Supreme Court declines to hear cable DVR case

U.S. Supreme Court has asked the Justice Department to look at the issue of whether cable operators can deliver networked DVR services.

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.

 

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