New Service Delivers Broadcast TV on the Internet

Aereo aimed at cable TV cord cutters

A service aimed at cable TV cord cutters is set to launch in New York on March 14. The service, called Aereo, streams live broadcast TV channels to all Internet-enabled devices, from smart phones to tablets, for the monthly fee of $12.

To lure new customers, Aereo is offering New Yorkers a 30-day free trial.

The service also announced Tuesday $20.5 million in financing led by Barry Diller's IAC. Diller, the chairman and senior executive of IAC, has joined Aereo's board of directors.

"Aereo is the first potentially transformative technology that has the chance to give people access to broadcast television delivered over the Internet to any device, large or small, they desire," Diller said in a press release. "No wires, no new boxes or remotes, portable everywhere there's an Internet connection in the world, truly a revolutionary product."

The timing may be right. As cable fees continue to climb, consumers are looking for less expensive video options, like Hulu or Netflix.
New York is also logical launch pad for the service, since it solves over-the-air reception problems inherent to New York's urban canyon environment.

What's particularly interesting about the subscription-only service, is the way it works. Aereo uses tiny antennas the size of a dime to pick up the local TV stations in the market, which are then delivered via an Internet player. Each subscriber is assigned one antenna.

In a sense, the consumer is renting a personal antenna from Aereo. That's how how Aereo intends to get around the copyright and retransmission regulations that have shut down other alternative subscription TV services.

Broadcasters, who would not get a dime from Aereo under its current business model, haven't yet mounted a legal challenge. But that doesn't mean one isn't coming.

"While it sounds like it has some capital behind it, they will need a lot more to fend off litigation if they can't work out separate deals with the networks," said Scott Flick, a broadcast attorney with Pillsbury Winthrop Shaw Pittman in D.C. "It will also be very important as to exactly how they 'process' the broadcast programming on its way to the consumer. After all, any one with a DVR and a set of rabbit ears could collect their own broadcast programming for free. That being the case, the monthly charge makes it look less like an equipment rental service, and more like a retransmission service, particularly given the stated intent to relay the content to phones and other screen devices that are not designed for reception of broadcast signals."