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What the Aereo Supreme Court Case Means for You

The online video community has been buzzing about Aereo, a streaming service that lets users watch and record local antenna television. There's just one catch. It might not be legal. The company's case has advanced all the way to the United States Supreme Court, where both parties will present their arguments on April 22.

Broadcasters object to Aereo, as they believe the company is profiting unfairly from their work. Many viewers find the service useful, as it's an easy way to watch local TV on computers, televisions and mobile devices. The Supreme Court's decision could end with Aereo flourishing unchallenged, shutting down completely or facing something in between.

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What are the wider repercussions of the Aereo case?

The case of American Broadcasting Companies, Inc. v. Aereo, Inc. may have broader effects on the average consumer than on one particular company.

If Aereo wins the case, other antenna-based streaming services like FilmOn and Simple.tv will be able to stream content to users and charge subscription fees, just as before. Enterprising streaming companies may even discover a legal way to stream one area's local TV to another area without the additional cost of transmitting a service outside its originally licensed broadcast area. Perhaps most importantly, such a ruling might allow cable and satellite companies to sidestep paying broadcasters for content, opting instead to stream this content to users from antenna receivers, just like Aereo does.

If the broadcast networks win the case, they could make Aereo more expensive (because Aereo would have to pay licensing fees) or shut it down entirely. On a larger scale, this means that broadcast channels will be available only at the broadcaster's discretion. Either you use an HD antenna, get a cable subscription or rely on whatever programs the network uploads to its website. This will give network TV more power and autonomy when it comes to streaming content, especially as it relates to regional programming (live sports and events, mostly).

This primer covers the basics of Aereo versus the networks, and what the Supreme Court's decision, whatever it may be, could mean for you.

What is Aereo?

Aereo is a streaming online video service available in about 10 major cities. Like Netflix, Hulu Plus or Amazon Instant video, it allows you to watch content on your computer, mobile device or television. Unlike those services, Aereo does not offer a predetermined catalog of recorded content. Rather, Aereo allows you to tap into local antenna broadcasts.

When you sign up for an Aereo account, the company activates an HD antenna at its facility somewhere in your area. The content from this antenna then streams through Aereo's servers over the Internet to your device of choice. The company's website details exactly where the service is available.

If you attach an HD antenna to your TV, you could get the exact same programming as Aereo delivers — assuming you live somewhere with good reception. However, watching the content on your computer or mobile device is a little more difficult with just your own antenna. Furthermore, Aereo allows you to record shows with a cloud DVR service, which is very helpful if you want to watch new episodes of network shows on your own time.

Aereo starts at $8 per month (For $12, you get more space for recording shows and access to two antennae, which provides the ability to record two shows at once or watch one and record another.)

Aereo is not a little startup. The company is backed by major media investor Barry Diller of IAC and other big players, including Gordon Crawford, a prominent media investor, and Himalaya Capital Management. While Aereo might not have quite as much firepower as network broadcasters, it will enter the Supreme Court fight with considerable money and power behind it.

Why do networks object to Aereo?

This is a complicated question, as networks do not seem to be losing any money with Aereo acting as a middleman. Since people are still receiving uncut broadcast TV, including commercials (which is how networks pay for much of their programming), using one remote antenna per customer does not appear to have any ill effects on a network's bottom line.

While networks are not losing any money, they are not making any money off of Aereo, either. The networks argue that Aereo is profiting off of their broadcasts without paying proper licensing fees, as a cable or satellite provider would have to do.

"Anybody who wishes to retransmit copyrighted broadcast programming — whether over the Internet or by more established means of transmission such as cable or satellite — may do so only by obtaining the consent of the copyright owners," the broadcasters argued in a statement before a House of Representatives subcommittee on copyright and intellectual property law in 2000. These laws are part of the Copyright Act of 1976, which was the first major update to American copyright law since 1911.

Since Aereo has neither sought licenses from broadcasters nor offered to pay for rebroadcasting content, the networks believe that Aereo's operation is shady at best, and illegal at worst.

What are the legal arguments for Aereo?

Networks argue that Aereo violates the Copyright Act, which allows networks, and only networks, to determine permissible public performances of their content. Aereo believes that this claim does not pass muster, as Aereo subscribers generally use their remote streams for personal enjoyment, not public broadcast.

"The 'one-to-one' transmissions from Aereo's equipment — individual transmissions from personal recordings created from data received by individual antennas — do not constitute 'public' performances," Aereo wrote in an amicus brief to the Supreme Court. Aereo, used as intended, transmits a single broadcast stream to a single recipient.

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Aereo further claims that while, for example, cable companies do indeed pay to rebroadcast content, no court has ever ruled that transmitting a recording for personal use (as Aereo does) should be subject to licenses or fees.

The most important point in Aereo's favor is that the networks themselves acknowledge that Aereo is not technically violating any laws. The networks claim that this is intentional — because Aereo operates as a very clever service designed specifically to sidestep the laws. And the networks want to clear up that ambiguity.

Judge Denny Chin, in a ruling from a lower court supporting network broadcasters, wrote that Aereo is "a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law."

Meanwhile, Aereo argues that although the law has changed somewhat in the last 38 years, Congress has always upheld the spirit of the Copyright Act of 1976, and allowed rebroadcasting content within certain sensible limits.

"In 1995 … [Congress] exempted retransmissions of broadcast radio within 150 miles of the original broadcast," Aereo wrote in an amicus brief to the Supreme Court. "And in 1999, Congress [allowed] satellite systems to retransmit a broadcaster's signals in-market without paying copyright royalties. Satellite carriers should not pay to retransmit such content, Congress concluded, 'because the works have already been licensed and paid for with respect to viewers in those local markets.'"

How does this affect you?

With regard to Aereo, it might not. But even if you're not an Aereo subscriber, the decision could determine how you can legally stream content in the future.

If Aereo gets its way, the Supreme Court will rule that the service's activities fall within the parameters of the Copyright Act. Even if the Supreme Court agrees that the act needs to be revised, that will take time, and require Congress to agree and take action by revising copyright law. In the meantime, Aereo will continue operating as it has before.

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Furthermore, if you live in an area where courts have blocked Aereo access on legal grounds (such as Utah), your Aereo access should be restored within the next few weeks. Networks may find other legal grounds to continue blocking Aereo in the meantime, though.

If the Supreme Court rules in favor of the networks, there are two possibilities: that Aereo may have to increase its subscription fees, or that it will shut down altogether. If the second option happens, expect rivals to Aereo like FilmOn and Simple.tv to increases costs or shut down as well. It also seems very unlikely that similar services would materialize in the future.

At present, the networks claim that Aereo cannot rebroadcast the network content because Aereo has not secured licenses for that content. If the networks agree to license content (or the court instructs them to do so), and the costs are not prohibitive, Aereo may need to raise its prices to compensate for its cost increase.

If the networks ask for too much money, Aereo may well shut down. Additionally, the service could shutter if the networks decide they aren't interested in licensing fees and would rather see Aereo go out of business.

Either way, Aereo will exist in its current form for at least a little while longer. The Supreme Court will likely debate the issue for weeks or even months before coming to a solid resolution. If you think Aereo might be the streaming solution for you, check out the Tom's Guide FAQ on Aereo.

Otherwise, a personal HD antenna is a simple way to get network programming on your TV, and it's not currently under any kind of legal threat.

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