Cloud computing providers of all sizes were watching the Supreme Court very closely this year, waiting for its decision in the case of American Broadcasting v. Aereo. Aereo is a subscription-based service that allowed its customers to access local, broadcast television stations over the internet.  Customers rented antennas that allowed them to record network television shows and access the content on smartphones, tablets, and computers. Aereo did not pay licensing fees for the service, which sent cable companies up in arms.


Aereo argued that it was not functioning as a cable company, but was, instead, simply renting small antennas to its customers. The broadcasting industry didn’t buy the explanation, and sued all the way to the nation’s highest court.  In early summer, 2014, the Supreme Court sided with broadcasters in a sweeping 6-3 decision.


Aereo’s Unintended Consequences


Companies that provide and use cloud services waited for this decision with bated breath. Aereo’s business model was at the same time completely legal and an attempt to get around copyright laws. Anyone can purchase an antenna to be able to access local network TV stations. And anyone can record the programs on those stations to watch later. Aereo argued that’s precisely what they were doing – giving customers an antenna in order to watch TV, while also giving them a way to record network television at their convenience.  However, that antenna was connected to the internet, not the airwaves, and that’s is what has left other cloud providers vulnerable in the wake of the decision.


Cloud PBX System


The justices of the Supreme Court went to extra lengths in their majority opinion to emphasize that the ruling affected only Aereo and companies that are structured just like it. They deemed cloud storage services like Google and Dropbox to be safe from the decision –for now.  However, cloud computing companies are still very much on edge, and with good reason. The dissenting opinion was penned by Justice Antonin Scalia, and in it he repeatedly cited a legal scholar who has written extensively on the case, and believes that this decision will have cloud storage and consumer electronics companies looking over their shoulders.


In his opinion,Justice Scalia writes, “The Court vows that its ruling will not affect cloud-storage providers and cable-television systems, but it cannot deliver on that promise given the imprecision of its result-driven rule.” He also took aim at the finding of the majority that Aereo resembles a cable company, saying it would “sow confusion for years to come.”

The reason? Aereo was storing television programs at the request of users, and then transmitting that content to a user’s phone, tablet, or computer. At the end of the day, that’s precisely what cloud services do – store content at the request of a user, to be accessed at any time or place.


The Megaupload Legacy


This isn’t the first government-related action that worried cloud service providers. In 2012, the US governmentshut down the extremely popular cloud-based file sharing site Megaupload.  The action marked the first time that the government took direct action against cloud services.


Previous actions against Napster and Grokster were brought in civil court, meaning that affected parties (artists and music publishers) filed suit on their own. In the Megaupload case, the government went after the company directly, shutting it down completely. They charged the owners and principals of the company with copyright infringement, money laundering, and even racketeering. It was the first time that a company was held liable for the actions of its users.  The government has had trouble making the charges stick, and is still in the process of trying to extradite the named parties.


So far, the action has not had any direct impact on existing cloud services, but the Aereo case has added to the anxiety that cloud providers have about how far the government can and will go. The Megaupload case had far-reaching impact. While the government was trying to tackle internet piracy – many users were illegally sharing copyrighted movie and music content – they cost many legitimate users access to their files, both personal and business when they decided to shutter the operation with absolutely no warning.


The Future of Cloud PBX Systems


While most of the attention in the wake of the Aereo decision is focused on cloud-based file sharing services, providers of cloud PBX telephone systems are also on edge.  Cloud PBX systems use the internet to transmit telephone calls, rather than phones lines. Just as Aereo used the internet instead of airwaves, this use of the internet could leave providers subject to the whims of civil and government action.


Aereo allowed users to circumvent their local cable company to access broadcast television for a fee. Cloud PBX systems allow businesses to circumvent local telephone companies for a fee. Cloud PBX systems are far more flexible than hardline systems, and much cheaper. Companies not only use cloud PBX systems to place and receive calls, but they also use the systems to store data regarding those telephone calls. Calls themselves can be recorded, a useful tool for conference calls and webinars, allowing participants to go back and access the calls in the future, as needed. The data mined from cloud PBX systems also gives companies dramatic insight into business performance and customer behavior.


There has been no indication so far that the Aereo decision will have a direct impact on cloud PBX systems, but as the government stretches its reach into the cloud, it will be hard to predict just what the impact will be.


Cloud PBX System


Institutions such as cable companies and traditional telephone companies are far behind the times when it comes to technology and the demands of users. Cloud PBX systems were designed as a way to get around the bulky, expensive hard line phone systems of the past. They give companies the ability to customize their communications systems in myriad ways. They integrate with the computer network, and give users unlimited flexibility when it comes to communications, and they do it cheaply and efficiently.


There is always some pushback with new technology, as the large, lumbering titans in the industry find themselves outpaced by smaller, more technologically advanced companies.  However, action against Napster and Grokster ultimately led to uber-popular sites like Pandora and Spotify, services that may never have existed otherwise. Innovation is what keeps technology moving forward, and as the government slowly catches up to technology, nimble organizations will be able to find new ways to deliver services that the public demands.