Correction: An earlier version of this story misidentified a service called Mystro TV. That service was tested by Time Warner Cable.
The Supreme Court has declined to hear what could be a watershed copyright case that has the potential to make it easier for people to record and watch their favorite movies and TV shows at home.
On Monday, the Supreme Court asked the U.S. Department of Justice to look at a case involving a new service proposed by Cablevision that allows people to record broadcast TV shows and movies on a digital video recorder that sits in Cablevision's network instead of in their living rooms.
The TV networks and Hollywood film studios sued the cable operator in New York, seeking to block the service. The networks and studios have argued that recording programming in this way violates copyrights. (Disclosure: The film studios and television networks that brought the suit against Cablevision include Time Warner, News Corp., Walt Disney, and CBS, which owns CBS Interactive, publisher of CNET News.)
The case has been winding its way through the court system for three years. In 2007, a U.S. District Court in New York barred Cablevision from launching the service after the cable operator lost its initial suit. Cablevision appealed the decision. And in August 2008, a U.S. appeals court overturned the lower court's ruling, siding with Cablevision.
The TV networks and movie studios appealed to the Supreme Court in October, arguing that Cablevision was violating the law because it did not plan to pay a licensing fee to make copies of their TV shows.
But Cablevision has argued that it is the cable subscriber who is determining what is copied. The networked DVR only sits in the Cablevision network where the content is stored and accessed. The company wants to keep this technology in its network because it is more efficient and cost effective to deliver the service than providing every home with multiple DVR set-top boxes.
Cablevision, which services over 3 million customers in the New York metropolitan area, claims each set-top box costs about $100. This cost is passed on to consumers who must pay a rental fee for their DVR set-top-boxes. The cable operator also incurs costs for installing and maintaining this equipment. Eliminating the need for one of these boxes in the home could reduce Cablevision's capital costs, and it could also help reduce the cost of the service for consumers.
It could also allow consumers to get rid of their set-top boxes altogether or at least get smaller devices that don't take up as much room as the bulky DVR boxes of today. And because the DVR function is housed in Cablevision's network instead of at home, consumers also won't have to deal with the hassle that often comes along with housing a relatively complex piece of networking equipment in their homes.
Experts agree that how the legal questions surrounding the case are ultimately decided will likely have a huge effect on the TV industry. Some believe it could even be as important a decision as the 1984 Supreme Court decision to allow consumers to record TV shows and movies on home videocassette recorders. That decision paved the way for the VCR, and it also cleared the way for DVR services that were first offered by Tivo and are now a mainstay of every cable, satellite, and phone company offering paid TV services.
It's been reported that Comcast and Time Warner Cable are also planning to introduce a networked DVR service if Cablevision wins its legal battles. And Verizon, which offers TV service through its Fios service, has also said it would consider offering a similar service.
For now the Supreme Court has sent the case to the Justice Department to consider. But the solicitor general at the Justice Department still has the option to toss the case back to the Supreme Court. If that happens, it wouldn't be heard until fall.
A U.S. appeals court has sided with cable provider Cablevision in allowing the company to offer its network-based DVR service despite arguments from the movie and TV industry that it infringes on their copyrights.
On Monday, the U.S. Court of Appeals for the Second Circuit in New York, ruled that Cablevision's proposed new service that allows movies and TV shows to be recorded on remote storage servers in Cablevision's network "would not directly infringe plaintiffs' exclusive rights to reproduce and publicly perform their copyrighted works." The appeals court overturned a lower court's decision that was issued in March 2007.
The ruling could have a major impact on new entertainment services that cable companies and other video providers can offer customers, and it could also help reduce the price of DVR services.
Up until now, video providers have offered DVR services that allow people to record, store, and play back movies and TV shows on their set top boxes.
Cablevision's Remote Storage DVR or RS-DVR service would allow people to have all the same functionality they have with their existing DVRs, but it doesn't require them to have a special box to do it. Instead, all that functionality is in Cablevision's network rather than on a box sitting in the subscriber's home.
By putting the functionality in the network, Cablevision could reduce the cost of offering the service. Today, cable operators spend about 10 percent of their capital investment on providing DVR boxes to customers, according to Craig Moffett, an analyst at Bernstein Research. And if Cablevision can reduce its cost, it could offer the service at a lower price, which in turn could make the service appealing to many more subscribers. It also means that Cablevision can roll out the service to new subscribers much more quickly.
"This is a tremendous victory for consumers, which will allow us to make DVRs available to many more people, faster and less expensively than would otherwise be possible," Tom Rutledge, Cablevision's chief operating officer, said in a statement.
A networked DVR service, might also allow people to get rid of their set-top boxes altogether or at least get smaller devices that don't take up as much room as the bulky DVR boxes of today. And because the DVR function is housed in Cablevision's network instead of at home, consumers also won't have to deal with the hassle that often comes along with housing a relatively complex piece of networking equipment in their homes.
But the film studios and television networks that brought the suit against Cablevision, including Time Warner, News Corp., Walt Disney, and CBS, which owns CBS Interactive, the publisher of CNET News, argued that this remote storage infringed their copyrights. Specifically, they said that Cablevision's remote storage DVR operates more like a video on-demand (VOD) service than a DVR. Therefore, Cablevision should obtain licenses from content owners before people can record and store content on the remote DVR.
The appeals court didn't buy this argument. In fact, it saw no difference between the in-home DVRs and the ones that sit in the network to record and store TV shows and movies. In its written ruling, it also sent the case back to the U.S. District Court in New York for further proceedings.
"We appreciate the court's perspective that, from the standpoint of existing copyright law, remote-storage DVRs are the same as the traditional DVRs that are in use today," Rutledge said in his statement.
The court's decision could pave the way for other video providers to offer similar services. So far, none of the major players has said whether they plan to offer networked DVRs. But Verizon, which is building a new fiber-to-the-home network, could be in a perfect position to offer such a service, since its network is fast and has very low latency.
Joe Ambeault, director of consumer product development for Verizon, said Verizon might offer networked services in the future in addition to services that take advantage of hardware installed in the home.
"We are going to take advantage of both (centralized and distributed) approaches where it makes sense," he said. "We could develop a centralized service that is similar to Cablevision's. But it doesn't preclude us from also leveraging hard drives in the home to do other things."
But he emphasized that the company has not had to change any of its plans for new DVR services based on the legal dispute between Cablevision and the TV and movie producers.
"There isn't a service we've considered that couldn't be offered without the court's ruling (in the Cablevision case)," Ambeault said. "It's more a matter of it giving us more options as we go forward."
- prev
- 1
- next
