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Cable Technology Feature Article

October 06, 2014

Comcast X1: Testing the Legality of the Cloud DVR?

By Tara Seals, TMCnet Contributor

Cloud and network-based DVRs are starting to roll out, which could push the U.S. Supreme Court to put a finer point on their legality than what they have thus far.

One particular move may have far-reaching precedents: No. 1 pay-TV operator Comcast (News - Alert) has rolled out the X1 DVR with cloud technology in the San Francisco Bay Area and Houston, joining existing deployments in Atlanta, Baltimore, Boston, Chicago, Philadelphia and Washington D.C. And, the company said that it expects most of its X1 customers will have access to the features by the end of year. The upgrade offers many perks but the crucial feature to consider here is that customers will be able to stream and download their recorded DVR programs to any Internet-connected device; not just via Comcast’s own managed connections within the home, via set-top.

In theory, this means that it is offering content that may or may not be covered under a digital rights agreement with media companies (Comcast hasn’t made any announcements discussing that), in an over-the-top (OTT) fashion via the Web. In practice, Comcast makes a separate, “personal” copy of each recording for each customer and stores it in the cloud, rather than offering wholesale via a broadcast architecture—offering a technological hair-splitting justification that it’s staying within the bounds of copyright law.

“We comply with all the copyright laws that are associated with DVRs,” Comcast video head Matt Strauss told Quartz.

But the nuances of all of this could eventually wind up back with the Supreme Court. At issue is whether offering digital streams of previously recorded material via the unmanaged, open ‘Net is a “fair use” of content that a pay-TV operator has already licensed.

The situation at its heart hinges on two precedents: The Cablevision and Betamax court decisions. The U.S. Supreme Court’s Sony-Betamax decision in 1984 affirmed that consumers have a fundamental right to record copies of over-the-air broadcast television using an individual antenna, for their personal use—paving the way for VCRs and later, DVRs. Then, in 2008, Cablevision beat back broadcaster opposition with a Second Circuit decision that cleared the way for network DVRs to be considered legal, paving the way for cloud-based broadcast models and the cloud storage industry.

In Cablevision, the court agreed that legally, there is no difference between DVRs that stored content remotely on a server and those that keep it locally on a set-top box for personal use at the home—and it’s this determination that cloud DVR proponents are relying on to confirm the legality of their products. But, it’s not a perfect match—if a DVR stream is pulled down from an airport via a 4G connection to a tablet, there’s no set-top involved here.

It’s also worth considering Aereo, the OTT start-up that was recently effectively shut down in a copyright infringement case, and which tried to use both precedents to justify its own existence. It offered broadcast feeds via the Web for $8 per month—without paying retransmission fees, drawing copyright infringement suits from every major broadcaster. Aereo argued that because it provided dime-sized antennae to its subscribers, it constituted an over-the-air, rabbit ears-based service, which is exempt from retrans fees.

But it also argued that that it used the same fair use concept that was upheld in Cablevision, and that broadcasters are simply denying technological innovation and the rise of cloud services. It noted that its content is delivered to a single cloud-based DVR device for one subscriber and can therefore not be categorized as a public broadcast service, subject to fees and regulations.

The Supreme Court did not agree, and Aereo is now out of business. But Justice Antonin Scalia, in a dissenting opinion, warned that the lack of total clarity on these issues would “sow confusion for years to come” because the court established a vague standard having to do with Aereo’s similarity to a cable company. “The Court vows that its ruling will not affect cloud storage providers and cable-television systems,” Scalia wrote, “but it cannot deliver on that promise.”

And Comcast’s new functionality would seem to be right in the middle of that murkiness.

There’s yet another wrinkle here: the FCC (News - Alert) is now thinking about giving OTT video providers like Aereo status as multichannel video providers, putting them on par with pay-TV companies under its program access rules.

After the Supreme Court sided with the broadcasters, Aereo tried to win approval from a lower court to be considered as having the same status as a cable operator—that would give it must-carry access to programming from broadcasters like FOX, NBC, CBS and ABC. But the lower court refused to hear the case, effectively icing Aereo’s plans.

Now, an FCC spokesperson told Multichannel News that the idea is to create a “technology-neutral definition of an MVPD,” which would eliminate the requirement of having facilities-based transmission path in order to be guaranteed access to TV station feeds.

And by proxy, the FCC's reclassification of OTT providers would thus pave the way for unmanaged links to be considered an appropriate conduit for DVR streams under fair use, by removing the distinction of having facilities as a requirement for MVPD status.

Edited by Maurice Nagle

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