The Supreme Court effectively destroyed Aereo's fundamental business strategy Wednesday, but Aereo's technology could survive and make Internet media better.

The U.S. Supreme Court released its ruling Wednesday in the case of American Broadcasting Companies Inc. v. Aereo Inc., and it will likely put the upstart TV broadcast-over-the-Internet company out of business. America's highest court voted 6-3 that Aereo's business model violates federal copyright law by retransmitting programs, labeled a "public performance" in legalese, without paying a fee to broadcasters.

Aereo was launched about two years ago, offering live TV streaming and DVR services over the Internet for broadcast television for a low monthly subscription. The service relied on TV antenna farms -- arrays of tiny HD antennae camped out in high-quality broadcast locations -- that Aereo "leased" to subscribers over the Internet for $8 per month.


Soon after it launched, the major broadcast networks sued Aereo, saying it was illegally retransmitting copyrighted programs without paying a retransmission fee, which cable and satellite companies pay as a matter of course. Those fees aren't cheap, as evidenced by the fact that negotiations over retransmission fees sometimes cause intermittent network "blackouts" on some providers, like with the recent spat between Time Warner Cable and CBS.

A Fatal Decision for Aereo?

Aereo -- a small technology startup -- could never afford such fees, and it never planned to: In the run-up to the April arguments in front of the Supreme Court (after a lower court ruled in favor of Aereo), Aereo CEO Chet Kanojia said there was no "Plan B" if the Supreme Court ruled against the small company, according to Ars Technica.

After the decision Wednesday, Kanojia called the ruling a "massive setback for the American consumer" that sends "a chilling message to the technology industry" on CNBC. Barry Diller, a media mogul responsible for the creation of the USA Network and Fox Broadcasting Co., financially backed the Internet streaming upstart. After the ruling, he told CNBC, "We did try, but it's over now."

Still Some Hope for Aereo's CEO, if Not for Subscribers

Despite essentially having his company's core business strategy destroyed by the Supreme Court's ruling, Kanojia told CNBC he vowed to "continue to fight" for consumers and "create innovative technologies that have a meaningful and positive impact on our world." What form that fight will take is unknown, but Aereo's technology could be a boon to TV broadcasting.

That's because Aereo's expertise in capturing and transmitting high-quality TV broadcasts through the cloud could help the broadcast industry, which has mostly been ham-fisted in individual broadcasters' attempts to provide streaming TV -- especially locally relevant content -- to subscribers on the Internet. Like a defeated Starfleet captain joining the Borg, Kanojia and his Aereo technology could be used as a tested, reliable Internet distribution platform for broadcasters too flummoxed by the modern world to provide reliable streaming services.

"Be more like Netflix" was FCC Chairman Tom Wheeler's recent message to the technologically archaic TV broadcasting industry. Aereo could help.

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