The Supreme Court ruled today that a new TV service start-up that allowed people to stream broadcast television to their computers—television that would normally be available for free over the air—is illegal. And in many interesting ways, the story of the company in question, Aereo, mirrors the story of what would become America's first cable company, founded nearly 70 years ago by a Pennsylvania man named John Walson.
In 1948 John Walson worked two jobs, says the Morning Caller, one installing and maintaining electrical lines, the other selling appliances, including TVs. Nestled within the peaks of the Ridge-and-Valley Appalachians, the broadcast television signal in Manahoy City was so weak that Walson was having trouble selling TVs—who'd want an expensive box that can barely pick up a picture?
With permission from the electrical company he worked for, Walson installed an antenna atop a nearby mountain and ran a wire down to his shop. People were so impressed by the picture on the TVs in Walson's store that they too wanted TVs and wires brought to their homes. The Morning Caller:
“Walson was soon charging residents $100 for installation and $2 a month for service. Within a few years, he was using his antenna to provide cable service to residents throughout Mahanoy City and surrounding mountain towns.
It was called community antenna television, or CATV -- a name that later gave way to "cable." For his seminal role in the creation of the industry, Walson has been recognized by Congress and inducted into the Cable Television Hall of Fame.”
In the 2010s, viewers don't just want a cleaner picture; they want the convenience of streaming their television over the internet. Aereo designed a system that used an array of tiny antennae, one per person, to capture, record, and stream over-the-air broadcasts to people's computers. Aereo was designing a community antenna television system for the modern age.
That's not how they would have described their service, though. Instead, says Vox, Aereo thought of its service as more akin to a DVR—a service people could use to store and record television programs. Aereo argued that they were not providing the television signals, as a community antenna or cable provider would, they were just renting out the antennae to people to capture and watch the signals themselves.
If Aereo had been thinking of themselves as a community antenna, they would likely have been more prepared for the Supreme Court's ruling.
For years after they were created community antennae were used to transmit over-the-air broadcasts from a central tower to people's homes, with no money flowing back to the broadcasters who were creating the bulk of the content. In 1976, however, Congress made that illegal. In practice, though, says law professor Jeffrey Eisenach, cable operations could still carry local broadcast signals for free. It wasn't until 1992, Eisenach says, that Congress created the rule of “retransmission consent,” that requires cable services to obtain the permission of broadcasters to carry their programs. Retransmission fees paid to the broadcasters by cable and satellite providers now run on the order of billions of dollars, says the New York Times.
According to the Supreme Court, says the Verge, the differences between Aereo and these early cable companies are few:
"Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service," the ruling reads. "We conclude that those differences are not adequate to place Aereo’s activities outside the scope of the [Copyright] Act."
According to the new Supreme Court ruling, capturing and transmitting the broadcasters' programs without paying the retransmission fees is a violation of the Copyright Act, and with that decision Aereo's business model became illegal.