High court declines to hear DVR case

Cable firms want to phase out In-home recording devices

Cablevision has cleared the final legal hurdle in its fight to bring network DVR service to its subscriber base. The U.S. Supreme Court on Monday refused to hear a challenge from television networks and Hollywood studios alleging the remote-storage architecture violates copyright laws.

The high court's decision to reject the complaint affirms an earlier ruling by the Second U.S. Circuit Court of Appeals, which found that Cablevision's network DVR service, which stores captured content on servers at the head-end, is fundamentally identical to what end-users experience while using traditional set-top DVR.

Following the lead of Turner Broadcasting's CNN and Cartoon Network, a consortium of television networks and studios -- including ABC, NBC, CBS, Twentieth Century Fox, Universal, Paramount and Disney -- first called for an injunction against the nDVR concept in May 2006, arguing that the service would effectively allow the MSO to rebroadcast network programming at will, a violation of copyright law.

The lawsuit engendered a series of appeals and counter-appeals until the case landed in front of the Supreme Court.

In March 2007, Judge Denny Chin of the U.S. District Court in Manhattan ruled in favor of the networks and studios, saying that remote storage-DVR "is clearly a service ... in providing this service, it is Cablevision that does the copying." That judgment was overruled by a Second U.S. Circuit Court of Appeals panel in August.

The justices rejected the case without comment. The refusal to hear the complaint effectively clears the way for Cablevision to begin deploying the new service this year.

In a statement, Cablevision chief operating officer Tom Rutledge called the high court's refusal to hear the case "a tremendous victory," adding that the operator is "mindful of the potential implications for ad skipping and the concerns this has raised in the programming community."

At present, DVR penetration is about 26% of all U.S. TV households; that number effectively could double if nDVR takes off.

"We believe there are ways to take this victory and work with programmers to give our customers what they want -- full DVR functionality through existing digital set-top boxes -- and at the same time deliver real benefits to advertisers," Rutledge said. "We expect to begin deploying the first application of this new technology, the ability to pause live television when the phone rings, as a value-added benefit to our customers later this summer."

While advertisers wonder how nDVR will affect commercial ratings, questions remain as to how the service will be received. Earlier this month, Magna issued an on-demand report that suggested the impact of nDVR would likely be minimal in the near term. "At most, the availability of network DVR services will contribute to a minor increase in DVR penetration," the report stated. "Network DVR will more likely have a significant long-term impact on cost savings to MSOs."

By eliminating equipment costs and the expense of truck rolls, operators may save up to $500 per customer by deploying DVR service at the head-end.
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