What is Aereo and why does it have the TV networks in an uproar?

When Chet Kanojia came up with the idea of Aereo, I'm sure he never dreamed that broadcast TV networks, such as Fox, would threaten to shutter their local stations and move their content exclusively to cable to avoid it being shared over the internet.

Aereo, itself, is based on a very simple idea. Many people want to cut the cable cord, but find it hard to watch the major broadcast networks even with an over-the-air (OTA) antenna. Aereo takes several existing technologies and creates a packaged solution for these people.

First, Aereo sets up clusters of miniature antennas in an area. When you sign up for the service, you are assigned two of those antennas. One is for watching live shows and the other is for recording programs. Your local OTA shows are then streamed to a cloud-based digital video recorder (DVR)-like service.

This isn't just a TiVo in the clouds, though. Whether you're watching a "live" show or a recorded one, you're creating, the company states, "three separate unique copies of the show, each in a different bit rate optimized for different streaming conditions. The lowest bit rate file is ideal for streaming over 3G connections. The medium rate file will work well over most wi-fi connections. The highest rate file is intended for really fast broadband connections. While watching, you can choose the Video Quality on your device. If you select 'auto', you will automatically choose the best bit rate for your current network conditions".

The only customer problem with this is that, at most, you can only record up to 40 hours of video. If you're like me, that's nowhere near enough storage.

When you want to watch your local TV, you then stream your shows to a wide variety of devices. Currently, you can watch Aereo shows on PCs with up-to-date versions of Firefox, Chrome, Safari, Opera, or Internet Explorer web browsers. You can also watch shows on Apple iPads; iPhones running iOS 4.x or better; Apple TV, using Airplay; and Roku units with 3.0 or higher firmware. Android support will be arriving shortly.

At this time, the service is only available in New York City. You can't, for example, subscribe to the service in Chicago and watch New York City channels. Aereo is planning on expanding to 22 new cities in 2013.

Sounds simple enough, doesn't it? It's really not much different from what I currently do with my OTA antenna and my TiVo Premiere.

Many broadcast companies see this, however, as threatening their business models. While advertising was once the life's blood for broadcast TV, over the last few years, cable and satellite operator retransmission fees has become vital to their business. Aereo doesn't pay such a surcharge. As a result, several of these companies, including CBS, ZDNet's parent company, have taken Aereo to court on copyright grounds.

In the courtroom, the networks have lost twice. Given that the US Court of Appeals for the Second Circuit ruled that they have "not demonstrated that they are likely to prevail on the merits of this claim in their copyright infringement action", it seems unlikely they'll win in the courts.

So it is that CBS and Fox are threatening to turn off OTA broadcasts in NYC if Aereo continues to stream broadcast TV without paying retransmission fees. As an alternative to switching to black, CBS and Fox are proposing that their OTA signals would only be available to OTA subscribers using some as-yet-unknown digital rights management (DRM) package.

Let's hope that all sides can come to a mutual agreement and that it doesn't come to that.

Related Stories:

• CNET: CBS joins Fox in considering subscription-only model

• CNET: Aereo wins big one in streaming case against TV networks

• CNET: Aereo said to be talking partnership with AT&T and Dish

• Intel plans to launch Internet television service this year

• Microsoft sells its IPTV business to Ericsson

• NYC broadcasters sue to shut down web TV service Aereo