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No, Aereo isn’t a cable company, says the Copyright Office

( <a href="">andreaskristensson / Flickr</a> )

Aereo's latest plan to keep on living was already on iffy ground before the Copyright Office weighed in. Now, Aereo's prospects look grimmer than ever.

In case you're just catching up, Aereo had bowed to the Supreme Court's ruling against it and tried to argue that it should be treated like a cable company under copyright law. That argument would've kept Aereo on safe legal ground while still allowing it to avoid paying hefty content fees to the broadcast industry. Instead, Aereo would've paid government-regulated royalty fees to the Copyright Office.

Except now the Copyright Office is saying it doesn't buy Aereo's argument about its status. In a letter to Aereo, the Copyright Office says that "internet retransmissions of broadcast content" aren't covered by the type of content licensing system that Aereo wants to take advantage of.

"Section 111 [the part of the Copyright Act that concerns so-called 'compulsory licensing'] is meant to encompass 'localized retransmission services' that are 'regulated as cable systems by the FCC,'" the letter reads.

In plain English, the Copyright Office is effectively tossing the hot potato to the Federal Communications Commission. This is potentially very bad for Aereo: If the FCC rules that Aereo is a cable company in the eyes of communications law, then it would likely be forced to pay the broadcasters directly and undermine the company's core business model. And it's a nudge in favor of the broadcasters.

As I explained earlier, Aereo can pin its hopes on the fact that it's an online video distributor, meaning that as part of any decision on Aereo's status, the FCC would have to clarify the rules for online video more generally. There's currently an open docket at the FCC to consider just this question, but the agency has studiously left it untouched for the last two years.

Even though the Copyright Office seems to have reached its own conclusion rather quickly, nothing is final until the Second Circuit Court of Appeals comes out with an official decision on Aereo's fate.

"This is not the end of the road," said Paul Gallant, a telecom analyst with Guggenheim Securities.

Read the full letter below.