June 30, 2014
Volume XLVIII, Issue 9
Last Call for Enterprise End-User Speakers at CDSE:2014
In addition to numerous hands-on instructional workshops and special seminars, on Wednesday October 1st and Thursday October 2nd, in Austin, TX, enterprise end-users from six sectors will take center stage at the all new CLOUD DEVELOPERS SUMMIT & EXPO 2014 (CDSE:2014) to share case-studies from their adoption of cloud-based business solutions.
If you represent an organization that has adopted or is considering the adoption of cloud computing for logistics, big data, or mobile, and has an interesting story to tell, please contact DCIA CEO Marty Lafferty at your earliest convenience to schedule a speaking slot at the DCIA & CCA co-hosted CDSE:2014.
Likewise, if your company is based in media and entertainment or healthcare and life sciences or is a government agency or branch of the military -- and has experiences to share based on your implementation of cloud computing or your plans to implement it — please get in touch as soon as possible.
If you are a cloud solutions provider, and would like to recommend your enterprise customers for one or more of these speaking roles -- possibly in a joint presentation session with you at this major industry event -- please call or email ASAP.
The CCA & DCIA are finalizing the conference agenda and speakers list to be included in the promotional materials and conference program now.
Call or e-mail at your earliest convenience — THIS WEEK IF AT ALL POSSIBLE— for more information.
CDSE is shaping up to be a remarkable event for cloud-computing customers.
Stephanie Brownlee Joins DCIA Member Services
Please warmly welcome Stephanie Brownlee to the senior management team of the Distributed Computing Industry Association (DCIA).
Stephanie brings 26 years of cable television experience coupled with 18 years in new media to her leadership role in DCIA Member Services, including entertainment software solutions for interactive program guides (IPGs), video-on-demand (VoD), videogame applications, interactive television (iTV), portals/gateways, and Wi-Fi.
Most recently, Stephanie served as SVP of Sales & New Business Development for Strategic Media, a business strategy consultancy, working with Motorola, High TV 3D, Global Call Enterprises, (where she brokered a strategic agreement with Homeland Security), and the National Rural Telephone Cooperative (NRTC).
Previously, Stephanie was SVP, Distribution, North America, for Zodiac Interactive, which developed and deployed portals/gateways embedded with iTV and gaming applications, winning a 2006 Emmy Award in the iTV category for its execution of the iO portal. Zodiac Interactive apps were launched by Cablevision to over 3M homes in Long Island, CT, and NJ.
Before that, Stephanie worked at ICTV, the first company with an Internet-to-the-TV solution using cable-plant infrastructure and first- generation cloud computing technology, as SVP of Sales & Industry Relations. She helped raise $87M for ICTV's second round of financing and facilitated content partnerships with Disney, ESPN, Lifetime, NBC Universal, and Hollywood studios.
Stephanie began her cable industry career with Prevue Networks, which developed one of the first advanced analog IPGs in the early '90s, and then deployed the first "live" digital IPG in competition with TV Guide in 1996. Twelve years later, News Corp. and Liberty Media acquired Prevue Networks.
Stephanie also was one of the founders of the CTAM Silicon Valley & Pacific Northwest Chapter and then President for three years. She has a BS degree with a major in marketing and a minor in finance from Oklahoma State University (OSU).
Report from CEO Marty Lafferty
 The Supreme Court of the United States (SCOTUS) this week ruled 6-to-3 against Aereo for violating the Copyright Act by retransmitting digital broadcast television signals to viewers over the Internet, rejecting the company's argument that it lawfully received over-the-air stations individually for each of its subscribers and basically served as a technical facilities rental service.
The broadcasters opposing Aereo included ABC, CBS, FOX, and NBC, among others.
The Court's decision was delivered by Justice Breyer with Roberts, Kennedy, Ginsburg, Sotomayor, and Kagan joining.
Justice Scalia filed a dissenting opinion, with Thomas and Alito joining.
As the DCIA predicted, SCOTUS opted to protect the incumbent broadcast television industry, which has moved away from primarily offering free over-the-air telecasts to a distribution model requiring retransmission license fees from multichannel video programming distributor (MVPD) intermediaries such as cable and satellite TV operators.
"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 read.
"We conclude that those differences are not adequate to place Aereo's activities outside the scope of the Copyright Act."
In his dissenting view, Justice Scalia agreed in part, "I share the Court's evident feeling that what Aereo is doing (or enabling to be done) to the networks' copyrighted programming ought not to be allowed, but it is not the role of this Court to identify and plug loopholes."
He went on to say, "It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes."
"Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude 'looks-like-cable- TV' solution the Court invents today."
Aereo's service allowed subscribers to watch and record live television over the Internet for a monthly fee.
It maintained banks of tiny digital TV antennas in each designated market area (DMA) in which it operated.
The antennas received and ingested broadcast station signals — essentially acting as the digital counterpart of analog rabbit-ear antennas — and were assigned by Aereo to individual subscribers, who the company argued were the parties responsible for playing the TV programs.
The court did not accept this position, however, agreeing with the
broadcasters' argument that Aereo's streams constituted public performances of their content, thus violating the Copyright Act and requiring that they be licensed for playback.
"Viewed in terms of Congress' regulatory objectives, these behind-the- scenes technological differences do not distinguish Aereo's system from cable systems, which do perform publicly," the decision states.
"Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies."
The dissent, however, found that Aereo could not be in violation of the Copyright Act because, quite simply, it "does not 'perform' at all," although it may have facilitated a secondary liability for copyright infringement, which the Court declined to explore.
The court did go out of its way to note that its ruling should not impact other emerging technologies — particularly cloud computing.
Nevertheless, there is enormous concern that this ruling against Aereo will stifle innovation and deter investment in the technology sector.
It is up to each of us to work to ensure that such unintended consequences fail to materialize. Share wisely, and take care.
Aereo Puts Service on "Pause" as It Weighs Next Steps
Excerpted from Variety Report by Ted Johnson
Following the Supreme Court's ruling on Wednesday in favor of broadcasters, Aereo announced early Saturday that it was pausing its streaming TV service at 11:30 AM ET.
"We have decided to pause our operations temporarily as we consult with the court and map out our next steps," Aereo CEO and founder Chet Kanojia wrote in a letter to subscribers.
All users will be refunded their last paid month, he wrote.
He urged consumers to "keep your voices loud and sign up for updates at ProtectMyAntenna.org — our journey is far from done."
The company emphasized that it was not shutting down but waiting as the case returns to the lower court in New York, although it is unclear what options they have. Networks and stations could try to press the case to trial and pursue damages.
The broadcasters challenged the district court's decision to decline their motion for an injunction to halt Aereo, and the 2nd Circuit Court of Appeals also sided with the streaming service. The Supreme Court's decision reversed those lower court rulings.
Kanojia's full letter is below:
A Letter to Our Consumers: Standing Together for Innovation,
Progress and Technology — An Update on Aereo
"The world hates change, yet it is the only thing that has brought
progress." —Charles Kettering, inventor, entrepreneur, innovator & philanthropist.
A little over three years ago, our team embarked on a journey to improve the consumer television experience, using technology to create a smart, cloud-based television antenna consumers could use to access live over the air broadcast television.
On Wednesday, the United States Supreme Court reversed a lower court decision in favor of Aereo, dealing a massive setback to consumers.
As a result of that decision, our case has been returned to the lower Court. We have decided to pause our operations temporarily as we consult with the court and map out our next steps. You will be able to access your cloud-based antenna and DVR only until 11:30 AM ET today.
All of our users will be refunded their last paid month. If you have questions about your account, please email support@aereo.com or tweet us @AereoSupport.
The spectrum that the broadcasters use to transmit over the air programming belongs to the American public and we believe you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television, or in the cloud.
On behalf of the entire team at Aereo, thank you for the outpouring of support. It has been staggering and we are so grateful for your emails, Tweets, and Facebook posts. Keep your voices loud and sign up for updates at ProtectMyAntenna.org — our journey is far from done.
Yours truly, Chet Kanojia
Aereo Loss Is a Very Big Deal
Excerpted from CED Magazine Report by Brian Santo
While the average TV viewer saw the Supremes' smackdown of Aereo as a largely inconsequential elimination of just another cord-cutting option, people in the TV business knew better. The Court obliterated a technology that could have been a game changer.
I'm on record agreeing with what ended up being the Supreme Court's minority opinion. Aereo was not the same as a cable company; Aereo was a rental operation. Subscribers rented access to an antenna and the virtual equivalent to a DVR, and the only difference is that the antenna and the DVR were at the other end of a wire. This puts me in agreement with Antonin Scalia for perhaps the very first time, which means someone should check the weather in Hades today; the temperature might have changed drastically.
Another thing the average viewer doesn't get is that Aereo and its approach was a hedge against rising cable costs.
It's no news to anyone in the TV business that broadcasters are squeezing cable operators for higher and higher retransmission fees, and those fees eventually have to get passed along to consumers already cranky about how much they're paying for TV.
If cable operators had the option to ally with Aereo, or perhaps duplicate the approach as an ancillary service they provide themselves, it would have constituted a very clear counterweight in a negotiating position that is now far out of balance in favor of broadcasters. This is why the ACA, representing the smallest cable operators, whose subscribers tend to be most cost-sensitive, was rooting for Aereo. The power imbalance is now only going to get worse.
That option is gone. Retrans fees are going to keep going up. Cable fees are going to keep going up. That's a win for broadcasters, but for no one else. It's a clear loss for viewers, larger than most realize.
While there are millions upon millions of people who will undoubtedly submit to higher pay TV fees, there's a growing population for whom TV is not important enough to pay that much for — they'd rather get whatever they can from web-based (aka over-the-top) video sources, or illegally. The piracy numbers on "Game of Thrones" are impressive (or alarming, or something).
The breakdown of the existing TV model is accelerating, and this Supreme Court decision is going to give that process a little more impetus.
The Supreme Court's Odd New Standard: "Looks Like Cable TV"
Excerpted from LA Times Report by Jon Healey
The Supreme Court's smackdown of Aereo's local-TV-over-the- Internet service Wednesday should remind tech companies that the Justices don't appreciate clever engineering.
At the oral argument, the Justices' questions and comments hinted that they were outraged that Aereo would sell a pay-TV service to the public without paying broadcasters for the retransmission rights.
To them, Aereo's technology served only one purpose: to dodge the obligations that federal copyright law imposed on cable operators. Justice Stephen G. Breyer didn't say those exact words in the opinion he wrote for the court's 6-3 majority. But the sense that Aereo is a cable operator in sheep's clothing seeps through in much of his commentary.
Never mind that Aereo's technology delivers a different product than other pay-TV operators do.
Aereo customers have access only to local over-the-air broadcasts, and unless they sign up for a second antenna, they can't watch one program while recording another.
Nor does Aereo record programs on their behalf; if they forget to tune in or record it, it's gone. And finally, the service delivers shows to smartphones, tablets, and other Internet-connected devices, not
conventional TVs.
Such technology-driven differences were immaterial to the court's majority, which fixated on the surface similarities between Aereo's service and cable TV. Breyer declared repeatedly that Aereo should be treated as a cable TV operator because its service looked (to him) just like cable.
Perhaps the differences were easy to ignore because the justices had trouble grasping the technology. Breyer, for example, said during the oral argument that Aereo's tiny antennas could somehow "pick up every television signal in the world." Ummm, no. Aereo's antennas are no more capable than the kind consumers buy at Radio Shack, which means they are limited to local TV broadcasts.
Justice Antonin Scalia dissented, calling the new "looks like cable TV" standard a "result-driven rule" — in other words, a standard based not on existing law but on the outcome the majority desired. It's as if the justices got together and said, "This can't be legal," then found a way to make it not be.
The court's landmark ruling in MGM vs. Grokster, which put the kibosh on the file-sharing networks that emerged after the original Napster, had a similar results-oriented feel. But there the justices applied a statutory principle that, while little used in copyrights, was well known in patent law.
And while the court's "inducement" principle didn't draw a nice, bright line between legal and illegal behavior, at least Justice David H. Souter's opinion offered some guidance on where the line falls.
In Aereo, as Scalia rightly noted, the court didn't specify what "looks like cable TV" means. Is it just a service that offers live TV to subscribers for a fee? Then all Aereo has to do, Scalia wrote, is to delay subscribers' ability to play their recordings for an hour.
The court vows that its ruling will not affect cloud-storage providers and cable television systems... but it cannot deliver on that promise. - Justice Antonin Scalia
The biggest problem is that the majority's ruling holds a service
provider responsible for its customers' use of the technology. That's particularly bad here because those customers aren't violating copyright law by recording over-the-air TV for later viewing, an activity the Supreme Court blessed 30 years ago in the Sony Betamax case.
Again, the problem stems from the majority's dismissal of a technology-driven difference between Aereo and cable. The latter gathers programs from various networks via satellite and data lines, then pumps all of them into subscribers' homes. The former enables customers to tune an antenna to a specific program, direct it to a digital video recorder, then transmit it to themselves through the Internet. Nothing gets transmitted by Aereo without a customer's intervention.
In past years, Scalia wrote, appeals courts had repeatedly held that service providers do not infringe unless they choose themselves to
do something that violates the act. The transmissions here may travel
over Aereo's equipment, but the "volitional conduct" was the subscriber's, not the company's.
"It will take years, perhaps decades, to determine which automated systems now in existence are governed by the traditional volitional- conduct test and which get the Aereo treatment (and automated systems now in contemplation will have to take their chances)," Scalia wrote. "The court vows that its ruling will not affect cloud-
storage providers and cable television systems ... but it cannot deliver on that promise given the imprecision of its result-driven rule."
In other words, Aereo won't be the only tech company regretting Wednesday's ruling.
Four Unanswered Questions from Aereo's Supreme Court Loss
Excerpted from Forbes Report by Eric Goldman
This week, the Supreme Court ruled that Aereo infringed broadcasters' copyrights by transmitting, in near-real-time, the stream of over-the-air television broadcasts, even when it did so at viewers' direction.
Adopting a pragmatic and functional assessment of Aereo's activities, the majority held that Aereo was too similar to cable systems, which copyright law regulates heavily.
It's pretty clear this opinion means the end of Aereo and its competitors as they are currently architected, so I'm going to focus this post on four of the many questions left open by the ambiguous statements and dubious assumptions in the majority's opinion.
1. Who took the legally significant action?
It's one of the most fundamental, yet unresolved, questions of Internet law: if online content is infringing, who bears legal responsibility? Is it the uploader, the downloader, one or more intermediaries helping move the content from uploader to downloader, all of the above, none of the above, or some subset of these parties? This "whodunit" question online has vexed courts for more than 20 years, and this ruling will likely exacerbate the confusion.
Aereo argued that it was a technology provider, and users configured the system to specify their desires. Under this argument, Aereo didn't take any legally significant actions; its users did. The court rejects Aereo's argument, saying that Aereo took legally significant actions of transmitting the broadcast signal—apparently in addition to its users, who also took legally significant actions.
With respect to watching broadcast content, viewers probably don't infringe for a variety of reasons (including the users' performance isn't "public" or the users are protected by fair use). But in other cases, "downloader" liability may not be so favorable. Furthermore, in other circumstances, intermediaries who think they are just user- driven technology providers might now find that their actions are
legally significant. Indeed, the implications of the "whodunit" question ripple throughout Internet Law. This is why so many people are
asking what this opinion means for cloud services—a question that doesn't lend itself to broad generalities. Instead, we have to carefully analyze individual cloud services, such as…
2. Is digital video recording (DVR)-as-a-service legal?
A seminal Internet copyright law ruling involved DVR-as-a-service (Cartoon Network v. CSC, a 2008 ruling from the 2nd Circuit). The court there held that the DVR service provider Cablevision wasn't liable because its DVR users took all of the legally significant actions. The Aereo ruling expressly sidesteps whether its reasoning applies to DVR-as-a-service. Furthermore, much of the court's ruling depends on Aereo's real-time/near-real-time streaming of broadcasts, which is factually distinguishable from time-delayed DVR services.
Still, because the court said Aereo took the legally significant actions, it's possible this ruling overturned the 2008 Second Circuit ruling, exposing DVR service operators to new liability. The opinion further reinforces the riskiness of DVR-as-a-service when it says the simultaneous delivery of content to multiple viewers is an infringement, even if the system stores and delivers a personal copy for each viewer (the court later implies that even simultaneous delivery isn't required to violate the law).
Cablevision contacted me to say they think this opinion "protects" their DVR service. Their press statement says: "We are gratified that the Court's decision adopted a sensible middle ground, holding that unlicensed retransmission services like Aereo violate the copyright law, while protecting consumer-friendly, cloud-based technologies, such as RS-DVR." I don't read the opinion as charitably as they do.
3. Is in-line streaming legal?
In 2012, in Flava Works v. Gunter, the Seventh Circuit issued a garbled ruling that a website embedding videos hosted at third party websites didn't take any legally significant actions—and neither did the
individual viewers of those videos. So if an embedded video infringed, neither the embedding site nor the viewer were liable. (In that situation, the uploader and the video host still could be liable).
The Aereo opinion clouds the legitimacy of embedding and viewing videos hosted at third party websites. The Aereo opinion can be distinguished by the fact Aereo's equipment captures and relays the broadcast stream, whereas a website embedding a third party hosted video doesn't actually process the video stream at all.
However, to the end user, it looks like the embedding site is the video's source, and that could make a difference. The Aereo court says:
why should any of these technological differences matter? They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers' screens. They do not render Aereo's commercial objective any different from that of cable companies. Nor do they significantly alter the viewing experience of Aereo's subscribers. Why would a subscriber who wishes to watch a television show care much whether images and sounds are delivered to his screen via a large multisubscriber antenna or one small dedicated antenna, whether they arrive instantaneously or after a few seconds' delay, or whether they are transmitted directly or after a personal copy is made?
If we apply Aereo's functional equivalence approach, that could create problems for in-line streaming.
(For the same reason, this opinion could cast a shadow on in-line linking of images and photos, which in 2007 the Ninth Circuit held was not an infringing display so long as the in-line linking site didn't actually host the images).
4. Will this opinion chill innovation?
The Aereo majority clearly felt it couldn't ignore how Aereo threatened to upend an industry worth many billions of dollars based on the equivalent of a technological parlor trick. The court's opinion sought to resolve that problem without creating new problems elsewhere.
Realpolitik opinions by the Supreme Court are unavoidable, but do they work as planned?
We have some evidence from a similar realpolitik opinion involving online copyright, the nearly decade-old Supreme Court opinion in MGM v. Grokster. In that case, the defendants distributed software that enabled peer-to-peer (P2P) file sharing, enabling a large quantum of infringing activity by users online. In a realpolitik opinion, the court struck down the defendants' practices as "inducing" infringement.
Since that ruling, we've had a small number of cases where courts have found online inducement, and almost none of those cases found inducement without finding some other legal violation. As a result, the Grokster opinion seemingly accomplished its goals: it kicked the source of major online infringement out of the marketplace, but didn't expose other players to new legal liability.
That's the good-news story of Grokster. Unfortunately, there's a bad- news side to the story: we now see inducement alleged in virtually every case involving online intermediaries, even though it's highly unlikely to succeed. The result is that all parties (plaintiffs, defendants and the court system) face higher adjudication costs to reach the same outcome. Those adjudication costs can absolutely chill innovation, as we saw when copyright owners kicked YouTube- competitor Veoh out of the marketplace even though the federal appellate court ultimately concluded that Veoh hadn't infringed at all. A more dystopian possibility is that the Supreme Court's murky "whodunit" discussion will give copyright owners new pet theories to test in litigation against poorly capitalized start-ups. It could take years to sort through those theories, meaning we may not be able to gauge the effect of this opinion for quite some time, and numerous start-ups will go under in the process due to oppressive legal bills.
An even worse dystopian possibility is that this opinion will chill innovators who want to rely on legislative text to develop innovative technological workarounds. One way of reading this opinion is that it's not OK to replicate the functions of existing incumbents without complying with the same regulatory obligations, even if the
newcomer's technological implementation differs. But so many of our most cherished technological tools made exactly that kind of end-run on incumbents. If this opinion discourages that kind of innovation, we
as a society will be poorer.
Case citation: American Broadcasting Cos. v. Aereo, Inc., 2014 WL 2864485 (U.S. Supreme Court June 25, 2014)
Aereo: It's Over Now
Excerpted from Shelly's Sunday Blog by Shelly Palmer
After months of debate and speculation, the US Supreme Court on Wednesday ruled against internet TV service Aereo in a 6-3 decision. The decision was a win for broadcasters that argued Aereo violated their copyright. Even though lesser courts had sided with Aereo, the Supreme Court saw it differently, effectively killing Aereo (at least in its current form).
"It's over now," said Barry Diller, whose company IAC led a $20.5 million funding for Aereo in 2012. Diller said Aereo "did try" but has said in the past that there is "no Plan B" if the Supreme Court rules against Aereo.
21st Century Fox said the ruling was "a win for consumers that affirms important copyright protections." Aereo's founder and CEO Chet Kanojia said the ruling is "a massive setback for the American consumer" and that it sends a "chilling message to the technology industry." Aereo says it will continue to fight, but the definitive ruling leaves them with little room to operate.
My good friend, Gary Shapiro, CEO of the Consumer Electronics Association, wrote that the ruling "is a disappointment for startups, consumers and proponents of technological progress" as "more and
more of us are demanding the ability to view TV programming on our own tablets and smartphones, not just our TVs."
The Supreme Court's ruling directly affected a very small slice of the current TV landscape. Aereo, which launched in 2012 in NYC, is only available in 13 cities and only has about 100,000 subscribers.
However, its ramifications for the future are much, much greater — especially considering that in 36 months, more people will be watching primetime television programming online than on broadcast TV. This ruling delays the inevitable — and helps broadcasters keep their heads in the sand.
What the Ruling Means for Broadcasters
The Supreme Court's ruling against Aereo helps keep the status quo for broadcasters and major networks — which is exactly what they wanted. Major networks were threatening to pull their stations off the air and move to subscription-only if Aereo had won — they said Aereo would create a blueprint that would eventually let cable providers stop paying retransmission fees. (They were right about that specific point.)
The ruling is also a win for the NFL and MLB, both of which said Aereo exploited their copyrighted telecasts and both had threatened to move their games to cable if Aereo was deemed legal.
Les Moonves, CEO of CBS, says the ruling means broadcasters can
tay in business: "We will continue to do the same high-quality, premium programming that we've done and we will deliver it. This is a pro-consumer thing."
What the Ruling Means for You
Even if you weren't an Aereo subscriber, the ruling limits your TV options — and brings into question other cloud-based products you may be using.
Aereo aimed to disrupt cable. Diller said Aereo offered an "alternative to the bundle" that consumers are forced to accept from cable providers.
"It's not a big [financial] loss for us, but I do believe blocking this technology is a big loss for consumers," he said. "I salute Chet Kanojia and his band of Aereo'lers for fighting the good fight."
The ruling is a blow for cord-cutters — both the ones who have already given up on cable and the ones who planned to do so in the near future. It eliminates an inexpensive option to get live TV on their computers, alongside other subscription services like Netflix and Hulu Plus.
A sea change is coming in the broadcast world. Consumers are unhappy with the expensive (and restrictive) subscription models cable and satellite providers are offering. The most recent yearly survey from Temkin Group found support for all of the largest pay TV providers had fallen in the past year. The survey also showed that
these pay TV providers were the second worst in customer satisfaction across the 43 industries; the only companies that fared worse were internet service providers.
As Gary Shapiro wrote, the ruling also means that "the migration away from local programming in favor of new alternatives offered by HBO, Netflix, Amazon, YouTube and other innovators in the content and delivery space will continue." Our expectation of TV is
WiWWiWWiW (What I want, When I want, Where I want). Aereo offered broadcast TV that fit that model; traditional broadcasters do not.
What the Ruling Means for the Rest of the Tech World
The bigger fear is that a ruling against Aereo could disrupt and endanger cloud computing — where storing videos and other content on remote servers is the name of the game. Justice Stephen Breyer said the ruling should not affect cloud-based content services or companies (like Google, Microsoft or Dropbox), but that could still be a future battleground.
Could these services such as Box, Dropbox and Google Drive, be next on the chopping block? The types of services that let you stream copyrighted materials stored on a server — like music, books and movies — in exactly the same manner as the technology Aereo was using. Aereo is afraid of these consequences — that's the "chilling message" Kanojia spoke about.
"We know what the Supreme Court intends to do, which is to say [Aereo] is illegal and nothing else, at least presumptively, is," said
Jessica Litman, a professor at the University of Michigan's law school. However, "there's a bunch of ambiguity in the attempted carve-out of cloud storage services."
The Future of Aereo and TV
Aereo doesn't have the revenue to pay the retransmission fees major broadcast networks do. It also doesn't have the money to begin an expensive legal battle. It's likely this is the end of the road for Aereo, unless it completely re-works its business model — which seems antithetical to the basis for the company.
"If broadcasters won't adapt to what we as viewers want," writes Gary Shapiro, "they will continue to face challenges from disruptive innovators like Aereo."
Let's hope so. I would hate to think that this ruling inhibits innovation in any way, but only time will tell.
Does Aereo's Death Leave Cloud Computing Hanging in the Balance?
Excerpted from Ars Technica Report by David Kravets
There's no dispute that the Supreme Court's decision Wednesday in the Aereo case puts the fledgling TV-over-the-Internet startup out to pasture.
But the outcome goes well beyond Aereo and its paying subscribers' abilities to stream broadcast television without the broadcasters' consent. Instead, the 6-3 decision siding with broadcasters presents an even more important question involving cloud computing and its future.
There was a lot of chatter ahead of Wednesday's decision that a loss for Aereo would also upend the cloud, which is expected to become a
$1.1 trillion industry by next year. If Aereo were to be blocked from allowing consumers the ability to stream their content at will, what would prevent rights holders from making the same claim against cloud storage providers?
The answer to that question depends on who you ask.
Even the three-justice minority, led by Justice Antonin Scalia, said that the cloud is perhaps in jeopardy and at the whims of rights holders. "The Court vows that its ruling will not affect cloud-storage
providers," Scalia wrote. He added that the majority "cannot deliver on that promise given the imprecision of its results-driven rule."
The majority opinion, from Justice Stephen Breyer, said that Aereo amounted to a cable television provider and that Congress has emphatically required that providers pay broadcasters to transmit their content. End of story. Questions involving cloud computing and "other novel issues not before the Court," Breyer wrote, "should await a case in which they are squarely presented."
Aereo transmits over-the-air broadcast television using dime-sized antennas to paying consumers, who can watch TV online or record it for later viewing. Broadcasters like ABC, CBS, FOX, NBC, and others haven't given Aereo permission to do that, so they sued.
In a growing number of markets nationwide, Aereo customers rent up to two of the tiny antennas, which are housed in Aereo facilities across the country. The antennas capture local, over-the-air broadcasts and funnel them to local customers in real time. The content is freed to stream to almost any Internet-connected device.
Another antenna syncs with a DVR for later viewing for about $12 monthly. Broadcasters decried the system as "technological gimmickry" to skirt copyright and other retransmission laws.
Call Aereo whatever you want, but the process seems a lot like cloud computing. All of which leads to the question of whether a license is needed to stream copyrighted content from Dropbox, for example?
The court's majority doesn't go there, and it instead focuses on Aereo acting like a cable TV service and hence being treated like one. The broadcasters have claimed all along that the case has nothing to do with cloud computing.
"There is an obvious difference between a service that merely stores and provides an individual user access to copies of copyrighted content that the user already has legally obtained, and a service that offers the copyrighted content itself to the public at large," they said.
Others disagree. The Electronic Frontier Foundation published a headline Wednesday that reads, in part, that the high court's ruling "fails to protect Internet streaming."
David Sohn, General Counsel for the Center for Democracy and Technology, said the "decision doesn't directly undermine cloud computing." But, he said, "It leaves open significant questions about the legal foundations of cloud-based services. The full impact of today's decision will take time, and possibly additional litigation, to sort out."
On the flip side, Thomas Goldstein, the operator of Scotusblog that has argued about two dozen cases before the high court, said the majority issued a "clearly crafted" opinion "to not be the death knell of cloud computing." Regarding the Scalia dissent, he said, "It's one of those that, at the end of the day, doesn't have a whole lot of impact on future cases."
Seth Davidson, a Washington, DC, intellectual property attorney, agrees with Goldstein, saying the decision was "written in mind with preserving those types of technologies as it was with striking down Aereo."
Others, like Mark Cooper, a director at the Consumer Federation of America, suggested that the decision won't be the last word on the topic. "For copyright holders who have little else to cling to," he said, "it is red meat."
No, the Aereo Case Doesn't Endanger Cloud Computing Services
Excerpted from Mother Jones Report by Kevin Drum
I'm puzzled by much of the commentary on the Aereo case. Much of
it echoes a point in Scalia's dissent, namely that ruling against Aereo puts all sorts of cloud computing services at risk. After all, if it's a copyright infringement for Aereo to rent you an antenna and some hard-disk space, then why shouldn't it be an infringement for, say, Google to rent you cloud storage that allows you to copy —and potentially share — copyrighted music?
I think David Post has the answer right:
The majority is at pains, in several places, to say that the case is just about broadcast television and the retransmission of broadcast signals. Not about cloud storage, or streaming services, or gaming platforms, or anything else. Just broadcast TV, and what you may or may not do with over-the-air broadcast signals. Congress has made a choice about those signals; anyone who re-transmits them (like the cable companies do) has to pay royalties to the broadcasters. If that's what it means ... the decision has nothing to say about any other content-delivery or content-storage platforms that deal with the vast array of non-broadcast-TV content.
The Aereo case turns almost entirely on the fact that Aereo was
retransmitting TV signals, which are covered by a very specific statute. Despite Scalia's huffing and puffing, I simply don't see how this applies to cloud storage platforms.
Beyond that, there's another crucial distinction: Aereo was explicitly in the business of retransmitting content that was almost 100 percent copyrighted. That's fundamentally different from a third-party service
— email, cloud storage, etc. — that can be used for infringing purposes but has a generally legitimate intent. The Supreme Court has ruled in cases like this before, and it's why VCRs and Gmail are still around even though people sometimes use them to copy and share copyrighted material with each other, while Napster is dead.
It's hard not to conclude that much of the opposition to the Aereo decision is based on a simple libertarian dislike of enforcing
copyright law at all. But like it or not, commercial TV is almost entirely copyrighted content, and the stations that produce it have every right to control how it's distributed. The fact that current copyright law is overly expansive doesn't really affect that.
It's interesting that we've seen back-to-back decisions that, to my mind, were confirmed in diametrically opposite ways. In the Aereo case, Aereo thought it had discovered a clever loophole in copyright law, but the court ruled against them. The general intent of the law was more important. In the recess appointment case, Senate Republicans found a clever loophole to stay technically in session, and the court ruled that this was perfectly fine. The fact that it was a hyper-technical sham didn't move them.
Why the Aereo Ruling Won't Destroy Cloud Computing
Excerpted from Business Insider Report by Erin Fuchs
The Supreme Court insisted in a groundbreaking copyright decision Wednesday that its ruling against TV-streaming startup Aereo won't discourage the development of other technologies.
"Given the limited nature of this holding, the Court does not believe its decision will discourage the emergence of different kinds of technologies," the court noted in its summary of the decision.
The 6-3 decision found that Aereo violated the copyrights of TV marketers, broadcasters, and distributors whose programs people streamed online through Aereo's tiny, individual antennas.
Some have worried that a decision against Aereo could stifle innovation in the cloud media industry, which includes technology like Amazon's cloud music player.
Specifically, Aereo and its supporters did not want the Supreme Court to decide that the shows it streamed through its antennas constituted a "public performance." Generally, copyright law requires you to get permission before broadcasting a "public performance," under a provision known as the Transmit Clause.
This clause applies to cable companies, which have to pay broadcasters, but Aereo said its own broadcasts should be considered "private" because they were sent through individual
antennas.
In its ruling Wednesday, the Supreme Court agreed that Congress did not intend to "discourage or to control the emergence of different kinds of technologies" when it passed that provision of copyright law.
However, the Transmit Clause should apply to cable companies and their "equivalents," the high court ruled. And the majority of the court equated Aereo to a cable company and not merely a provider of equipment (in this case, antennas).
The court made it clear that its ruling does not apply to the remote storage of online content.
"We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us." the court found. "We agree with the Solicitor General that "questions involving cloud computing, remote storage DVRs, and other novel issues not before the Court, as to which 'Congress has not plainly marked the course,' should await a case in which they are squarely presented."
The Aereo Decision: 5 Likely Scenarios for What's Next
Excerpted from Variety Report by Ted Johnson
In the hours after the Supreme Court ruling in Aereo, consumer groups declared a victory for rising cable prices. Public interest groups declared it a win for big media dominance. And Aereo's CEO declared that the decision sends a "chilling message" to the tech industry.
Does the decision really spell that dire of an impact for innovation?
Justice Stephen Breyer, in writing the majority opinion, went to great lengths to say that they were not ruling on such things as cloud computing or remote storage, going so far as to affirm that the
justices do not believe the decision "will discourage the emergence or use of different kinds of technologies."
That was met with some doubt from Justice Antonin Scalia, who is not wild about Aereo but even less so about the way the majority reached its decision, by concluding that because it was like a cable TV service, it had to get permission to carry broadcast signals. "The court vows that its ruling will not affect cloud-storage providers and cable television systems, but it cannot deliver on that promise given the imprecision of its result-driven rule," he wrote.
Supreme Court decisions have a history of delivering impacts far different than those predicted. Scalia even noted the warnings that the VCR would "wreak all manner of havoc on the TV and movie industries," only to see those very businesses flourish with the growth of home video after the Supreme Court, by only one vote, upheld the legality of the VCR and Betamax in 1984.
That's not to say there won't be any impact. As Brad Newberg, partner at Reed Smith in Falls Church, Va., says, "There is no Supreme Court decision that is only limited to the issue at hand. This will definitely be used in cases outside of Aereo."
With that in mind, here's where the win for broadcasters is most likely to make a difference.
1. Retransmission fees rise: The reason TV networks took this case all the way to the Supreme Court was the fear that Aereo would undercut their growing revenue stream from fees paid by cable and satellite distributors to carry their signals. Aereo challenged that scenario, and Scalia even made light of it, but now that broadcasters have a definitive win, they get some certainty that the multi-billion dollar stream of money may very well grow into a river.
"This ruling is a broad victory for the broadcasters, and the implications appear clear — irrespective of tech platform and user- model (single copy or broadcast), any system that is substantially similar to cable TV must negotiate with broadcasters for the right to retransmit broadcast signals," Morgan Stanley's Benjamin Swinburne, Ryan Fiftal and Hersh Khadilkar wrote in a research report. They wrote that their predictions of of the growth in the retrans revenue stream are unchanged: from $3.4 billion this year to nearly $8 billion in 2017.
2. No more 'deploy first, ask questions later': After the ruling, Aereo's Chet Kanojia asked, "Are we moving towards a permission-based system for technology innovation?" In the eyes of many in Hollywood, when it comes to using their content, the answer is yes, and that is how it should be. That's one of the reasons why groups like SAG- AFTRA and BMI praised the decision, as they characterized it as one that ultimately could have an impact on the ability of artists to collect royalties and residuals in the digital age.
Aereo wasn't the first to offer subscribers digital streams of broadcast signals without first getting the permission from the content owner. It had a different technology as an alternate legal rationale. But it's likely that any new iteration will proceed only with some kind of licensing agreements or other kind of pacts in place, especially if new products are to gain investors.
David Wittenstein, partner at Cooley LLP, said that he didn't think that Aereo "presented a particularly sympathetic image" to the court. "They seemed to have more sympathy for other cloud-based services," he added, but where the content was licensed from the copyright owner.
"The status quo prior to today's decision was that you can't take someone's intellectual property without permission," said Robert McDowell, a former FCC commissioner and now a visiting fellow at the Hudson Institute. "All this does is reinforce that. It does give more clarity, and that is actually good to everyone involved to understand the rules of the road going forward."
He added, "I think over-the-top technology remains alive and well. The only caveat is you can't use property without permission."
3. Cloud computing, remote DVR safe for now: The Aereo case has its roots in Cablevision's unveiling of a remote DVR, in which its subscribers could select programs to record and store their content on remote servers or in the cloud. In reaction to the ruling, Cablevision expressed confidence that its RS-DVR is protected.
Some Wall Street analysts aren't so sure about that, but the question is whether networks will press the issue. After all, the landscape has changed. Comcast now owns NBC, and may have an interest in cloud-based technology of its own.
The decision already is having an impact on existing litigation, however. Fox is challenging Dish Network's offering of streams of live TV programming over the Internet to its subscribers, as well as another function that enables its customers to copy programs onto iPad tablets for viewing outside the home. On Wednesday, Fox's legal team submitted the Supreme Court's Aereo decision to bolster its case, with oral arguments scheduled before the 9th Circuit Court of Appeals on July 7.
"Dish, which engages in virtually identical conduct when it streams Fox's programming to Dish subscribers over the Internet — albeit also in violation of an express contractual prohibition — has repeatedly raised the same defenses as Aereo which have now been rejected by the Supreme Court," wrote Richard L. Stone, partner at Jenner & Block.
4. It may seem 'private,' but it's really 'public:' The case came down to whether Aereo's transmissions of broadcast streams were public performances, and therefore fell within the scope of the Copyright Act. The majority of the court said yes, the streams were public performances, even as Aereo contended that it was merely supplying remote equipment so their subscribers were in control of what they watched, and when and where they chose to view it.
The Copyright Act defines public performances in a traditional way: A play on stage, a movie screened in a theater, a band playing songs to an audience. But largely in response to the growth of cable television in the middle 1970s, Congress also added a "transmit" clause to copyright law's definition of public performances in an attempt to cover new technologies. The Supreme Court on Wednesday essentially said that because an intent of the "transmit" clause was to prevent cable operators from just freely beaming broadcast signals into homes, Aereo's service was akin to something that Congress sought to prevent.
There are potential implications on what is the definition of a public performance, but the court didn't exactly spell out what they were.
As Newberg says, "The court did make it clear that just because you are transmitting the work via many different antennas or other technological means doesn't mean you get out of it being a public performance."
Hillel Parness, of Parness Law in New York, noted that Breyer "did reject the argument that Aereo cannot be a direct infringer because the subscriber selects what to watch." But he noted that Breyer also wrote that "in other cases involving different kinds of service or technology providers, a user's involvement in the operation of the provider's equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the [Copyright] Act."
In other words, just because a consumer is put in control — pushing a button or hitting 'record' to access content — doesn't absolve a company from liability. But it doesn't mean that the company is liable, either. In Scalia's eyes, the decision just made things more confusing.
5. And … monthly bills continue to go up, up, up: The Consumer Federation of America blasted the decision, with the organization's Mark Cooper saying it was "bad for video consumers, who have lost an important low cost option for viewing the programming they want whenever, wherever and on the device they prefer."
Yes, they have lost the Aereo option, but consumers still have Netflix, Apple TV and other over-the-top services, and they can still set up an antenna. Moreover, it's unclear as to the extent to which Aereo even drove cord-cutting, although Kanojia said that the combination of different services was a viable, cheaper alternative to cable subscriptions.
Where consumer groups are right is that cable and satellite prices are going up. That has been abundantly clear with the hearings on the proposed combinations of DirecTV and AT&T and Comcast and Time Warner Cable, where the companies haven't promised that monthly subscriptions will fall, but that their rate of increase may be slowed. Aereo, it appears, has nothing to do with it.
Coming Events of Interest
Silicon Valley Innovation Summit — July 29th-30th in Mountain View, CA.AlwaysOn's 12th annual SVIS is a two-day executive gathering that highlights the significant economic, political, and commercial trends affecting the global technology industries. SVIS features the most innovative companies, eminent technologists, influential investors, and journalists in keynote presentations, panel debates, and private company CEO showcases.
International Conference on Internet and Distributed Computing Systems — September 22nd in Calabria, Italy. IDCS 2014 conference is the sixth in its series to promote research in diverse fields related to Internet and distributed computing systems. The emergence of web as a ubiquitous platform for innovations has laid the foundation for the rapid growth of the Internet.
CLOUD DEVELOPERS SUMMIT & EXPO 2014 — October 1st-2nd in Austin, TX. CDSE:2014 will feature co-located instructional workshops and conference sessions on six tracks facilitated by more than one-hundred industry leading speakers and world-class technical trainers.
International Conference on Cloud Computing Research & Innovation — October 29th-30th in Singapore. ICCRI:2014 covers a wide range of research interests and innovative applications in cloud computing and related topics. The unique mix of R&D, end-user, and industry audience members promises interesting discussion, networking, and business opportunities in translational research & development.
PDCAT 2014 — December 9th-11th in Hong Kong. The 16th International Conference on Parallel and Distributed Computing, Applications and Technologies (PDCAT 2014) is a major forum for scientists, engineers, and practitioners throughout the world to present their latest research, results, ideas, developments and applications in all areas of parallel and distributed computing.
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