Cloud Power: Aereo May Expand Into Subscription Video


New York -- Aereo, an Internet TV startup in the legal crosshairs of major TV broadcasters, has no interest in replicating the cable channel bundle but will look to deliver subscription-based video content where it makes sense, founder and CEO Chet Kanojia said.

The company currently offers a service in its initial New York City market 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.

However, he 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 was interviewed by Multichannel News editor-in-chief Mark Robichaux at the Multichannel News/B&C “TV’s Cloud Power” event Thursday.

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

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

Aereo, whose backers include IAC's Barry Diller, 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 suing Aereo have appealed the ruling and their civil litigation is pending.

Kanojia said the initial court ruling was “a very instructive round” because it held -- at least for the time being -- that Aereo’s system was within legal bounds.

“The court found the technology works as advertised,” he said.

In 2013, the company expects to expand to additional markets beyond New York City. The service uses geolocation technology to verify users are accessing Aereo in the relevant broadcast TV market. In New York, Aereo is available only in certain ZIP codes.

At a high level, Aereo is a technology company, not a subscription-TV provider, Kanojia said. “We don’t sell programming. We charge for access to our infrastructure,” he said. “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/willing-seller model,” Kanojia said.

“I think any and all other alternatives that come in that are legitimate of consumer choice and mindful of copyright issues are good for growth,” he said.

Aereo's pricing plans include: $1 per day with three hours of DVR storage; $8 per month with 20 hours; $12 per month with 40 hours; and $80 per year for 40 hours of storage. Last month, the company launched a "Try For Free" feature, which offer New Yorkers free access to the service for a continuous one-hour period every day.

In New York City, Aereo currently offers 28 broadcast channels available over-the-air, including major networks such as WABC, WNBC, WCBS, WNYW-FOX, WPIX-11, WNET-PBS, and PBS Kids. The company markets the service as an alternative to pay-TV service with the tagline, "No cable needed."

Aereo provides users access via an HTML5 interface on iPads, iPhones, Safari browsers on MacBook, Apple TV set-tops and Roku boxes. Support for more devices is in the works.

Kanojia said Aereo specifically avoided developing a service that relied on set-top boxes, to instead deliver TV across virtually any IP-connected device.

“This is really a set-top box,” Kanojia said, holding up his smartphone. “A PC is a set-top box. A Roku is a set-top box -- these devices act as the signal-decoding endpoints.”