Cablevision's (CVC) attempt to bypass the set-top box is taking a detour through federal court.
A group representing seven TV networks and movie studios filed a lawsuit in the U.S. District Court of New York Wednesday charging that Cablevison's plan to store its subscribers' recorded videos on its network will violate copyright agreements.
The plaintiffs --
, a unit of
20th Century Fox,
and ABC, CBS and NBC -- say Cablevision's network-storage system is an extension of video-on-demand and should require additional licenses from copyright holders. The group is seeking an injunction to prevent Cablevision from offering the service.
"This lawsuit is without merit," Cablevision says in a press release, adding that it "reflects a fundamental misunderstanding of Cablevision's remote-storage DVR."
Unlike its cable peers
, which offer set-top DVR boxes from
, Cablevision's strategy is to give viewers recording capability and 80 hours of video storage. The network-storage approach would allow Cablevision to save millions of dollars on installation costs and box upgrades, which go for about $400 apiece.
Cablevision argues that "this new technology merely enables consumers to exercise their time-shifting rights in the same manner as with traditional DVRs, but at less cost."
The network-storage system is similar to the set-top box format that allows users to select programs from an onscreen guide. It can also record as many as two programs as they are broadcast, says a Cablevision representative.
The Hollywood group contends that Cablevision's network-storage plan would provide a video-on-demand-style service that requires new licensing agreements.
This is the first of many challenges Cablevision's network-storage technology is likely to face, say analysts.
The so-called Betamax ruling allows the recording of copyrighted material for personal use. Cablevision will have to prove that storing videos for customers is the same as users recording the programs on their own box, say analysts.
The next legal test could come from the
camp. The Alviso, Calif., DVR pioneer successfully argued that satellite-broadcaster
infringed on its so-called time-warp patent, which allows users to record one program while viewing another.
Outfits like Comcast and
have license agreements with TiVo, but Cablevision says it has no TiVo issues that it is aware of.
Analysts say they are watching the Cablevision network-storage strategy, which begins trials this spring among employees, with great interest. If it clears legal hurdles, they say it will present a strong challenge to the two-player set-top box market and give cable companies a much cheaper path to higher cable bills.