Many technophiles may be crestfallen today (Jun 25), learning that the Supreme Court ruled against Aereo. The service charged subscribers as little as $8 a month to stream, and record, live local TV broadcasts over the Internet. This wasn't a narrow 5-4 ruling along ideological lines, but a 6-3 landslide. Painful as the decision is for cord-cutters, it was the right call. In fact, Aereo's demise may be a critical political and moral boost to advocates of Net neutrality — the loss of which threatens all online TV.
Aereo is a convoluted technology service that tried to skirt copyright restrictions by using banks of antennas to capture free TV broadcasts, then charged customers to stream that content over the Internet or record it to watch later. Aereo was a good deal: The cheapest alternative is to install an HDTV antenna chained to your TV, whereas with Aereo, you can watch live and recorded streams from any device.
MORE: Best Aereo Alternatives
The problem is that Aereo was charging for something — over-the-air TV broadcasts — that by law is provided free to the public. It's like renting out a patch of public park to picnickers, or selling public parking spots. This same sort of practice by startup MonkeyParking was just shut down in San Francisco.
Cable- and satellite-TV companies don't get this option: They must pay dearly to license content from broadcast networks such as ABC and CBS. Increased broadcaster fees are the main reason that cable rates have been rising. And it was the networks, united as the plaintiff American Broadcasting Cos., that spearheaded the Supreme Court case. (Of course, cable TV giant Comcast owns NBC, one of the plaintiffs.)
It's impossible to elicit sympathy for cable and satellite companies, often ranked at the bottom of consumer surveys. But Aereo vs. pay TV providers was not a David vs. Goliath battle — more like Goliath vs. Goliath. While folksy CEO Chet Kanojia is the public face of Aereo, the company is bankrolled by media and business titans such billionaire Barry Diller of IAC, media investor Gordon Crawford, and Himalaya Capital Management.
Aereo wasn't that great, anyway
Sure, it was a much better deal for consumers than cable TV, but Aereo wasn't a total fix. Aereo streamed broadcast TV, providing access to local affiliates for their own programs and their broadcasts of major networks like ABC. Aereo didn't offer popular cable channels like AMC, FX, ESPN, MTV, Nickelodeon or any others. Furthermore, a lot of the broadcast programming is already available online for free from the networks directly or from the free, ad-supported version of Hulu. Many local channels also broadcast their programs for free over the Internet.
Pitching in $8 a month for Hulu Plus gets you access to far more previous episodes of network shows — going back years or decades — than you could record on an Aereo cloud DVR, although not all networks are included. Netflix ($8.99 per month for new subscribers) and Amazon Prime ($99 per year) get you access to cable shows like "Breaking Bad" and HBO classics like "The Sopranos."
Losing Net neutrality is the real threat to online TV
While a Supreme Court case attracts national attention, a much bigger fight about online TV is taking place across town in the dull rulemaking process at the FCC. Net neutrality, the notion that Internet service providers should treat all data equally, no longer exists in the U.S., and there is an uphill battle to bring it back. ISPs, which also generally happen to be cable companies, currently have the right to stifle any online service they want.
The first implication here is that, if the Supreme Court hadn't killed Aereo, the cable ISPs might have anyway. Slow a streaming video service to a stuttering crawl, and you make cable TV much more appealing to customers. Plus, if Aereo had prevailed in the Supreme Court case, it would have given more political and even moral ammunition to cable companies in their fight to avoid new FCC rules establishing Net neutrality requirements.
Paying extra for non-discriminatory treatment, as Netflix has done with Comcast, Verizon and other ISPs, may work for Netflix or YouTube, but not the "next" Netflix or YouTube that is a truly struggling startup (not a bankrolled one like Aereo). Today's Supreme Court ruling brings down one online streaming service that was on shaky legal ground (and perhaps a few others, like copycat service FilmOn, nee Aeroekiller).
The failure to enforce Net neutrality threatens all online TV providers, including many that are playing by the rules of copyright and even working hard to produce original online programs. It especially threatens the many brilliant one-person YouTube videobloggers who can't possibly pay anything like the Netflix-style access fee but might be the TV innovators of tomorrow.
With Aereo out of the way, online advocates aren't tainted by the example of a copyright-fudging service like Aereo. Instead, they have the moral high ground in defending the real innovators that don't simply rebroadcast old-school TV but instead may revolutionize what "TV" will be in the future.