Not all channels will be offered to everyone in a given market. For example, a Virginia subscriber might be blocked from a Maryland station even though both are in the Washington market. Aereo said it will use data from the Federal Communications Commission to calculate whether that subscriber would normally be able to pick up that station using a regular antenna.
Out-of-market stations won't be available, even if both markets are served by Aereo after the expansion. A New York subscriber who takes a trip to Chicago, for instance, would be able to watch only Chicago stations — and not New York channels — while in the Windy City.
In doing so, Aereo continues to tread the boundaries of copyright law.
A 1992 federal cable law allows broadcasters to demand licensing fees from services that retransmit their signals, even if a station offers its signal over the air for free. Cable and satellite companies spend millions of dollars for those rights and often blame price hikes on the fees. High-profile disputes over such fees have led to blackouts of stations on some TV lineups, as broadcasters aren't required to offer their signals to any of these services.
Aereo argues that it isn't subject to those fees because it uses thousands of dime-size antennas to pick up signals and assigns them to subscribers one at a time. The company insists it is merely renting an antenna to the customer, and it's the customer who enables the transmission, the way one would with a home antenna. If two subscribers record the same show, two antennas would be assigned and two copies would be stored on the virtual DVR. The setup is inefficient; Aereo admits it's done solely because of copyright law.
Nathan sided with Aereo last summer, denying broadcasters a request to shut down the service pending resolution of the lawsuits filed in March by major networks and local stations, as well as producers of some of their shows. Nathan ruled that while the service might hurt broadcasters' ability to make money, the law left her no other choice.
Nathan had relied on a 2008 court decision involving a remote DVR service offered by Cablevision Systems Corp. In their appeal, broadcasters pointed out that Cablevision was already paying licensing fees for TV signals, so the court was deciding whether the company had to pay extra for the new service. Cable and satellite TV operators are not plaintiffs in the lawsuits against Aereo, but Cablevision filed a brief saying that Aereo should be subject to the same fees that cable companies have to pay.
Aereo's early investors include Diller's IAC/InterActiveCorp, which owns Match.com, Ask.com, and other websites. On Tuesday, Aereo said it has closed on a second round of financing, worth $38 million and led by IAC and Highland Capital Partners.
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