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Q&A: What the Aereo decision means for TV viewers

The Supreme Court's ruling against Aereo is a huge deal — not because it'll upend the TV industry, as some might have hoped, but because of the disruption it won't cause. What is (was?) Aereo, and what does the decision mean for the way we watch TV?

What is Aereo?

Based in New York City, Aereo was founded by CEO Chet Kanojia in 2012. The company uses tiny antennas to grab TV signals out of the air. Those antennas feed the broadcast programming to a DVR, which then plays the programming back to you on your PC, tablet or phone on demand. The technology is cloud-based, meaning it works a lot like Dropbox or Google Drive: The TV shows are stored online, then served to you over the Internet. The service is available in about a dozen cities.

Why is it so controversial?

At issue was whether Aereo should have to pay money to TV broadcasters for their content. Right now, Aereo pays nothing — it gets the TV signals for free, just as you or I might with our own televisions, grabbing signals over public airwaves. But unlike us, Aereo gets to make money from relaying those transmissions over the Web. Broadcasters challenged Aereo on that around the country, accusing it in court of stealing their work and infringing their copyright. They'd much prefer Aereo do what cable companies do: Pay "retransmission" fees for the right to carry broadcast content on cable.

What did the Supreme Court decide?

The court held in a 6-3 vote that Aereo wasn't simply providing equipment for consumers to watch their own taped shows later, as the company claimed. Instead, Aereo was found to have violated copyright law: Every time the company made a recording available to the consumer, it was engaging in a "public performance" that required paying for a content license.

Does this reading of the situation actually make sense?

Well, the majority of the justices believe Aereo is really no different from a cable company, which also pays for content and transmits broadcast signals to the public.

Three conservative justices disagreed. They argued in a dissent that Aereo doesn't transmit anything, publicly or privately. It's simply facilitating what customers would do on their own if they had the equipment.

Is Aereo dead?

Not immediately, but pretty much. Even top Aereo investor Barry Diller admits as much.

"We did try," he told CNBC, "but it's over now."

Aereo's whole business model depends on avoiding retransmission fees. Now that the court has said that model is illegal, what can Aereo do? Maybe it can eke out a living selling people their own digital antenna kits or something. But Aereo's future certainly doesn't seem very bright. Same goes for the various Aereo copycats that would've sprung up had the court ruled in the company's favor. Now, those companies will likely be deterred as a result of this ruling.

What's unclear is how the decision could affect cloud computing companies. Aereo advocates warned the court that a broad ruling against Aereo would have chilling effects on the cloud industry, a growing part of the U.S. economy. In its opinion, however, the court said it didn't expect its decision to have any bearing on future technologies.

It's one thing to assert that. But nobody, not even the court, can predict whether that will be the case.

Associated Press

Rescue service work at the scene of an explosion at a shopping mall in Abuja, Nigeria, Wednesday, June 25, 2014. An explosion rocked a shopping mall in Nigeria's capital, Abuja, on Wednesday and police say at least over 20 people have been killed and many wounded. Witnesses say body parts were scattered around the exit to Emab Plaza, in the upscale Wuse 11 suburb. (AP Photo/Olamikan Gbemiga) GBE109

Q&A: What the Aereo decision means for TV viewers 06/25/14 [Last modified: Wednesday, June 25, 2014 10:54pm]
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