Cablevision Systems' quest to launch a network digital video recorder came a step closer to reality on Monday, when the U.S. Supreme Court declined to hear an appeal on the matter.
The court's decision, which was largely expected after a recommendation from the U.S. Dept. of Justice's Office of the Solicitor General last month, basically clears the path for the controversial product, which would allow a cable company to provide DVR functionality to its customers through technology located at the head end.
Cablevision has been testing the service internally for several months and in the past has alluded to the possibility of a final offering that would satisfy both operators and programmers. Programmers had objected to the network DVR, claiming it violated its copyrights.
The programmers sued Cablevision in 2006 and initially won their case when U.S. District Court Judge Denny Chin ruled that the product violated programmers' copyrights. That decision was later overturned by an appeals court. It was that later decision that the Supreme Court declined to revisit.
In a statement, Cablevision called the Supreme Court decision a "tremendous victory" and hinted that a middle-ground could be reached.
"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," Cablevision said in a statement. "This landmark case gives the cable industry and Cablevision in particular, the opportunity to do something that our satellite competitors cannot do. 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."
Sanford Bernstein cable and satellite analyst Craig Moffett wrote in a report that other operators are expected to follow Cablevision's lead in introducing a network DVR, which could considerably cut their capital expenditure requirements.
"The ruling opens the door to widespread deployment of Network DVRs, and therefore significantly lower Cable capex going forward," Moffett wrote. He added that after Cablevision, he expected Comcast to deploy a similar product in a few years followed by Time Warner Cable.