Aereo, the television-over-the-Internet service that is threatening the broadcast and cable TV industries, is expanding to Boston on May 15.
With prices starting at $8 a month, Aereo will offer 28 Boston-area broadcast channels, plus the cable channel Bloomberg TV. Service will be available in Boston and surrounding areas in Massachusetts, New Hampshire and Vermont.
The Barry Diller-backed company announced in January that it plans to expand beyond New York to 22 additional U.S. markets. Boston represents the first metropolitan area outside New York. Others expected in the coming months include Chicago, Philadelphia and Washington.
Aereo converts television signals into computer data and sends them over the Internet to subscribers' computers and mobile devices. Subscribers can watch channels live or record them with an Internet-based digital video recorder. They can pause and rewind live television, just like a DVR.
Aereo sells its service as a low-cost alternative to cable or satellite TV, and it plans to target those who have dropped pay-TV service or never had one. Aereo offers far fewer channels than most pay-TV packages, but it could appeal to viewers who already turn to Hulu, Netflix and other online sources for TV shows and movies.
Broadcasters see Aereo as a threat to their revenue, even though stations already make signals available for free. Broadcasters are increasingly supplementing advertising revenue with fees they get from cable and satellite TV companies for redistributing their stations to subscribers. If customers drop their pay-TV service and use Aereo instead, broadcasters would lose some of that revenue.
So far, federal courts have ruled against broadcasters' claims that Aereo's service constitutes copyright infringement. Aereo claims what it is doing is legal because it has thousands of tiny antennas at its data centers and assigns individual subscribers their own antenna. According to Aereo, that makes it akin to customers picking up free broadcast signals with a regular antenna at home. Broadcasters argue that the use of individual antennas is a mere technicality meant to circumvent copyright law.
Although the latest ruling, from the 2nd U.S. Circuit Court of Appeals, will likely be appealed, broadcasting companies have already threatened to take their stations off the air. The Fox and Univision television networks are among those that say they might end their free broadcasts and become a subscription-only channel like CNN, Nickelodeon and Discovery.
In a Twitter post Tuesday responding to the Boston expansion, CBS Corp. spokesman Dana McClintock vowed, "And we will be there to sue them." In an email, McClintock said the specifics of such a lawsuit were still to be determined.
If such a lawsuit is filed, Aereo could seek to have the cases consolidated in New York, where the company has had favorable rulings. But if broadcasters succeed in keeping the cases separate, they would have a better chance of winning in Boston because Massachusetts is part of a different appellate region and would not be bound by the 2nd Circuit's past rulings. The U.S. Supreme Court — or Congress — would be left to settle any conflicting rulings.
Aereo's Boston expansion will initially be available only to those who had pre-registered for the service. The New York-based company said others would be able to join after May 30.
Subscribers must live in one of 16 counties: Barnstable, Dukes, Essex, Middlesex, Nantucket, Norfolk, Plymouth, Suffolk, or Worcester in Massachusetts; Belknap, Cheshire, Hillsborough, Merrimack, Rockingham or Strafford counties in New Hampshire; or Windham County in Vermont.