the rabbit-ear antenna you plop on top of your TV. Customers also get their own DVR cloud space to save shows as part of their rental package.
On Tuesday, however the Supreme Court will hear oral arguments in American Broadcasting Companies, Inc. v. Aereo, Inc., a case that could potentially shut down Aereo’s ability to take advantage of this loophole. The case pits Aereo against major broadcast companies such as ABC, CBS, NBC and Telemundo. If Aereo wins, it could expand TV on the internet, opening up the market for online-only cable and satellite TV alternatives. But if the broadcasters win — and even if they don’t — consumers may have to pay for content that was once free, regardless of whether they actually watch it on TV or online.
“Ultimately, this is a fight about how do we stop getting programming delivered to us via [traditional] broadcast and move it onto the Internet. This is the beginning of the initiation of how and when that’s going to happen,” Michael Carroll, a law professor at American University in Washington, D.C., tells ThinkProgress.
Broadcasters say Aereo should be shut down because it’s stealing copyrighted content and transmitting it through their site. To avoid trampling on copyright laws, broadcasters say Aereo should pay the same fee cable and satellite companies pay to transmit network TV programming, such as live sporting events.
“Broadcasters are freaking out because Aereo represents the complete disruption between the cable systems and the broadcasters,” Carroll says. “Cable [companies] don’t want to pay the fee, but they also don’t want to lose subscribers to Aereo, which pays nothing for the broadcasts.”
Two lower courts ruled that Aereo’s unique brand of transmission was legal. But with so much money on the line — broadcasters make billions of dollars each year collecting the fee — the Supreme Court will now weigh in.
It should be noted that a very similar fight occurred when cable TV came around. Community access television redistributed content to rural areas that couldn’t receive reliable broadcast signals because they were far from the towers, Carroll says. The Supreme Court ruled in the Cablevision case that cable companies weren’t infringing on the broadcasters’ right to make content available to the public and, therefore, not entitled to redistribution fees. In the 1970s, however, Congress made it so that cable companies had to pay a licensing fee when re-airing copyrighted content such as the Super Bowl. All cable companies must pay the fee and transmit all broadcast channels, even smaller ones with little funding.
This history could repeat itself if Aereo wins its case. Even if the Supreme Court rules in Aereo’s favor, Congress could step in and make them pay the fee anyway. “If Aereo wins, we will almost certainly see Congress respond,” Carroll says. “There’s a huge influence from the media industry in Congress. I can see it going the way that the cable verdict went. Everyone who has come along with a new technology for broadcast has gotten the right to do that if they pay the fee.” If that happens, consumers may still have to share some of the costs for the new fee.
Broadcasters and groups such as the NFL have also threatened to take their shows and programming off the networks — and make them available only on cable — if the justices side with Aereo. That will likely force consumers, especially sports enthusiasts, who primarily watch TV online to get a cable subscription to watch programs such as the TV-drama Scandal or even the Olympics.
Nevertheless, going against Aereo would set a precedent against technological development, according to Kanojia. “There are so many creators out there; [keeping] the platform for them to create other types of programming” for consumers is crucial, Kanojia says. A ruling in the broadcasters’ favor could make it so that Google and other tech companies wouldn’t be able to improve on older technology, he says. For example, Google Drive brought a different means of storing and streaming data. “If you don’t allow a consumer to take media wherever they want, with taxes, levies and fees, you risk losing them,” he says.