Two Decisions Shed Light on the Supreme Court's Role in Telecommunications Policy

The Supreme Court of the United States (SCOTUS) released two big communications-related decisions on June 25. First, the Court unanimously ruled that the police need warrants to search the cellphones of people they arrest. That ruling will have the most immediate impact on the approximately 12 million people – yes, 12,000,000 – who are arrested in the U.S. each year. But its impact will most likely be much broader: the ruling almost certainly also applies to searches of tablet and laptop computers, and its reasoning may apply to searches of homes and businesses and of information held by third parties like phone companies.

Chief Justice John G. Roberts Jr., writing for the court, was keenly alert to the central role that cellphones play in contemporary life. They are, he said, “such a pervasive and insistent part of daily life that the proverbial visitor from Mars might conclude they were an important feature of human anatomy.” But he added that old principles required that their contents be protected from routine searches. One of the driving forces behind the American Revolution, Chief Justice Roberts wrote, was revulsion against “general warrants,” which “allowed British officers to rummage through homes in an unrestrained search for evidence of criminal activity. The fact that technology now allows an individual to carry such information in his hand does not make the information any less worthy of the protection for which the founders fought.” The court recognized that 90% of Americans have cellphones and they contain “a digital record of nearly every aspect of their lives — from the mundane to the intimate.” Chief Justice Roberts wrote that even the word cellphone is a misnomer: “They could just as easily be called cameras, video players, Rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps or newspapers.”

Chief Justice appeared to grasp the privacy implications of cellphones. “The average smartphone user has installed 33 apps,” he wrote, “which together can form a revealing montage of the user’s life.”

There are mobile applications, he said, for “Democratic Party news and Republican Party news,” for “alcohol, drug and gambling addictions,” for “sharing prayer requests” and for “tracking pregnancy symptoms.” Records from those applications, he added, “may be accessible on the phone indefinitely.” And yet more information, he said, may be available through cloud computing. “An Internet search and browsing history,” he wrote, “can be found on an Internet-enabled phone and could reveal an individual’s private interests or concerns — perhaps a search for certain symptoms of disease, coupled with frequent visits to WebMD. Data on a cellphone can also reveal where a person has been. Historic location information is a standard feature on many smartphones and can reconstruct someone’s specific movements down to the minute, not only around town but also within a particular building.”

Although the Justice Department, in its Supreme Court briefs, said cellphones were not materially different from wallets, purses and address books. Chief Justice Roberts disagreed. “That is like saying a ride on horseback is materially indistinguishable from a flight to the moon,” he wrote.

The Supreme Court’s decisions can be technical. This one was straightforward. What must the police do when they want to search a cellphone in connection with an arrest?

“Get a warrant,” Chief Justice Roberts wrote.

In the second case of note, SCOTUS ruled that Aereo, a television streaming service, had violated copyright laws by capturing broadcast signals on miniature antennas and delivering them to subscribers for a fee. [Andrew Jay Schwartzman wrote a brilliant primer on the case for us back in March] The ruling blocks a company whose goals were to upend long-standing models for how broadcast programming is delivered to consumers. The service, which appealed to cord cutters seeking Internet-based alternatives to cable TV, allowed subscribers paying as little as $8 a month to watch and record their local over-the-air broadcasts from an array of electronic devices. The 6 to 3 decision handed a major victory to the broadcast networks, which argued that Aereo’s business model was no more than a high-tech approach for stealing their content.

Justice Stephen G. Breyer, writing for the majority, said the service was “not simply an equipment provider,” but acted like a cable system in that it transmitted copyrighted content. “Insofar as there are differences,” he wrote, “those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service.” [Chief Justice Roberts and Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan joined the majority opinion.] The court held that Aereo improperly used broadcasters' copyrighted works, no matter the technical makeup of its system. "We do not see how the fact that Aereo transmits via personal copies of programs could make a difference," Justice Breyer wrote.

For broadcasters, the victory preserves traditional and lucrative revenue streams, most notably the fees they charge pay-TV distributors to carry their signals, which could have been undercut by an Aereo win. Such carriage fees have become increasingly important, making up $3.3 billion for the industry last year and expected to hit $7.6 billion by 2019, according to research firm SNL Kagan. The growth in fees has helped broadcasters offset a slowdown in advertising revenue. Stocks for broadcasters soared on the news of the Court’s decision.

While the court ruling provided new clarity for broadcasters, it muddies the picture for the cloud-computing industry. Cloud-computing businesses had expressed concern that a ruling against Aereo's cloud-based service could threaten other technologies that allow consumers to access copyright content via the Web. The court took pains in its opinion to say the ruling against Aereo was limited and wouldn't discourage the use or development of other emerging technologies. But some court watchers weren't so sure.

The Supreme Court sent the case back to lower courts for further proceedings. Some speculate that Aereo will sell off its expertise in capturing video signals, transferring them to digital streams and storing them in the cloud to the existing television industry, which has been trying to rollout online streaming of its content to mobile devices on its own terms.

The case illustrates how technology can evolve more rapidly than the law. The court was tasked with judging Aereo under a 1976 copyright law enacted before the Internet, smartphones and digital video recorders.

Three conservative justices dissented, saying the majority's ruling "will sow confusion for years to come." That dissent, written by Justice Antonin Scalia, said the court distorted federal copyright law to rule against Aereo. If the service is a problem, it was up to Congress to address it, Justice Scalia said. Although Scalia’s dissent expressed distaste for Aereo’s business model, he said that the service had nevertheless identified a loophole in the law. “It is not the role of this court to identify and plug loopholes,” he wrote. “It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes.” [Justices Clarence Thomas and Samuel A. Alito Jr. joined the dissent.] Of note, in “Will the Supreme Court ever figure out technology?”, Nilay Patel writes, “it's not just lawyers looking for loopholes, it's the entire tech industry. Loopholes are the building blocks of our current age of disruptive technology; we've all got the smartphones now, and the world is changing around them. An entire class of startups are building massive businesses around loopholes in the law, and where those loopholes don't exist they're just blazing forward anyway.”

Justice Scalia’s dissent has us thinking about the role of SCOTUS in telecommunications policy these days.

Writing for Vox, Matthew Yglesias notes that “no legal text is without real or perceived ambiguity” and “entities from the public or private sector will inevitable push the boundaries, exploit loopholes, or otherwise land themselves in gray areas. And it's the job of the courts to sort things out.” But the “collapse of the legislative process” in Washington, courts have become “the forum for huge new departures in the realm of policymaking.” “Because everyone takes for granted that in this day and age Congress can't rewrite the relevant laws. It can't clarify the legality of Aereo's repacking of over-the-air television broadcasts… Congress can name post offices and not much more.” [emphasis his]

Asked whether Washington has kept pace with technological innovation in Silicon Valley, Rep. Jason Chaffetz (R-UT) has a blunt response: “Are you kidding?” “There are very few people who understand or appreciate tech,” said Rep Chaffetz. “I think it scares a lot of members of Congress.”

Whether or not Congress can quickly understand burgeoning digital issues, technology firms are still rapidly unveiling new products from connected cars to facial recognition to wearable technology. And that’s just in the last couple of years. Washington’s slow understanding of technology and telecommunications development comes amid an increasingly active private-sector -- most notably, a pair of major mergers between AT&T and DirecTV and Comcast and Time Warner Cable. Lawmakers won’t have direct authority over whether those deals go through, but many legislators have still not been hesitant to weigh in.

Yglesias contends that the judicial branch is not properly equipped to make broad evaluations of the policy merits of different approaches, it is not “staffed properly to consider what intellectual property policy ought to look like, it's not subject to the normal feedback mechanisms of democratic politics, and it lacks the legitimacy of a directly elected branch. Indeed, for all those reasons it's broadly considered inappropriate for the courts to rule on these cases on the basis of policy desirability.”

Also writing in Vox, Nilay Patel posits that SCOTUS got the cellphone privacy case right because the Justices probably all have smartphones. But they may have gotten the Aereo case wrong because they didn’t understand the technology in that case. “[W]e're saddled with Justice Breyer's strident, almost angry opinion in Aereo, which literally refuses to consider the actual technology involved or how it might be different from what's come before. Aereo built an elaborate system of miniature personalized antennas and individual storage in an effort to skirt the existing copyright law, but the court simply wasn't having it.” Patel argues, “Aereo's technology is the whole point; it was designed and engineered specifically to create a new business model within our existing legal framework. But because this technology isn't actively working to make the lives of our Supreme Court justices better, they simply decided it was the same as old technology and decided to shut it down.”

Yglesias concludes:
That's fine in a world where we assume Congress will revisit statutes in light of judicial rulings and correct undesirable outcomes. But in a world where the safest assumption is that Congress will do nothing on any contentious issue, it's absurd. The courts, whether they like it or not, are making public policy when they lay down interpretive rulings. Massive status quo bias ensures that whatever they decide is, irrevocably, the law of the land. This is the biggest and least-acknowledged cost of congressional dysfunction in America.

Practically speaking, the power to legislate does not go away when Congress fails to exercise it. Instead, it drifts; first into executive agencies and then over to the judicial system where it is simply exercised in clunky and inappropriate ways. That's why this week's Supreme Court rulings are such a big deal. Rather than being, as they should be, one step in a dialogue between branches of government they constitute an unintended final word by an unelected super-legislature.

A Los Angeles Times editorial echoed Yglesias’ concerns in wake of the Aereo decision. The Times noted SCOTUS “resorted to a simple principle: If it looks like a duck and walks like a duck, the law should treat it as a duck, no matter what kind of creature it is. But in doing so, the court threw a legal shadow over a slew of other tech-driven companies.” Justice Stephen G. Breyer pooh-poohed the technological distinctions between Aereo and cable TV. But as Justice Scalia observed, the majority glossed over a crucial detail: Aereo may be providing the equipment, but its customers are the ones transmitting the programs. By shifting responsibility for those transmissions to Aereo because it "looks like cable," Justice Scalia wrote, the court threw into doubt a long-settled principle that technology providers don't violate copyrights just by enabling others to do so. The Times concludes: “By trying to close a legal loophole that technology enabled Aereo to exploit, the court blurred the boundaries around copyrights in a way that will chill investment and innovation. It would have been far better if the court had let Congress respond to a technological change it couldn't have foreseen 38 years ago.”

In the New York Times, Farhad Manjoo took a more favorable view of SCOTUS’ week: “These were both wins for the [tech] industry, because they revealed something that should be quite gratifying for every technologist: The Supreme Court understands technology.” He believes the Justices “seem to understand some of the deeper distinctions between various kinds of tech, distinctions that are vital to how we should regulate the gadgets now infiltrating our lives.” Of the Aereo decision he writes, “The majority decision indicates that Justices understood Aereo’s unique technical infrastructure. They simply rejected it as a legal gimmick, which is a perfectly valid interpretation.”

We’ll be watching the Court as more and more tech-related cases make their way through the system. And we’ll see you in the Headlines.