Supreme court chief justice John Roberts on Tuesday attacked Aereo, the controversial video streaming company, as the firm squared off with the US’s biggest broadcasters in front of the court.

In a case that could end in a radical shakeup of the future of TV and cloud computing, Roberts and others questioned why Aereo should not pay fees to broadcasters, as its cable company rivals do. Roberts said its technological model was “solely based on circumventing legal prohibitions you don’t want to comply with.” Justice Sonia Sotomayor said that, looking at the company’s business description, “I read it and say: ‘Why aren’t they a cable company?’”

But the justices seemed concerned about how any ruling could affect cloud computing in general – a concern many of Aereo’s supporters have expressed. Justice Stephen Breyer said the case threw up some “serious problems” and he was “nervous” about making a ruling that would impact how people store their legally obtained media in the cloud.

Aereo, a two-year-old startup backed by media mogul Barry Diller, uses a large number of antennae – one for each customer – to capture the output of network TV channels and re-transmits them over the internet to customers’ devices. Those customers, who can also store shows on a cloud-based DVR, pay $8-12 per month, a fraction of the average cable TV bill, for the service. Aereo pays nothing to the broadcaster.

The company argues that it is doing nothing wrong. It claims that becasue each customer is assigned an antenna, the re-transmission does not constitute a "public performance" under copyright law – the issue at stake in the case.



Media companies including ABC, CBS, Fox and PBS, accuse Aereo of blatant theft. Their arguments have been backed by the White House and sports groups including the National Football League, which threatened to move the Super Bowl to pay TV channels if the broadcasters lose the case.

As Fox co-chief operating officer James Murdoch, Diller, Aereo chief executive Chet Kanojia and others looked on, the justices asked why Aereo shouldn’t be considered the equivalent of a cable company, which would give them the right to transmit TV programming – but also require them to pay for it.

Cable and satellite companies pay networks billions for the right to broadcast their programming. Brian Wieser, a senior research analyst at Pivotal Research, said that by 2020 CBS’s retransmission fees will top $2bn, more than half the company’s cash flow.

Aereo argues consumers have a “fundamental right to watch over-the-air broadcast television via an individual antenna, and they have had the right to record copies for their personal use since the supreme court Sony Betamax decision in 1984.”

Broadcasters also fought the mass introduction of Betamax tapes, which was the first technology to allow people to easily make home recordings of TV shows.

That landmark case, which ushered in a revolution in television consumption, centered around “private” versus “public” performances of TV shows. Watching a video at home or a show on a DVR constitutes a private performance and is not covered by the Copyright Act. A public performance of a TV show –which is what cable companies do and what broadcasters claim Aereo is doing too – would violate the Copyright Act.

Aereo argues that each individual antenna provides a private performance and that they are being penalised simply because those consumers are using modern technology. Their argument, backed by groups including the Electronic Frontier Foundation, Public Knowledge and others, also claims a ruling against them could have a detrimental impact on the cloud computing industry, and prevent people storing their lawfully purchased media online.

The case has reached the supreme court after a hard-fought state-by-state battle that ended in mixed verdicts at the lower levels of the judicial system. Last year, two federal courts agreed with Aereo. In February, a federal judge in Utah sided with the broadcasters.

Aereo’s victories relied on a landmark 2008 ruling in a case that pitted Cablevision against 20th Century Fox and others. The fight came after Cablevision set up a “remote DVR” for customers – allowing them to store their TV shows in the cloud. The media firms sued, claiming copyright infringement, and lost. Ironically, Cablevision is now backing Fox and friends to fight Aereo – to a degree.

Cablevision argues Aereo is “functionally identical to a cable system” and should pay broadcasters for the right to retransmit their over-the-air signals. But Cablevision warns that broadcasters have overreached in their arguments about their copyright protections in a way that could “imperil nearly any cloud technology that enables remote storage and playback”.

Jodie Griffin, a senior staff attorney at Public Knowledge, said the Aereo battle should be seen against the backdrop of Comcast’s proposed merger with its closest competitor Time Warner. She said a ruling against Aereo would stifle innovation at a moment when cable companies were hiking their fees and controlling ever larger sections of the market. “Consumers should have choices for accessing content, and choices that are affordable,” she said.

On top of that, she warned that a ruling against “private performances” would have dangerous consequences. “There are good reasons why we don’t have copyright protection for private performances. You shouldn’t have to get a license to sing a song in the shower,” she said.

Many legal experts believe the court will side with the broadcasters. Objecting to one Aereo victory, Judge Denny Chin, who sits on the US court of appeals for the second circuit, called the service a “a sham” and a “Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act”. A number of other experts apparently agree. An early April poll from the highly influential ScotusBlog and Bloomberg Law showed 72% of legal teams expecting a win for broadcasters.

But, according to Weiser, a victory would not mean the broadcasters are out of trouble. “The media companies need to be worried to the extent that there is a less than non-existent chance that they will lose. If not this case then the next one,” said Weiser.

He said the larger problem was that the broadcasters are playing “technology Whac-A-Mole.”

“There will always be a new technology that comes along and threatens their business,” Weiser said. “This kind of attack is not the best approach for dealing with it.”

A verdict in the case is expected in late June or early July.

• This article was amended on 22 April 2014 to correct an error in the description of Aereo's business model.

