Aereo Plots Net-Video Play

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NEW YORK — Aereo, the Internet TV startup in the legal crosshairs of major TV broadcasters, doesn’t want to pay for the programming rights to become a “virtual MSO.” But it does have some fee-based over-the-top cards up its sleeve.

While the company has no interest in replicating the cable channel bundle, it will look to deliver additional subscription-video content where it makes sense, founder and CEO Chet Kanojia said last week.

Aereo, whose investors include IAC’s Barry Diller, offers a service in New York that provides live and DVR access to 28 local TV channels, delivered over the Internet to various devices.

“We have no desire to recreate the cable business … from a wholesale-cost perspective,” Kanojia said. “There’s a bunch of viewers who like the idea of broadcast with online content… The value/ price equation [of pay TV] is absolutely skewed.”

Kanojia estimated that 20% to 25% of U.S. households would be interested in such a hybrid alternative to cable TV. He was interviewed by Multichannel News editor-in-chief Mark Robichaux at the Multichannel News/B&C “TV’s Cloud Power” event Sept. 13.

Aereo uses dime-size antennas, mounted in rooftop arrays and dedicated to individual subscribers, that provide remote access to free over-the-air TV in the same way consumers can legally use an antenna to watch broadcast TV at home.

Broadcasters have sued Aereo for copyright infringement, arguing the service amounts to retransmission and is subject to the same rules as cable, satellite and telco TV operators.

Aereo won a legal victory in July when a federal district court judge denied a motion for a preliminary injunction filed by a group of 17 network broadcasters to shut down the startup. That ruling relied on a previous appeals court ruling that Cablevision Systems’ Remote Storage DVR service did not violate copyright laws. The broadcasters have appealed the ruling; civil litigation is pending.

In 2013, Aereo expects to expand to additional markets. The service uses geolocation technology, including GPS, on mobile devices to prevent users from accessing Aereo outside a given broadcast TV market. Aereo is available in 535 ZIP codes in New York.

At a high level, Aereo is a technology company, not a subscription-TV provider, Kanojia said. “We don’t sell programming,” he said. “We charge for access to our infrastructure. The beauty of the cloud implementation is that the cost of that infrastructure is low and continues to drop.”

That said, the company will look to distribute paid content through its service in a “willing-buyer/willingseller model,” Kanojia said.

Aereo specifically avoided developing a service that relied on capital-intensive set-top boxes, Kanojia said, to instead deliver TV across virtually any IP-connected device. The startup uses an HTML5 interface available on iPads, iPhones, Safari browsers on MacBook, Apple TV set-tops and Roku boxes. Support for more devices is in the works.