A judge in Utah has provisionally ruled that online television company Aereo may not deliver its services in certain states in America. It is the first successful injunction against Aereo, which has been expanding nationally. An appeals court in New York previously ruled in favour of Aereo in a similar case. The Supreme Court will now decide whether the Aereo service is legitimate, which could have far-reaching consequences for broadcasters, pay-television providers and other network-based television services.
The preliminary injunction against Aereo covers Utah, Colorado and Wyoming, and five other states in which it does not currently offer its services. United States district judge Dale Kimball considered that broadcasters had a case that the Aereo service breached copyright, pending a decision by the Supreme Court.
Aereo offers a subscription service that allows users to watch live or recorded programmes on computers or mobile devices, with fees starting at $8 a month. The company does not pay broadcasters any retransmission fees, arguing that it is simply offering users access to a remote antenna that receives free over the air signals.
Since launching in the city of New York in March 2012, Aereo has been expanding its service from east to west across the United States. The company received a further $34 million in financing in January to fund national expansion. On the same day as the ruling by the court in Utah, Aereo extended its service to San Antonio in Texas.
Chet Kanojia, the founder and chief executive of Aereo, which is backed by Barry Diller and IAC/InterActive Corp, together with venture capital investors, said: “Consumers have a fundamental right to watch over-the-air broadcast television via an antenna and to record copies for their personal use.”
Aereo argues that broadcasters are seeking to deny consumers the ability to access such cloud-based services.
The judge in Utah considered: “Aereo’s retransmission of Plaintiffs’ copyrighted programs is indistinguishable from a cable company”. The ruling concluded that Aereo is infringing copyright “based on the plain language of the 1976 Copyright Act and the clear intent of Congress”.
At stake are billions of dollars in retransmission fees that broadcasters have succeeded in charging cable companies that distribute their signals.
While online services like Aereo could undermine traditional cable and satellite television services they could equally provide a precedent to allow those service providers to offer something similar without paying retransmission fees to rights owners.
The Supreme Court is scheduled to consider the matter, starting in April, with a decision expected some months later.
The outcome could be even more significant than an earlier ruling on whether Cablevision could offer its customers a network-based digital video recorder service without the explicit consent of rights holders.
That set an important precedent, on which Aereo is partly relying. The judgement of the Supreme Court in this case could have profound consequences not only for Aereo but also the entire television industry in the United States, which is why these developments will be eagerly watched.