The question of whether online broadcast television is to remain in the hands of a stodgy industry that once declared the VCR the enemy is being put directly before the Supreme Court.

Broadcasters' latest legal target is 2-year-old upstart Aereo—which retransmits over-the-air broadcast television using dime-sized antennas to paying consumers, who can watch TV online or record it for later viewing. Broadcasters like ABC, CBS, FOX, NBC, and others haven't given Aereo permission to do that, and they say it violates US copyright law.

The industry will ask the Supreme Court during a Tuesday hearing to kill the New York-based Aereo service. The high-stakes oral arguments come 30 years after Hollywood told the justices that the VCR—and its time-shifting elements—would doom television and its producers forever.

An industry on the line

An outcome perhaps more important than who controls the broadcast airways has generated a great amount of concern, and it's not just the expected chorus from the copyleft. Companies like Google, Microsoft, Mozilla, Yahoo, and others are worried that a victory for the broadcasters could upend the cloud.

They contend that the broadcasters' position "would threaten one of the most important and emerging industries in the US economy: cloud computing" (PDF).

The companies, in briefs trade associations, told the justices in a recent filing that the "dramatic expansion of the cloud computing sector, bringing with it real benefits previously only imagined in science fiction, depends upon an interpretation of the Copyright Act that allows adequate breathing room for transmissions of content."

For the moment, a federal appeals court has deemed Aereo's service legal, and the cloud-computing market, expected to be a $1.1 trillion industry by next year, is safe, at least until the justices rule in the months ahead.

For Aereo, unless the Supreme Court says otherwise, it's free to retransmit broadcast signals without paying licensing fees to the broadcasters. That's something not even the cable companies can get away with, and it's got broadcasters and cable companies seething.

But a federal appeals court said that Aereo's service is akin to a consumer putting a broadcast antenna atop their dwelling. Aereo, the appeals court ruled, "provides the functionality of three devices: a standard TV antenna, a DVR, and a Slingbox" (PDF).

Not so fast, the broadcasters claim. They say it's a copyright breach because Aereo hasn't paid fees to the broadcasters to retransmit their content. They say that the dissemination of the content amounts to a "public performance" requiring the broadcasters' consent.

The broadcasters said that it's far-fetched to analogize Aereo to the likes of services like Dropbox, Box, Google Drive, and other cloud services. Claims that cloud storage hangs in the balance are overblown, they said.

"There is an obvious difference between a service that merely stores and provides an individual user access to copies of copyrighted content that the user already has legally obtained, and a service that offers the copyrighted content itself to the public at large," they said.

Aereo isn't exactly a cloud provider. Yet what the broadcasters say it can't do has the cloud industry closely following the startup's legal battles and business model.

Content liability

In a growing number of markets nationwide, Aereo customers rent up to two tiny, dime-sized antennas that are housed in facilities across the country. They capture local, over-the-air broadcasts, and funnel them to local customers in real time. The content is freed to stream to most any Internet-connected device. Another antenna syncs with a DVR for later viewing for about $12 monthly.

Broadcasters decry it as "technological gimmickry" to skirt copyright and other retransmission laws.

Aereo essentially maintains that they are providing offsite "rabbit ears" for their customers, allowing consumers to record freely available content that their rented antennas captured in their local markets.

if Aereo is blocked from allowing consumers the ability to stream their content at will, what's preventing rights-holders from making the same claim against cloud-storage providers?

John Bergmayer, a senior attorney at Public Knowledge, boils down the case to this.

"Consider any file-hosting service that allows people to store their own material, such as Dropbox. What if it can be shown they are storing copyrighted work. Do they need a license?" he asked in a telephone interview.

Mitch Stoltz, an Electronic Frontier Foundation attorney, said in a telephone interview that, "If the Supreme Court rules in favor of the broadcasters, their opinion might create liability for various types of cloud computing, especially cloud storage."

Chet Kanojia, Aereo's founder, likens the Aereo flap to the VCR litigation three decades ago, when Hollywood sought to block people from recording content obtained from their roof antennas.

"The idea that each individual consumer can have their antenna remotely located ... wins on its own," he said in a telephone interview. "There's no basis in law of any kind to prohibit that activity."

Luckily for Hollywood, consumers, and innovation, a deeply divided 5-4 Supreme Court ruled in 1984 against Hollywood and issued a stamp of legitimacy to the VCR, sparking in its wake a multi-billion dollar home entertainment market.

Fast forward to Tuesday's upcoming oral arguments before the Supreme Court, and we're right back to the VCR case of 1984.

"Underneath all the legal arguments and legal labels that we've thrown around in this case, the case is really very simple and straightforward," Stephen Kroft, a Hollywood lawyer, told the justices three decades ago during the arguments in the VCR case. "Petitioners have created a billion dollar industry based entirely on the taking of somebody else’s property, in this case copyrighted motion pictures, each of which represents a huge investment by the copyright owners."

Just months ago, in their October petition (PDF) to the justices urging the high court to kill Kanojia's service, the broadcasters said that "The disruption threatened by Aereo will produce changes that will be difficult, if not impossible, to reverse."

What's more, the broadcasters said: "The works provided by commercial television broadcasters to a remarkably broad swath of the public cost millions of dollars to produce. Petitioners rely on their ability to control how their programming is used by others in order to recoup those significant investments."

Sound familiar?