In 2002, Guido Ciburski and a couple of his friends gathered around a computer screen and logged on to a live Internet stream of the Olympic Games opening ceremony in Salt Lake City. A few minutes later, they gave up.

“It kept saying ‘server busy’ and you quickly arrive at the question: how can I expect to watch this when so many people are downloading it at the same time?” he said. “And that is where the thought ends 99 percent of the time.”

But the 40-year-old technology engineer just couldn’t let it go. He teamed up with Petra Bauersachs, his partner at their small TV technology company in southern Germany, and began developing software to tackle the problem.

Almost three years later, Cybersky claims to not only allow millions of users to watch a live stream at the same time, but it lets them share live television programming on a platform similar to the peer-to-peer file sharing of Grokster and Kazaa. If all goes according to plan, by the end of January, the software will allow CSI fans in Kuala Lumpur to get the popular American show live-streamed into their apartment by someone watching it in New York, with only a five to ten second delay.

New front line in copyright battles

In providing live-streaming to the masses, Cybersky could shake up the television industry in the same way Kazaa and Grokster shook up the music and film industry. The legal departments of German broadcasters are already monitoring the software’s progress and legal analysts say Cybersky’s potential for trading licensed programming could open up another front line in the court battles that have dogged file-sharing software since the days of Napster.

But Ciburski doesn’t seem bothered.

“What, are we going to say ‘We’re scared of how people will react’ and put it back in our drawer so that someone else can come along and do it?” he said.

After downloading Cybersky software, users, with the help of a TV card or Webcam, a DSL connection and a connector between their television and computer, will be able to upload the programming they are watching onto a sharing platform. After flipping through a world database of programming on offer, viewers will then be able to receive the live stream of that selected show, watching it at the same time the uploader is, with only a slight delay and at no cost.

Free television, no more bugs

Ciburski said they have been able to solve the overload problems that plagued live streaming when too many people logged on. The patented software eliminates the need for a server by using the peer-to-peer network. Everyone who logs on -- be it 10,000 or 10 million -- will be able to download at 400 to 600 Kb, enough for the full transmission of television. But the IT engineer won’t say how exactly it all works.

“This answer to this question is the one we sell investors on,” he said.

How much of what Cybersky does is legal is perhaps the bigger question. In an attempt to address the potential that users will stream copyrighted television shows and movies across its platform, a disclaimer on the Cybersky Web site says that pay TV will be swapped only with the permission of broadcasters and touts the legal uses of the software, like the ability for people and companies to set up their own channels using Webcams.

It has so far done little to assuage companies like Premiere, Germany’s only national pay TV broadcaster.

Broadcasters sharpen legal challenges

“The disclaimer is not enough,” said Michael Jachan, a Premiere spokesman. “They write that and then, two paragraphs later, write that each user is responsible for what they put in there. That’s a contradiction.”

He said Premiere’s legal department is already examining what steps can be taken against Cybersky. Media rights experts say Cybersky will face just as big a legal problem swapping regular non-pay television shows.

In order to live stream shows, the approval of the license holder is needed. Cybersky is side-stepping those re-transmission rights, say analysts, by essentially allowing each provider on the Cybersky network to become a mini broadcaster without the legal rights to broadcast.

“There’s no doubt about it that it’s definitely illegal,” said Oliver Castendyk, a media rights specialist and co-director of Potsdam University’s Erich Pommer Institute for Media and Television.

But Castendyk and others are convinced it will be hard to successfully sue Cybersky. Recent cases seem to bolster their arguments.

In a legal loophole

A suit by MGM seeking to dismantle the peer-to-peer file-sharing platform Grokster failed in August when the US Ninth Circuit Court of Appeals said that the Dutch company didn’t contribute to copyright infringement by providing the software to trade copyright-protected films and music online.

Like other file-sharing networks, Ciburski said that Cybersky is not able to trace who is providing programming, and who is downloading it, making it impossible to provide such lists to broadcasters.

Most broadcasters have not wanted to comment on Cybersky. But legal experts say it is only a matter of time before they will. By the beginning of the CeBit technology trade fair in March, Cybersky should be fully operational-- and the first suits already filed.