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Summary:

Upstart Aereo is taking on the TV industry from a single floor in Brooklyn where it has stuffed thousands of tiny antennas and top notch transcoders and servers. Here’s a primer on how it works — plus some pictures from the inside.

Aereo antennas
photo: Rani Molla

Brooklyn-based Aereo lets subscribers watch and record over-the-air TV anywhere they go on computers, iPhones or iPads. The service is available for now in New York City but will soon be unveiled in dozens more cities across the country for $1 a day or $8 a month.

Media attention to the service has focused primarily on the legal dispute between Aereo and TV broadcasters who have tried, and so far failed, to shut it down. The legal controversy is real but also overshadows the implications of the service for TV viewing and the technological wizardry that makes Aereo work. (Aereo founder and CEO Chet Kanojia will be speaking at our paidContent Live event in April.)

To get a better idea of just how Aereo is serving up TV, we went to the company’s plant in Brooklyn to get some up-close photos. Here’s our tour:

From the Empire State Building to your iPhone

Aereo transmits from the top floor of a nondescript government building on Vanderbilt Avenue on the edge of downtown Brooklyn. You can see it on the right: Aereo building on Vanderbilt

Aereo chose this location for a reason. The floor on which it operates has a direct line of sight to the city’s biggest transmission tower. Here’s a picture of the tower and the view from Aereo’s window:

These direct sight lines make it easy for Aereo to pick up the powerful signals emitted from over-the-air broadcast services like ABC, NBC, CBS, Fox and local community stations. Aereo’s technology then transcodes and relays those signals to its customers who can watch TV, change channels and record shows with their phones or iPads:

Tiny antennas for everyone in the city

Aereo works by letting every subscriber rent a pair of tiny antennas. Customers get two antennas so that they can watch live TV while also recording a show or, alternately, to watch live TV on two different devices at the same time. While Aereo created the personal antenna system as a way to comply with copyright rules (you can read about the legal issues here), the antennas themselves are remarkable in that they give Aereo the capacity to serve 1 million New York City customers from the single floor in Brooklyn and an adjoining rooftop.

Here’s a close up look of the dime-sized antennas in action:

Aereo antenna closeup

Aereo antennas

Aereo CEO Chet Kanojia explained that the device is a simple copper antenna but that, rather than picking up the entire TV spectrum like a typical cable antenna, it picks up only the 6 megahertz block of spectrum that a viewer wants to see at a given time. He describes it as a “switched antenna” that’s beautiful in its simplicity. The ingenuity, Kanojia said, is that Aereo’s 1.5 inch antenna changes its electrical and magnetic characteristics in order to replicate the tasks of a standard 35 inch UFH or three foot VHF antenna.

The size of the antenna allows Aereo to cram many of them into a small space which is one reason Aereo is able to relay TV to so many people at the same time. Another reason is that the antennas are “multitenant” which means that, when one Aereo subscriber is not using an antenna at a given time, it is available to all other subscribers.

Cheap storage and high-performance fiber

Aereo relies on the antenna system to offer a cheap TV services that subscribers can easily add or drop at any time. But the antenna is only part of the equation. To make the service economically viable, Aereo is also capitalizing on major advances in transcoding technology and cloud storage. It is these advances that now make it affordable for Aereo to translate the over-the-air TV signals into iPhone video streams and to let people store hours of television on remote servers.

According to Kanojia, commercial transcoding costs per stream would have been $8,000 per customer two years ago but now the company can do it for under $20 (these figures relate to capital expenditures, not monthly costs). He also notes that a terabyte of storage, which once cost over $1 million, can now be had for under $100. The new efficiency, he said, is not just in raw storage capacity but better spindle speeds on hard drives that improve transmission times.

Here is a look at Kanojia standing in front of Aereo’s proprietary transcoding devices and a close-up of the servers which act as a private cloud service and on which Aereo customers store thousands of hours of TV to watch later:

Aereo CEO in front of transcoder

Aereo servers

To connect the antenna system with the transcoding and recording devices, Aereo relies on multiple 10 gigabit fiber links that look like this:

Aereo fiber cables

Aereo also relies on leased fiber networks in different spots around New York City to deliver TV content to its subscribers. This system means it doesn’t have to rely on content delivery networks or other middlemen.

“What’s the point of long-hauling something when you’re already 80 percent there?. There’s no CDN’s. It’s a local to local product,” said Kanojia.

Next: the man who would break the cable industry

Aereo wants to overturn the current TV business model in which viewers shell a hundred dollars for a bundle of channels, many of which they don’t want to watch. Aereo’s challenge comes by way of its technology but also in the form of Kanojia himself, who is picking a fight that many have lost before (iCravetv, ivi, etc) — and is so far holding his own. You can now read our follow-up account of Kanojia’s vision for the future of television.

Aereo antenna

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  1. Wouldn’t it be easier if Oems started to add a tv tuner in tablets, laptops and maybe smartphones? Anyhow who would pay for something that’s broadcast for free?

    I don’t see this service lasting long because it’s illegal. Even if they have 1,000 antennas they are still rebroadcasting tv channels over the internet. A similar service tried something like this a few years ago with dvd players. They allowed people to watch movies the day it was released on DVD by hooking a dvd player up to each account and played whatever dvd (movie) you wanted and streamed it over the web to your laptop. They were sued and forced out of business.

    1. You mean the Zediva case where, in a quixotic quest to rule the service illegal, the judge in the case contorted the facts so much he eventually concluded that watching a DVD in your own home by yourself was a ‘public performance?’ Aside from the obvious issues with the ruling there’s also the fact that the Aero case is not in the same jurisdiction. Closer to home is the cablevision ruling, which hales from the same district as the Aero case, that found hosted DVR services could be legal. There’s some pretty crazy legal logic in that ruling as well though.

      The real thing we should be discussing here, however, is even if you assume these services are illegal why should the be so? It doesn’t make any sense at all that they have to use all these tiny antennas just to pipe over the air traffic transmission through the internet. Why is doing that efficiently copyright violation? It makes no sense. Further even assuming it’s copyright violation full stop why should it be treated differently from cable offerings doing the same thing only over a different transmission medium? Ivi tried and has so far failed to convince courts it’s ok for internet TV to pay the same compulsory licensing rates as cable TV but there’s no clear reason to me why either should pay anything and, even granting there is a reason, no reason to treat them differently when they do it.

    2. The are not rebroadcasting – To transmit (a radio or television program) for public or general use. Lets say you live at the bottom of a hill and you cannot get a signal. Your neighbor at the top of the hill can. So they set up an antenna for you, separate from theirs, and run a cable down the hill to your property to your cable that runs to your [viewing device]. Is that rebroadcasting too?

      1. Yes, that is exactly how/why cable started in the first place, and cable companies need permission from the broadcasters.

  2. I would pay for this service. Once we went from analog to digital I lost reception of all but two local stations. Whereas before I received an additional six stations or more. Because of geography I no longer receive digital broadcasts.

  3. Adding TV tunners is not a good solution since the ATSC standard sucks big time. DVBT is a much better option but I guess that we will never get that technology.

  4. Why is GigaOm allowing ads to be posted in the comments section?

  5. The real irony here is that this is basically how Cable TV started. Since over-the-air broadcasts inherently suffer from interference for a number of reasons, communities started to set up CATV antennas at optimum locations, then pipe that through coax to houses in the area to give them better reception. Aereo is basically just updating that model for the 21st century.

    1. And the broadcasters have no problem with that as long as Aereo is willing to play by the same rules that cable head ends are having to play by.

      The issue here is that Aereo is trying to commoditize Broadcast TV.

  6. TV stations pay big bucks to have exclusive broadcast rights to the shows they air. Cable and satellite operators pay them for the privilege of rebroadcast, unless Aereo starts paying retransmission fees I don’t see how anyone could call this legal let alone fair.

    1. That’s exactly right but some people can’t see it, or refuse to acknowledge it. Aereo owns the antennas and the transcoding and recording devices, and the public pays Aereo for using their gear. Saying Aereo isn’t doing retransmission because *each customer has their own antennas* is like saying two plus two does not equal four because I had a ham sandwich for lunch.

      1. so basically they’re in the antenna leasing business? Is that what it boils down to?

  7. “subscribers is not using”
    “direct line of sight to they city’s biggest”
    “a standard antennas”

    Great writing.

    1. Thanks for your helpful and insightful comment. These typos are fixed.

  8. Let us not forget that Broadcasters spew their signals out into the air unrestricted for the public to receive. If those signals were really private then we would be buying a decoder box from the broadcaster to get the signal. Since they ‘broadcast’ the signal I feel I should be able to receive it any way I want and watch the signal on anything I want. If someone helps me with that effort then of course I will pay them – but not the broadcaster.

  9. Anything that could kill Comcast and permanently unemploy their “must have worked for AT&T” pricing people is music to my ears.

  10. Aereo has not been shut down because they have less than 10,000 users in a city of 8 million people, so the broadcasters haven’t made a serious effort to stop them. If Aereo ever acquires enough customers to be a significant threat to the broadcasters, they’ll be given two choices: pay retransmission fees like the cable companies, or the courts will pull the plug on you.

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