With average monthly TV bills exceeding $75, Aereo is positioning itself as a cheaper alternative. For $8 a month, subscribers in New York get 29 over-the-air stations. They can watch shows live and record up to 20 hours using Aereo's internet-based digital video recorder. Subscribers get 40 hours of DVR space for $12 a month and can reduce that to less than $7 by paying for a year in advance.
While cable and satellite services are geared toward watching television on TVs, Aereo streams feeds over the internet to Windows and Mac computers, iPhones, iPads, and boxes such as Roku and Apple TV for feeding internet content to regular TVs. Android support is expected this year. Services such as Hulu and Apple's iTunes also offer television over the internet, but not live.
The downside: Aereo doesn't offer cable channels such as CNN, HBO, ESPN, and regional sports networks. The exception is Bloomberg TV financial news channel, which reached a deal in which Aereo is paying an unspecified fee. Cable lineups typically have hundreds of channels, compared with a few dozen for Aereo.
The 22 markets Aereo announced in Las Vegas on Tuesday for this spring's expansion are Atlanta, Austin, Baltimore, Birmingham, Ala., Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Houston, Kansas City, Madison, Wis., Miami, Minneapolis, Philadelphia, Pittsburgh, Providence, R.I., Raleigh-Durham, N.C., Salt Lake City, Tampa, Fla., and Washington. With that, Aereo estimates that the service will reach nearly 100 million potential customers.After that, Aereo plans to add more cities a few times each year.
One factor for the initial round was a market's proximity to Aereo's headquarters in New York, in case engineers need to board a train or a plane to resolve problems. Weather also was a factor, as much of the construction is taking place during winter months.
Another consideration was demographics. One key target will be people in their 20s who have never subscribed to cable or satellite TV, a group Aereo terms the "cord nevers." Research from Nielsen shows that younger Americans tend to watch more video over the internet and less on traditional TV than older audiences.
Kanojia said Aereo is offering broadcasters a way to reach younger audiences where they spend their time.
The National Association of Broadcasters disagrees. NAB spokesman Dennis Wharton likened Aereo to someone who steals a six-pack of Coke, shares cans with friends and then claims to be helping the soda company promote its product.
"If you're selling the program for a fee and not compensating the rights holder for that product, that's fundamentally unfair and violates the copyright law," Wharton said.
Aereo, which wouldn't reveal how many subscribers it has, said it will keep prices the same in the new markets, though the available channels will vary.