reo Not Backing Down

MULTIPLE CITIES--With a major Supreme Court case brought against it by broadcasters looming, and a preliminary injunction that bans the service from operating in Utah and five other states, Aereo continues to expand its Internet streaming service into new markets across the U.S. The company said it is now in a dozen markets with a 28-channel service, including all major broadcast channels, with plans to expand to 15 or more cities by the end of the year.

However, in the U.S. Supreme Court case entitled American Broadcasting Companies vs. Aereo, the nascent over-the-air/Internet Protocol hybrid service is being accused of retransmitting broadcasters' content without permission (or payment).

Aereo, for its part, says it is not bound by other retransmission rules, as it rents subscribers small antennas and a DVR box with which to record and watch programming on computers, cellphones and tablets. The signals are converted to an Internet-friendly format and streamed live or stored for customers. Consumers can pause and rewind any program that they are watching live.

Aereo founder and CEO Chet-Kanojia with a bank of dime-sized antennas for receiving broadcasters' off-air signals.

IP Delivery Is Growing

The latest market for Aereo is Austin, the fourth city in Texas where the service is now available. The company said that as of March 3rd Austin residents (more than 1.25 million of them) would have access to free over-the-air television channels with a cloud-based DVR via supported devices.

Aereo founder and CEO Chet Kanojia said that his company's technology brings the old-fashioned antenna into the 21st Century, providing consumers access to the over-the-air broadcast signals that belong to them. Aereo makes using an antenna easy again the way it should be.

Reflecting the heart of the case before the Supreme Court, the Austin expansion will enable subscribers to the service (membership begins at $8 per month, which includes 20 hours of DVR storage) to watch 19 over-the-air channels including KVUE (ABC), KXAN (NBC), KEYE (CBS), KTBC (Fox), KNVA (CW) and KLRU (PBS) as well as special interest channels ThisTV, MOVIES!, GetTV, Create TV and AccuWeather; and Spanish-language channels UniM s, UniVision, Telemundo and Estrella TV.

[For an additional $4, consumers can upgrade their membership and receive 60 hours of DVR storage for a total of $12 per month. Subscribers get their first of month of access for free.]

Aereo uses an HTML5 interface, which works on the Safari browsers for Apple's iPads, iPhones and Macintosh computers, as well as Apple TV and Roku set top boxes. An Android version is currently in beta testing and will soon be available for download for devices running Android operating system version 4.1 or higher. Aereo is also supported on Chrome, Safari, Internet Explorer 9, Firefox, Opera, and AppleTV (via airplay) platforms.

Supreme Fight

In court filings with the Supreme Court in anticipation of the milestone legal fight (oral arguments are scheduled for April 22), broadcasters are challenging the legality of Aereo's activities thus far (cable and satellite carriers pay the broadcasters for the right to distribute their programs) but also warn that a win for the streaming service would be deeply problematic and force them to reconsider the quality and quantity of shows on free, over-the-air TV. In fact several network executives have publically stated that they would consider a similar type of subscription service in order to deny Aereo and others like it access to their content if they don't pay for it.

In a 65-page brief, broadcasters argue that Aereo's streaming of broadcast signals violates the Copyright Act, as well as Congress' intent when it was passed in 1976.

Ready For Battle

With the deep pockets of entertainment mogul Barry Diller and others behind it, Aereo looms as a serious challenge to traditional broadcast business models. While several federal judges have already ruled in favor of the start-up (claiming that Aereo's streams to subscribers were not public performances and thus did not constitute copyright infringement), a US District Judge in Utah recently issued a preliminary injunction that bans the service in Utah as well as the rest of the 10th Circuit (which includes Wyoming, New Mexico, Oklahoma, and Colorado.) Aereo is currently operating in two cities in the 10th Circuit, Salt Lake City and Denver.

Judge Kimball ruled that Aereo's retransmission of Plaintiffs' copyrighted programs is indistinguishable a cable company and falls squarely within the language of the Transmit Clause.

However, Aereo adamantly disagrees, contending that its service amounts to a private performance, and is supported by legal victories in federal court in New York and Boston.

The goal is not to recreate the cable companies but to create an alternative for people who are coming into television from the Net side first, Aereo's Kanojia has told the New York Times in the past. There's an emerging population of people who have never signed up for traditional cable packages, who are used to customizing their own TV experience.

Amending his earlier ruling, Judge Kimball later gave Aereo a 14-day stay on the decision, allowing the streaming service to continue operating for two more weeks, while denying Aereo's request to continue operating until the April Supreme Court case is heard.

While several federal judges have already ruled in favor of the start-up, a U.S. District Judge recently issued a preliminary injunction that bans the service in Utah and several other states. Image courtesy of Gigaom

Challenging The Traditional Business Model

It's clear that Aereo's IP-based service was carefully crafted to avoid legal challenges that the broadcast industry has traditionally won. On the ninth

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