Broadcasting is about to change, regardless of Aereo lawsuit's outcome

Next Tuesday, the Supreme Court takes up the issue of whether Aereo is violating copyright law by providing over-the-top streaming of broadcast channels through its antenna-DVR service. While it's not known which way the justices will rule, or when--the case could continue well past next week--media and technology organizations are already taking sides.

But even though a decision for the broadcasters could spell the end for Aereo as an entity, does it really matter in the long run? Online video is clearly here to stay, and consumer demand for content that is easy and cheap to access, anytime, anywhere, will likely overwhelm the broadcast industry's protectionist stance.

Gary Shapiro, head of the Consumer Electronics Association, has a deep interest in the case: He was involved in the landmark 1985 Sony Betamax video recording case, on which Aereo's argument is partly based (it also draws on the 1982 Cablevision case). The CEA filed an amicus brief with the Court last week supporting Aereo.

"I'm so fascinated about what broadcasters are saying," Shapiro told me in a phone interview this week. "It's destroyed their argument that they value free over-the-air television. So it's not about over-the-air broadcast anymore. That's not the legal argument, but it is the public argument."

He sees the broadcasters' continuing battle against Aereo as somewhat resentful. "(Aereo) followed the law and read the law carefully. Broadcasters don't like that they found that (loophole), and that's their argument," Shapiro said. "It really comes down to what the law says and the law is what Aereo filed."

Meantime, broadcasters are busy putting together contingency plans in the event that Aereo wins the day. According to The Wall Street Journal, at least one broadcaster's plan may be to shift from over-the-air to cable transmission. CBS, as Les Moonves famously stated a few weeks ago, may just offer its own ad-supported OTT service. Or it may be a subscription service: No clear plan has been made public.

But ultimately, it doesn't matter who wins this case. Technology is swiftly passing the broadcast industry by, and instead of taking advantage of it, broadcasters appear to be standing still amid the rising waters.

FCC Chairman Tom Wheeler made a historical comparison between broadcasters and canal builders of the 1800s in a keynote speech last week at NAB. The canal builders controlled a key section of America's transportation sector, he said, but when the railroad began to make inroads on their business, they attempted to protect themselves through legislation. While he wasn't directly referring to the Aereo case--joint sharing agreements and spectrum reallocation were on his priority list--his warning that broadcasters need to change their business model is just as apt when it comes to online video.

"The NAB's main interest is to preserve the status quo," CEA's Shapiro said in an op-ed published in the Las Vegas Review-Journal last week. "Until the 1970s, broadcasters owned 100 percent of the market share of eyeballs on home screens. With notable exceptions such as Hubbard, broadcasters missed the migration to cable, the introduction of satellite, the opportunities offered by the Internet and the viewing shift to tablets and smartphone screens."

Shapiro suggests partnering with disruptive services like Aereo and Dish Network's Hopper or pushing to deregulate the industry so that broadcasters can compete directly with MVPDs.

He also pointed out to FierceOnlineVideo that broadcasters aren't totally in control of their industry. "If you go to any broadcaster's 10K filing, there's a statement in there saying we have licenses which are temporary and can be taken away at any time," he said.

While the decision will likely come down to answering a technical question about what constitutes a public performance, Shapiro agreed that online video will likely prevail, even if Chet Kanojia's company doesn't.

"Technology will beat them anyhow. The industry is phenomenally changing," he said. "When people watch TV, they're likely using some device. … The whole distribution model has been flipped on its head. People don't care that something is on Disney or ABC or another broadcast channel, they care about what the content is and that they get it when they want it, how they want it."

As an aside, I don't entirely believe Chet Kanojia's statement that Aereo has no "Plan B" if the Court rules against it. The amount of work and thought that went into the startup indicates that Aereo's founders can come up with something almost as effective and disruptive.--Sam