Internet TV in a Post-Aereo World
Last June, the Supreme Court ruled that Aereo's system for transmitting over-the-air television broadcasts over the Internet violated copyright law. In a 6-3 decision, with Justice Breyer writing for the majority, the Court ruled that Aereo both "performed" the television broadcasts at issue and did so "publicly." Aereo has since ceased operations and filed for bankruptcy, but since the decision, both policymakers and media companies have taken steps to respond to the market need Aereo sought to fill.
In its opinion, the Court relied heavily on the view that Aereo's service was very similar to the cable television systems Congress sought to regulate when it passed the 1976 Copyright Act. Accordingly, the Court found that Aereo's performances were public and unauthorized. The Catch 22 for Aereo was that under current FCC regulations both the Copyright Office and the Second Circuit determined that Aereo was not a cable system. Therefore, it was not eligible to participate in the Copyright Act's compulsory license system, and, with nowhere to turn, was forced out of business.
Despite Aereo's demise, at least one possible solution has started to take shape. In October, FCC Chairman Tom Wheeler recommended that the FCC "modernize our interpretation" of multichannel video programming distributor ("MVPD") to make the term technology-neutral. Under current regulations, MVPDs must sell both content-serving channels and the transmission path of those channels, that is, the cable or satellite medium used to deliver the video programming. The requirement that an MVPD sell the transmission path has been one stumbling block for online video providers, who do not sell the broadband connection over which they transmit programming. Thus, such services could not be classified as MVPDs. The proposed rulemaking Chairman Wheeler suggested could remove that requirement.
Allowing online video providers to be classified as MVPDs could give them many benefits, such as rights to the compulsory licensing scheme of broadcast stations under the Copyright Act and access to other programming on nondiscriminatory terms and conditions. However, it may also come with many of the regulatory burdens that cable and satellite systems currently bear. While some commentators believe this is the first step towards a la carte video service, others are less optimistic and are concerned about the possibility of increased regulation of Internet-based television.
While the market solution moves forward, the policy changes crawl. The FCC approved the proposed rulemaking in mid-December, which opens the public comment period. Even if the proposed changes to the definition of MVPD are enacted, many questions remain, the most important of which is how the Copyright Office, courts, and Congress might respond. While the Aereo decision lit a regulatory fire, online television providers still have far to go before they are ready for primetime.