Will Aereo Decision Put Brakes On Industry Innovation?

Broadcasters might have scored a victory today against Aereo, but shouldn't count on a judicial bail-out every time their business model is challenged by a startup. That's according to Pivotal Research Group's Brian Wieser.

“The ruling should not be conveyed as suggesting that broadcasters are out of the woods yet with respect to technology,” he says in a report addressing today's Supreme Court decision. “We expect that new technologies will continue to come to market, and from the vantage point of today’s broadcasters, they will still need to develop the capacity to iterate and adapt without relying on courts to solve disputes.”

Wieser was responding to the Supreme Court's 6-3 ruling that Aereo infringes  broadcasters' copyright by streaming television shows without a license. Aereo hasn't yet mapped out its next steps, but observers think the company's current business model is no longer tenable.

In his report, Wieser also identifies an additional, counterintuitive risk now faced by broadcasters -- the “industry-wide risk that can follow from the stifling of technology-driven innovation.”

“Depending on how this case is interpreted in the future, today’s action could impact how consumer electronics companies and related upstarts approach the video market in the future. This is unfortunate in the long run, as a vibrant video service business should help the industry expand overall, with most incumbents retaining dominance,” he writes.

For example, Wieser says, broadcasters weren't happy to see VCRs emerge, but they ended up helping the industry to grow.

Wieser wasn't the only one to react to today's decision. Some Republican House members indicated this afternoon that they want to rewrite the “outdated communications laws.”

“While the court ruled that Aereo had overstepped, invention and innovation are at the heart of America’s global leadership in communications and technology development,” said House Energy and Commerce Committee Chairman Fred Upton (R-Mich) said in a statement. “This case underscores the mounting need to modernize the 80-year-old Communications Act.”

The Supreme Court's decision was based on the Copyright Act, not the Communications Act. But the broadcasters' business model relies on both laws.

Meanwhile, the digital rights group Public Knowledge says that the Supreme Court decision serves as an argument against consolidation in the cable industry.

"It is very unfortunate for consumers that the Supreme Court has ruled against Aereo, which has provided an innovative service that brings consumers more choices, more control over their programming, and lower prices,” Gene Kimmelman, president and CEO at Public Knowledge, said in a statement. “This decision, endangering a competitive choice for consumers, makes it all the more important for the Department of Justice and Federal Communications Commission to guard against anti-competitive consolidation, such as the Comcast/Time Warner Cable merger.”

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1 comment about "Will Aereo Decision Put Brakes On Industry Innovation?".
  1. Edmund Singleton from Winstion Communications , June 30, 2014 at 6:59 a.m.
    Let me see, the government will give one access to the public air ways for free and in return one gets to make thousands of dollars, not allowing others in on the game; am I missing something here?