Bamboom CEO Chaitanya Kanojia

But the demand for broadcast content is there and Bamboom aims to fill it with legal muscle and infrastructure accumen. Bamboom wants to create an array of antennas that are each smaller than a dime (they look like earrings) to gather the signals that local television stations emit. It will then translate those to signals so they can be delivered over an IP network, which means any web-connected device that has an HTML5-compliant browser can play the program. This could be a Roku, a web connected TV, an iPad or any number of other devices. For those without such devices, the company also offers a box to connect to an older television so it can receive the signals as well.

As a cord cutter who can’t get a broadcast signal using an over-the-air antenna, I would happily pay for this service, especially if it’s in the sub-$10 range, which Bamboom CEO Chaitanya Kanojia says is where he’s trying to keep the monthly subscription price. Kanojia has a history in the television business: his previous startup Navic did TV ads and was bought by Microsoft in 2008. His history is likely one reason led by FirstMark Capital led the $4.5 million round. Also participating were High Line Venture Partners, SV Angel, First Round Capital and Highland Capital Partners.

That’s a significant “seed” round, especially when most startups are raising a few hundred thousand to prove out their ideas. However, in addition to manufacturing the antennas, building out a cloud of specialized appliances for doing real-time transcoding on the cheap (Bamboom built a special chip that uses DSP cores to keep the transcoding costs low), the startup also needs a legal war chest because it’s really a question of when, not if, it will get sued.

“Our investors planned for this” Kanojia said. “We need money for infrastructure and lawsuits.”

The company designed its distribution network with a court case in mind — a legal fight between content owners and Cablevision that led to the judge ruling the cable provider could store and stream content from its central location (called a headend) as opposed to sending each customer a digital video recorder. The court determined that it could do this because it still counted as a private viewing as long as the content was requested by and performed for a customer.

For Bamboom that means that each subscriber has to have an antenna on its array, so there’s no question that the viewing of the program is called for and controlled by a customer. An LA Times article on the company points out that this workaround may not be enough, given that startup Zevida has tried to make a slightly analogous argument in the DVD industry and was subsequently sued. That case is still in the courts.

There’s also a question of how much and how quickly Bamboom will build out its service. In order to offer it, Bamboom has to spend money setting up the antenna array and the fiber to send the signals to its transcoding cloud and then to the customer’s home. Kanojia declined to say what this costs, but says it’s orders of magnitude less than the cost of setting up a cable plant. He also wouldn’t talk about his strategy for selling the product to consumers and gaining customers, or where Bamboom would go next.

So with the capital to build out a technical trial in New York and then open up a wider beta there in the summer, as well as lawyers already in the wings for the inevitable lawsuit, Kanojia is ready to get down to the fun of building out his company. For him it’s a matter of providing access to a service that the public technically owns. He argues that broadcasters only have access to this spectrum because they are fulfilling a public good, but if people can’t technically get to those signals because of interference then they are denied access to a service they are entitled to.

“We’re providing access of a public resource to the public, ” he said. Of course, he is charging a fee for the service, but he points out that cost is merely the rental associated with the antenna. Presumably it does more than cover the costs of building and supporting the infrastructure associated with Bamboom, so the business can turn a profit, but that’s an issue the company can worry about after it runs the legal gauntlet, aces its technical trials and convinces users to sign up. I hope it makes it to Austin, so I can try it.

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Ivi’s system works by relaying live TV feeds from more than 40 broadcasters — including ABC, CBS, Fox, NBC and Telemundo — to online viewers. It claims to be operating under a legal loophole which says that cable and satellite companies can legally retransmit over-the-air broadcast content as long as they pay semi-annual fees to the U.S. Copyright Office. The startup says it has already applied to pay those fees, which are later distributed to rights holders.

It should come as little surprise that the broadcasters disagree with Ivi’s reading of the law, and have pressured it with cease and desist letters, calling for the startup to take down the online video service. That prompted Ivi to file a preemptive lawsuit against certain broadcasters last week.

The latest volley in the battle between Ivi and broadcasters came yesterday, as a group of TV programmers filed a lawsuit alleging copyright infringement for unauthorized retransmission of their live TV feeds. Plaintiffs in this latest suit, entitled WPIX Inc. v. Ivi Inc., include ABC, CBS, NBC, Fox, PBS, Major League Baseball and many more.

What Ivi’s doing is not a new idea, and its legal foundation is a little shaky. As one of our commenters noted a few weeks ago when Ivi launched, a startup called iCraveTV tried more than 10 years ago to exploit the same legal loophole before being “sued out of existence.”

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Ivi’s service retransmits original broadcast streams from networks like ABC, CBS and CW online, making it possible to watch live TV programming on your computer. The company said today that it has received more than 10 cease and desist letters from major broadcasters, as well as sports leagues like MLB. It is now seeking a declaratory judgment to clear itself from any infringement allegations.

In its lawsuit (PDF), Ivi essentially argues that it is protected by U.S. copyright law, which established provisions for a compulsory license for cable TV networks in 1976. These provisions essentially made it possible for cable TV providers to retransmit broadcast channels without separately negotiating each and every license. However, the 1992 Cable Act states that cable companies still have to get the go-ahead of a broadcaster, also known as retransmission consent, before they can make use of compulsory licensing of broadcast content. Ivi doesn’t address these issues at all in its lawsuit.

Ivi CEO Todd Weaver told us last week that he fully expected a “a typical knee-jerk reaction” from the broadcast industry. The company said today in a press release that its own lawsuit was meant to “discourage needless litigation.”

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The company claims its application offers “more content than Hulu”, but it hasn’t signed contracts with a single broadcaster. However, Ivi founder and CEO Todd Weaver believes his company’s offering to be perfectly legal. In a phone interview he claimed Ivi is “an online cable system,” and as such is protected by U.S. copyright law.

How’s that possible? In the U.S., cable and satellite TV providers can legally retransmit broadcast content without striking any deals, as long as they pay semi-annual fees to the U.S. Copyright Office: fees which then get distributed to rights holders.

Ivi has already filed paperwork with the Copyright Office to pay these fees. It’s questionable whether broadcasters see eye-to-eye with Ivi on this, and Weaver admitted that lawsuits are not out of the question. “What we expect is a typical knee-jerk reaction from the industry,” he told me.

However, he said that Ivi eventually wants to help broadcasters make money. The company plans to work with Nielsen to provide its viewership numbers, and it also wants to help sell local ad inventory, which it promises will be more effective than on cable TV. ”We have the ability to do targeted ads,” said Weaver, and he promised the ability to actually purchase products straight from within an ad further down the line.

For now, Ivi is working on growing its audience, and the company is targeting various hardware platforms, from the iPad to Boxee, Roku and the Google TV in order to do so. Ivi is using P2P technology to distribute its live streams, but the company is using a number of servers for seeding.

I briefly tried the application today, and it’s pretty snappy. A first channel starts playing immediately upon launch, and channel changing also works with minimal buffering. The player offers the ability to pause and rewind current broadcasts as well as access a basic EPG, but that’s about it for now.

Some menu items hint at future plans for on demand and pay-per-view shows, but these aren’t implemented just yet. Weaver told me that he hopes to have pay-per-view shows up and running within the next three months. Ivi is available for free testing for 30 days, and charges around $5 a month after that.

Liz Gannes first reported about Ivi in early 2009.

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