Aereo and its opponents in the broadcast television industry made their initial arguments in front of the Supreme Court last week, only to raise even questions about the long-term effects the court's ruling could have on the tech industry. How should investors think about the risk?
Host Ellen Bowman puts this question to Fool analysts Nathan Alderman and Tim Beyers in this week's episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.
Nathan says that Aereo's approach, which depends assigning each customer a unique antenna for acquiring signal, is a ploy to get around being classified as a cable company -- and paying the necessary retransmission fees as a result.
There's also a complicated technical argument at work. According to a deconstruction of Aereo's primary patent over at TVTechnology.com, the company likely shares power across its antenna clusters in order to download the signal it then ships to customers individually via the Internet. What's more, the company doesn't assign each customer dedicated hardware and software in the process of delivering programming, which could leave the company open to broadcasters' claims of skirting copyrights.
Tim notes that Aereo is positioning its system as similar to that of most cloud computing environments in hopes of persuading the Court that a ruling against it would result in collateral damage. Meanwhile, broadcasters -- CBS (NYSE:CBS), notably -- are threatening to pull their signal off the airwaves in favor of distributing shows entirely via the Internet.
Both Tim and Nathan see that as an eventuality, but not in response to the Aereo decision. Rather, broadcasters and cable companies are already taking steps to make more of their content available online. A ruling Aereo's favor would only accelerate the process.
On the other hand, a ruling against might do more than just kill Aereo. If the upstart's position is to be believed, it could also create havoc for file-sharers such as Dropbox and Google's Drive, which allow users to tap into shared server space for storing all sorts of digital files, including, no doubt, copyrighted material. Look for the Court to use this case as an opportunity to clarify the rules regarding data sharing services that exist in the cloud.
Now it's your turn to weigh in using the comments box below. Do you believe Aereo should win its case before the Supreme Court? Why or why not? Click the video to watch as Ellen puts Nathan and Tim on the spot, and then be sure to follow us on Twitter for more segments and regular geek news updates!
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Neither Ellen Bowman nor Nathan Alderman owned shares in any of the companies mentioned in this article at the time of publication. Tim Beyers owned shares of Google (A and C class). The Motley Fool recommends Google (A shares) and owns shares of Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.