Networks have the right to try to stop it, but we as consumers and manufacturers of products have the same right to prevent it from being stopped.
First off, theft of service, in the case of TV programming, is the viewer receiving and viewing a program that they are otherwise not entitled to watch because they didn't pay for the service. ReplayTV's CA is removing content that the viewer is (presumably) entitled to view. Time Shifting removes the control of the network schedule and moves the control to the viewer. Is it theft of service? I would say no. I am either paying to receive the content (in the case of Cable or Satellite) or I am watching WHAT I AM FREELY OFFERED by broadcast networks. When and how I watch should be my choice, not the networks.
The problem is in the current network model. There has always been an "implied" agreement that the viewer would watch the commercials that pay for the programming. Why? Because the "Broadcast" networks have no control over who receives their content, so advertizing must be done with a "shotgun" method. Blast out the ads, and SOMEONE will bite. They rely on the commercials for revenue. Of course, none of us signed anything or agreed to any EULA, so that impled agreement is not contractual.
Bring in the Digital Cable company or Satellite provider, and the rules change. Suddenly, we have s system that can control the content and who receives it. The problem with that is that they have greedily combined the Broadcast model with the Subscription model, so not only are we paying to receive the content, but on most channels, we also have to receive commercials. Only your "premium" or "Pay-per-view" channels offer uninterrupted content. But have you seen what goes on BETWEEN the shows on premium and pay-per view channels? It's an advertizing blitz that would make your head spin.
Another question is does a viewer have the right to "alter" the content (ie: remove commercials) that is fed to them. The Networks would say "No." Some Networks are claiming that by removing the commercials, you are breaking copyright laws because you are altering the original proadcast. The ethical and legal question that will need to be addressed is what rights does the viewer have? If I go out and buy a book, do I have the right to remove pages I don't like to make the story more readable? If I buy a magazine, do I have the right to tear out ads that I don't want to see? From a TV viewer perspective, do we have the right to remove commercials? I think the answer is obvious, but the networks would have you believe otherwise.
I know it's very easy to simply say "Then they need to change their business model." but the fact remains that as technology advances, traditional business models must be re-thought. And, they are. For example, take a look at the "bug" at the bottom of the screen and see what it has evolved into. It used to be a simple graphic in the corner that let you know what network you were watching. Now, it's a multi-media presentation that sometimes takes up the entire lower fifth of the screen amounting to nothing more than an animated banner ad. And they play it DURING the show, so basically, they are no longer exclusivly using commercial breaks for commercials. Granted, they use this space to promote other "shows", not "products" but just wait...
The other thing is that commercials have become predictable and redundant. During Prime Time, what commercials do you typically see? Car ads, Old Navy ads, and Dell computer ads. Maybe I'm in the minority, but I have NEVER bought a car, Old Navy clothing, or a computer based on TV ads. Targeted advertizing could be done very easily using a PVR. Just download targeted content and offer it to the viewer. I can't speak for everyone, but I know that I would be MUCH more likely to watch commercials if they were interesting and relevant TO ME. The point is that I should not be forced to watch a commercial. I should have the right to choose to view it or not.
Unfortunatly, there are no easy answers.
