GRAY AREA, GRAY AEREO

GRAY AREA, GRAY AEREO

In recent years, the time-shifting capabilities of digital video recorders (colloquially “DVRs”) and the rising availability of cloud storage have dramatically altered the definition of watching TV. The average television viewer is no longer bound by the schedule set forth by the networks. One need not rush home before kick off or hope that the episode they just missed will be rerun next week or even feel obliged to sit through the seemingly never-ending commercial breaks.

The idea of television on the viewer’s terms has led to a movement known as “cord cutting.” The term refers to a growing number of Americans that opted to cancel their often costly monthly cable or satellite service in favor of some combination of subscription based streaming video providers, digital media players and over the air digital television signals. Interestingly enough, the burgeoning “cord cutting” movement does not mean that Americans are watching any less content, simply that they are opting to view it on alternative devices like tablets, smartphones and computers as opposed to televisions.

The most considerable difficulty that comes about as a result of “cord cutting” is how to emulate DVR capabilities available from cable and satellite plans.[i] Without the DVR set-top box that is ordinarily furnished incidental to signing up for cable or satellite service, your ability to watch your favorite soap opera on the subway would likely be hindered.[ii] Many subscription-based services offer high quality mobile access to their content through the use of an application on a handheld device, tablet or media player.[iii] On the other hand, terrestrial television the viewer were to access through the use of an antenna picking up an over the air digital signal may habitually experience drastic ranges and frequent dips in quality.[iv] Quality issues aside, without the benefit of a set-top DVR, terrestrial television could not be recorded unless the “cord cutter” was willing to pay a subscription fee to TiVo or dust off their old VHS cassettes and hope that their VCR still works.[v]

Whether the result of good timing or pure opportunism, a startup company located in New York City by the name of Aereo developed a solution to the dilemma faced by both  “cord cutters” and individuals unwilling to pay the often exorbitant amount of money to a cable or satellite provider for access something that is essentially provided over the air for free. In a press release announcing that Barry Diller had joined the Board of Directors, Aereo was said to provide “an easy to use, proprietary remote antenna and DVR that consumers can use to access network television on web-enabled devices such as smartphones and tablets, and through internet TV solutions such as AppleTV and Roku.” Diller touted Aereo as a both a “potentially transformative technology” and “a revolutionary product” that would deliver access to all the major networks through any Internet enabled device.

Aereo’s website touts the ability to allow subscribers to “watch real, live TV through a tiny remote antenna you control over the Internet.”[vi] Although the concept of Aereo was not entirely novel at its inception, media analysts were quick to forecast Aereo as “the greatest threat to the cable/satellite/broadcast industry.”[vii]  “Until now, watching free, over-the-air television required a giant rooftop antenna or awkward rabbit ears. Aereo changed that.” The Aereo website also contains a “Frequently Asked Questions” section that claims to contain “[e]verything you’ve ever wanted to know about Aereo…”[viii] Simply put, members who subscribe to Aereo’s service are granted a connection to a nearby “tiny TV antenna located in a data centerconnected to a remote DVR in the same data center.”[ix] The average price for monthly cable service in 2011 in the United States was $86.[x] That number is estimated to grow to $123 by 2015 and $200 by 2020.[xi] Aereo, on the other hand, costs the consumer a mere $8 a month.[xii]

New technology like Aereo, with the potential to dismantle a system that has been in place for well over half of a century, is inevitably going to be met with significant opposition. The particular opposition against Aereo came in the form of an action on behalf of a number of over-the-air television broadcasters requesting a New York federal judge enjoin Aereo from continuing operation on the grounds that Aereo functions by profiting on the exploitation of others’ copyrighted works. The motion was denied. In April 2013, the 2nd Circuit Court of Appeals upheld the denial and refused to enjoin Aereo from continuing operation. Undeterred and tired of dipping profits, the broadcast networks soldiered on and filed petition for writ of certiorari to the United States Supreme Court that was granted in January of 2014. With oral arguments occurring earlier this week and a bulk of the networks’ resistance to Aereo’s business model rooted in well tread areas of copyright law insiders wait with bated breath. Given the stakes, the underlying questions being raised and the conceivable outcomes posited, the case might have more far-reaching consequences for the future of the television industry, the law and our day-to-day lives.



[i] Mike Flacy, Ditch the Bill, Keep the Remote With Four Cable-Free DVRs for Cord Cutters, Jan. 19, 2013, http://www.digitaltrends.com/home-theater/cord-cutting-101-dvr-solutions-for-cord-cutters/.

[ii] Id.

[iii] Id.

[iv] Id.

[v] Id.

[vi] Watch Live TV Online | Aereo, http://aereo.com (last visited April 20, 2014).

[vii] Eriq Gardner, Aereo, Ivi and the Legal Road That Will Determin the Future of TV-Cord-Cutting, Hollywood, Esq. The Intersection of Entertainment and Law (Feb. 25, 2012, 2:14 PM), http://www.hollywoodreporter.com/thr-esq/aereo-ivi-tv-chord-cutting-291395.

[viii] Frequently Asked Questions | Aereo, http://aereo.com/faqs (last visited April 20, 2014).

[ix] Id.

[x] The NPD Group: Average Monthly Pay-TV Subscription Bills May Top $200 by 2020, https://www.npd.com/wps/portal/npd/us/news/press-releases/pr_120410/ (last visited April 20, 2014).

[xi] Id.

[xii] Aereo | Support Center, How much does Aereo cost?, http://support.aereo.com/customer/portal/articles/383157-how-much-does-aereo-cost- (last visited April 20, 2014) (offering an optional $4 upgrade to 60 hours of DVR space and the ability to record two shows at once).

Photo credit: http://www.digitaltrends.com/home-theater/cord-cutting-101-dvr-solutions-for-cord-cutters/#!FIoHR