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Cable subscribers are fed up with paying for channels they don't want. But solving the problem involves battling a powerful broadcast industry and murky legal issues.
That's why Chet Kanojia isn't surprised that his startup Aereo, a streaming service for live broadcast TV (but not cable), has attracted controversy. And lawsuits.
Kanojia is very familiar with how the traditional broadcast TV business works. He worked with many of the bigwigs before selling his TV advertising startup Navic Networks to Microsoft in 2008, so he figured they wouldn't be pleased with his new idea: a service called Aereo.
Aereo lets subscribers watch live broadcast TV on Internet-connected devices, or record shows to watch later. Occasional viewers can buy a $1 day pass (recordings are stored for 10 days), while heavier users can purchase an $8 or $12 monthly package or an $80 annual subscription.
Before Aereo launched in New York in early 2012, Kanojia and his team made the rounds at broadcasters' offices to explain the approach. None of them cheered Aereo, but Kanojia wasn't waiting for broadcaster approval to move forward. He had already scored financial backing, and he had confidence that he was on solid legal ground.
After Aereo's New York launch, most of the major broadcast networks and local TV station owners quickly filed copyright infringement lawsuits against Aereo
Aereo's defense is its technical setup, which the company insists makes its service legal. It houses thousands of tiny antennas in its data centers, and it assigns each customer a unique antenna. Aereo argues that the service works just like a legal DVR. Broadcasters say it's an unfair dodge based on a technicality, and Aereo should have to pay them to re-transmit their programming.
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