The launch is part of Aereo’s planned rollout in 22 cities. Aereo arrives in Boston tomorrow. Until now, it’s only been available in the New York City area.

Aereo is facing a number of legal battles, with television networks like Fox and CBS suing to shut it down. But the company has forged ahead and says it may soon add a movie channel and a free news channel.

Ahead of its Boston launch, Aereo also changed its pricing plans on Monday: Annual and daily subscriptions are no longer available. Instead, customers can choose from two monthly plans: $8 per month to store 20 hours of programming, and $12 per month to store 60 hours.

The comments came during a Thursday call on Ergen and other Dish executives took questions about the company’s latest earnings results, which fell short of analysts’ expectations.

While most of the call was dedicated to Dish’s high stakes bid for Sprint, which would give it the chance to offer mobile-broadband-TV packages, analysts also asked Ergen about his company’s ongoing spat with broadcasters. In recent months, Dish has incensed the networks by selling “the Hopper,” a popular product to skip commercials, and touched off rumors that it might buy Aereo, which allows viewers to watch TV on their phones for $8 a month.

On today’s call, however, Ergen sounded more conciliatory.

“We admire what [Aereo is] doing. We indirectly get a benefit as it puts downward pressure on retransmission consent fees.. But all things being equal, we’d prefer to work with the broadcasters,” he said. The broadcasters are equipped to do something themselves. We’re more likely to work with existing partners.”

The rhetoric is part of a complicated dance between pay TV providers, including Dish, and content owners over the spiraling cost of programming; in this struggle, services like the Hopper and Aereo have become a source of leverage for Dish.

On the call, Ergen repeated his call for smaller cable “bundles” and more a la carte offerings.

“At the end of the day, if the bundle price gets too high, [consumers] will find other ways to do it — they’ll use small antennas, they’ll steal programming.”

Ergen added that he believes the traditional dual stream model for TV, consisting of subscription and advertising revenue, will continue thanks to new mobile opportunities. In particular, he said that mobile viewing opened the prospect of valuable local-based ad targeting that will result in tailored ads being delivered to the living room, tablets and smartphones.

He added that some “forward looking broadcasters” were already on board in exploring new bundle opportunities with Dish.

“I’ve never met a programmer or broadcaster that was against making more money.”

The move comes as Aereo, which recently won a major appeals court ruling on nearly the same issue in New York, prepares to offer its service in Boston and 22 other markets as soon as this month. CBS and other broadcasters have vowed to sue to stop Aereo in those new markets, a threat that appears to have led it to file the new court action. (The new filing, reported by AllThingsD, refers to recent public statements and Twitter feeds by CBS executives, including one that says “we’ll sue”).

So what exactly is the meaning of Aereo’s new lawsuit? Here’s what one copyright expert familiar with the issue had to say:

Aereo’s decision to file a separate declaratory judgment action at this stage is unorthodox. They’ve prevailed on a preliminary injunction motion at the district and circuit court level — which means that both the Southern District and the 2d Circuit have ruled they are likely to succeed on the merits — so it’s unusual to seek a declaratory judgment on the same issues.

Recall that the appeals court decision from last month already protects Aereo for the immediate future in the U.S. Second District, a territory that covers the states of New York, Vermont and Connecticut. This means that the new declaratory action Aereo is seeking will not really change any facts on the ground but could give the company another favorable verdict — but not one that will determine its fate in Boston (which is in the First Circuit) or any of the other legal jurisdictions where Aereo plans to open shop.

The most likely explanation, then, is that the move is part of the increasingly pitched PR battle between Aereo and the broadcasters who, in another recent appeal, accused the upstart of creating “havoc” and “massive disruption” in the television industry. The broadcasters have also threatened to pull their signals altogether and distribute their channels, including Fox and ABC, only on pay TV.

Aereo, for its part, argues that its technology, which assigns every subscriber a personal antenna, is akin to private viewing through a DVR system.  The company’s CEO, Chet Kanojia, has accused the broadcasters of extracting exorbitant fees by forcing viewers to accept cable bundles stuffed with channels they don’t want to watch.

Aereo’s new lawsuit, therefore, gives it a way to gain the upper hand on the media message (for a short time at least) – and possibly pick up some additional legal language from a judge who has taken the company’s side in the past.

In the bigger picture, the Aereo fight is part of a great game over the future of the TV industry. Aereo, which is backed by a major investment from media mogul Barry Diller, has also been the subject of acquisition rumors by satellite provider Dish. Broadcasters fear that an alliance between the two companies could provide an end-run around the existing system that requires cable and satellite providers to pay for use of the over-the-air signals.

The final outcome could well end up at the Supreme Court given a current split between the courts in New York and a district court in California, which shut down a similar service to Aereo last year. In the meantime, it’s possible that a patchwork of decisions could result in Aereo being legal in half the country and forbidden in the other half.

In another recent development, the four major sports leagues have joined the anti-Aereo chorus by filing court papers to support the broadcasters’ request that a full panel of the Second Circuit reconsider its decision. The NFL, NBA, NHL and Major League Baseball argue that the appeals court was wrong to consider Aereo a “private” transmission like singing in the shower:

An individual who sings a copyrighted lyric in the shower engages in a private performance […] A commercial service (like Aereo) that retransmits the broadcast of a copyrighted television program to thousands of paying subscribers at the same time is not in any way comparable.

Here’s a copy of Aereo’s new lawsuit:

Aereo Complaint for Declaratory Judgment – FINAL FILED

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From the Washington Post article:

“What Aereo is doing to bring broadcast signals to its customers is interesting,” Time Warner Cable chief executive Glenn Britt said in an interview with The Washington Post. “If it is found legal, we could conceivably use similar technology.”

That’s a big admission from Britt, and illustrates both how rapidly the internet is changing the television industry. But what would be an even bigger admission would be if Britt would consider delivering that public broadcast package beyond its existing subscriber base.

A modest proposal

In short, would Britt be willing to break the unspoken agreement that has kept the telcos and cable providers from infringing on each other’s turfs even as IP technology has made it possible for them to deliver their TV packages over the top?

If Time Warner Cable were to implement an Aereo-like business model and offer it to anyone, it might hurt Aereo but it would set off a war between the telcos and cable companies to deliver their services over the top. In many cases, the technology isn’t stopping this revolution, but the business implications would give them pause.

If Comcast’s Xfinity service were available everywhere and so were Verizon’s FiOS packages, then pay TV will have been decoupled from the entwork. All you would be left with are dumb pipes and whole lot of companies offering to provide the same channels of television. Would we need 20 “premium cable offerings?”

My hunch is no, which would have trickle down effects on the money the networks make as well as hasten the rise of a la carte pay TV packages, or even simply paying for a show. However, all of this speculation is premature as Britt cushioned his statements by telling the Washington Post that his company is only watching Aereo’s legal battle and that it doesn’t have concrete plans.

Taking action on this sort of talk would hugely piss off the broadcasters that own some of the channels that Time Warner Cable depends on to keep its subscribers happy, and may just be a feint in the ongoing fight between cable providers and content companies about retransmission fees.

Back in the real world

But Britt is clearly a fan of shaking things up. Unlike many ISPs that view Netflix as a threat to their triple play bundle, Time Warner Cable sends out advertisements touting Netflix as a reason to upgrade broadband speeds. He’s also letting consumers stream live TV to their Roku boxes with a Time Warner Subscription (that might come in handy should it elect to make an Aereo-style over the top offering). And he’s also been more vocal about the need for more flexible packages of channels for consumers.

He reiterated that to the Washington Post:

“The structure needs more flexibility,” Britt said. A customer shouldn’t have to pay for less popular channels like VH1 Honors in order to get Nick Jr. and MTV. “There are fellow citizens who are struggling financially and can’t afford large programming packages. We want the ability to offer those customers smaller, more affordable packages.”

It’s better to keep a customer paying you something, rather than decamping because they don’t want to pay for a $150 cable bill. Britt seems to get that, and wants to find a middle ground before the internet and over the top TV offerings take that ground out from under his feet. I wonder if he’s willing to take it even further.

In case you’re unfamiliar, Aereo lets users beam over-the-air TV signals to computers and mobile devices like the iPhone for $1 a day or $8 a month.

The service is also at the center of a legal hullabaloo as broadcasters, upset that Aereo is not paying retransmission fees, warn that it will create “havoc” and “massive disruption” in the TV industry.

Aereo has won a series of surprising legal victories after New York judges found that its tiny antenna system, which permit viewers to watch and record shows, result in private transmissions that do not violate copyright law. A dissenting judge has called the antenna arrangement a “sham.”

The service has been available in New York City for months and, though the company promised in January that it would launch in 22 new cities, Aereo has yet to actually go live anywhere else.

What today’s announcement means for Boston viewers is that they will be able to watch stations like CBS, NBC, Fox and ABC anywhere they please.

(Image by Samuel Borges Photography via Shutterstock)

It’s part of a bigger plan to figure out how to address consumers’ base needs first and foremost, before then adding the nice-to-have features for a price. Aereo sees the future of television content as being what Kanojia calls “skinny live, deep library,” so the live parts are only for the content people really need in real time — stuff like news and sports.

“(The consumer is) the one constituent in this industry that’s unserved,” Kanojia said. “Everyone’s businesses are stacked to take advantage of the consumer, not to serve the consumer.”

If on the other hand, the value-add of a movie channel (oh, Aereo’s probably going to add one of those, too) is to watch stuff on your own time, people will probably willing to pay 50 cents or a dollar a month, he said. The same thing goes for programming from, hypothetically, a content provider like Viacom has a broad range of shows that people don’t really need or want to see only while they’re airing.

The only way to do this correctly, though, is to avoid traditional licensing models that have jacked cable prices through the roof and have led to a lot bloat because consumers are getting way more channels than they ever would want to watch. Kanojia wants Aereo to provide 50 percent of the value for 10 percent of the cost of cable, and then let partners and services like Netflix or Amazon Prime fill in the rest.

“The last time I checked,” he joked, “there’s no need to have Desperate Housewives or the Real Housewives of Orange County running on four channels at the same time.”

As for those lawsuits that have plagued the company since its inception, Kanojia said he’s not surprised but he’s disappointed by threats from companies such as Fox and CBS to pull their stations off the public airwaves (the spectrum on which is provided for free because stations are supposed to operate in part in the public interest).

“I just don’t understand the logic behind that,” he said. “I think it’s disappointing to say the least.”

But with significant legal victories already behind it, the future looks a little clearer. He expects the company model could realistically net the company 20 percent of the American television market, and the company is expanding fast outside of New York. It’s supposed to be in 22 more cities by July.

“The one thing that would float by boat more than anything else,” Kanojia said, “is I get a chance to put my product in front of consumers and be judged by the consumers.”

Check out the rest of our paidContent Live 2013 coverage here, and a video embed of the session follows below:

A transcription of the video follows on the next page

Go to page 2 (of 2) on paidContent .

In a new court filing (embedded below), the broadcasters claim the decision “threatens to cause massive disruption to the television industry” and “will wreak commercial havoc,” and request a full panel of the US Second Circuit Court of Appeals to revisit the ruling.

The start-up Aereo has been at the center of a storm in recent months because its technology threatens to blow-up the existing model of pay TV, which is based on selling viewers a bundle of channels, that include over-the-air stations like NBC, ABC, CBS and Fox. Aereo is backed by a $58 million investment from media mogul Barry Diller and others, and lets customers watch and record TV without a subscription for $1 a day or $8 a month.

In the past, other companies have retransmitted TV signals over the internet but broadcasters quickly smashed them for copyright infringement. Aereo, however, has survived two major court challenges thanks to its technology which assigns a mini-antenna (see pic below ) to each subscriber; the service is now live in New York City and is slated to arrive imminently in 22 more markets.

In the new filing, broadcasters howl that Aereo’s individual antenna system is just a loophole to get around a copyright regimes that requires any company that plays over-the-air signals, including cable and satellite firms, to pay retransmission fees. The brief also cites a paidContent story to warn that Aereo wants to team up with distributors like Dish network and Time Warner Cable to expand its reach.

On a broader level, the legal manœuvreing is part of a great game between Aereo and the broadcasters over the future of TV that could end up at the Supreme Court. In the coming battle, the broadcasters are pinning their hopes on a recent California court case, which shut down an Aereo clone and rejected the theory that a private antenna means a transmission is not “public” under copyright law – a theory accepted by two out three judges on the Second Circuit court.

In the new filing, the broadcasters rely heavily on the opinion of dissenting judge Denny Chin, who described Aereo’s technology as a “sham” and a “Rube Goldberg” device that “over-engineered” to dodge copyright.

While the dissent and the California case provide the broadcasters with ammunition, the request for a review by all of the judges on the New York court is a long shot. This is because, unlike other appeals courts, the Second Circuit almost never agrees to hear so-called “en banc” appeals; in the event it did rehear the case, the judges would be reluctant to accept the broadcasters’ invitation to declare that they were wrong on an earlier case that formed the basis of their opinion for Aereo.

This means the Supreme Court — or Congress — is the broadcasters’ best hope. Time is not on their side, however, because it would take years for the legal case to be heard and decided. By that time, technology and consumer habits for TV may have changed dramatically.

The CEO of Aereo will offer his two cents on the bigger picture of TV at paidContent Live which is taking place on Wednesday in New York City.

Legal types — here’s a marked up version of the broadcasters’ very well drafted legal brief:

Aereo en Banc Petition

The motion seeks to uncover “any ‘actual, contemplated, considered, or proposed’ business arrangements” between Aereo and Dish as well as “offers or expressions of interest by Dish in acquiring Aereo’s assets,” according to passages quoted by the Reporter. Of course, Dish doesn’t want any of those discussions to be public, which is why the company is now trying to quash the subpoena.

Dish’s Charlie Ergen has been very vocal in his support for new TV business and distribution models, going as far as saying that “a lot of customers can live with Netflix and an… antenna, and YouTube.” Dish could possibly use Aereo to build a cheaper TV bundle by bypassing retransmission payments to local broadcasters — or maybe just lower these payments by threatening such a course.

Make sure to check out our paidContent Live conference in New York this month if you want to learn more about Aereo’s potential to shake up the TV industry – I’ll be interviewing Aereo CEO Chet Kanojia on stage, and will make sure to quizz him about Dish as well.

Here’s a plain English explanation of the decision (embedded below), in which the US Court of Appeals for the Second Circuit ruled that Aereo’s technology is legal, and why it’s so significant for the TV industry. (Note that Aereo CEO Chet Kanojia will be speaking at paidContent Live).

Aereo’s legal loophole

Aereo captures over-the-air TV signals by means of tiny antennas and streams them to subscribers who watch and record shows on their mobile devices or computer browsers. Aereo’s antennas are not just a marvel of technology (see photos here) — they’re also the key to a legal strategy that helps the company avoid copyright infringement.

To get a better idea of both Aereo’s technology and its legal strategy, it’s helpful to consider how it works for consumers. According to the Second Circuit, “Aereo functions much like a television with a remote Digital Video Recorder (“DVR”) and Slingbox” — allowing subscribers to use internet technology to capture live broadcasts on stations like CBS or Fox and and watch them later.

Aereo argues that its “one antenna for one subscriber” operation means it’s just like a personal recording tool.  The country’s broadcasters disagreed and sued Aereo, arguing that it’s illegally retransmitting their signals to the public.

Aereo won the first round last year when a US District Court in New York refused to grant the broadcasters  a preliminary injunction, saying that Aereo’s service was on all-fours with a previous Second Circuit ruling that found Cablevision’s remote DVR’s to be legal because they involved one copy of a show being transmitted to one subscriber.

On appeal, the broadcasters repeated their argument that Aereo’s mini-antenna system was built specifically to get around copyright law and that Aereo was different than the situation in Cablevision because Aereo offers live TV without a license.

The Second Circuit, however, ruled on Monday in a two-to-one decision that each Aereo subscriber controls the TV stream they receive — including the ability to pause, rewind or record any given show. This means that Aereo is not transmitting to the public and that the service is consistent with the Cablevision decision. The court added that it didn’t matter if Aereo didn’t have a license to show the original programming or that it had created the mini-antenna service specifically to take advantage of the copyright loophole.

The decision was not unanimous, however. In a lengthy dissent, Judge Denny Chin blasted Aereo’s service as a “sham” and “a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”

A major blow for the TV industry

The TV business has long been based on selling customers large bundles of channels at ever-increasing prices. Unlike the music industry, which has been thoroughly disintermediated by services like iTunes, the television incumbents have so far been able to resist the forces of digital disruption.

The arrival of Aereo thus represented a major threat to the TV business because it offered consumers a way to get broadcast channels where and when they wanted. And unlike other would-be disruptors, Aereo arrived well-funded and prepared to fight: it has top-notch lawyers and has already received at least $58 million in backing from media mogul Barry Diller and others.

Aereo alarms the TV industry not only because it encourages subscribers to watch shows where and when they want to, but also because it refuses to pay “retransmission” fees that cable and satellite companies give broadcast networks to retransmit over-the-air shows. At the same time, Aereo is promising to upend the cable industry by training users to come and go as they please — without expensive set-top boxes or installation fees or contracts. Instead, Aereo users can simply $1 a day or $8 a month.

For now, the broadcasters still have the upper hand in one way in that they own many popular cable channels such as ESPN that they can withhold from Aereo. This may help them in the short term but it does not address the bigger problem of changing TV-watching behavior of the sort that Aereo is ushering in. And in the meantime, Aereo has added one speciality channel (Bloomberg TV) and is likely to add others soon.

In the long run, Aereo’s CEO, Chet Kanojia, has vowed to break the current system which he has described as “an abusive system set up in an artificial way” and instead offer “rational bundles.”

Is the genie out of the bottle?

The significance of Aereo’s win at the Second Circuit is not just that can it continue operating. It’s also a big symbolic boost from the country’s most influential appeals court.

This symbolic support is likely to draw in more investment money and to facilitate Aereo’s expansion. Right now, the service is only available in New York City with plans to open soon in 22 more cities — Aereo is likely to treat the court ruling as a greenlight to open shop in the new cities sooner than later. At the same time, the new legal legitimacy is likely to speed Aereo’s existing partnership discussions with distributors like AT&T and Dish Networks.

Things aren’t all smooth sailing for Aereo, of course. The ruling only addresses a preliminary injunction, and the broadcasters will almost certainly appeal to a full panel of the Second Circuit and to the Supreme Court. At the same time, a California court has already ruled that a service offered by a would-be Aereo competitor amounts to copyright infringement — meaning that Aereo has no hope of coast-to-coast distribution for the foreseeable future. (The California case is at an earlier stage and could still be overturned; if not, it could set up a circuit split to be resolved by the Supreme Court).

But while it’s legal status remains uncertain, Aereo now has time on its side. Any future court decisions are likely to occur a year or more from now, providing the company with ample time to further ramp up its service. As it does so, consumers will become more familiar with Aereo and other over-the-top TV options — meaning it will be harder than ever for the traditional TV industry to persuade consumers to stick with an expensive bundle-of-channels model.

AEREO Decision

For anyone unfamiliar with Aereo, the Barry Diller-backed company lets subscribers rent mini personal antennas that can beam and record over-the-air TV to mobile devices and laptops under two plans. One costs $1 a day, or there’s a monthly subscription for $8. For those eager to hear more, Aereo CEO Chet Kanojia will be speaking at paidContent Live on April 17 about his plan to disrupt the TV industry.

News of Aereo’s discussions with Dish, AT&T and others comes by way of a Wall Street Journal report that says such a partnership could let Aereo quickly expand its footprint. Aereo has already announced plans to expand soon to 22 new markets beyond New York City where it is already available.

Aereo’s desire for a partnership with a major ISP or TV provider is probably not related to money or infrastructure; the company has told me in the past that rolling out a new antenna farm is quick and easy. Instead,  any partnership is likely tied to deeper strategic goals. From the Wall Street Journal story:

In one scenario that was discussed, AT&T would sell broadband or wireless data subscriptions paired with Aereo’s video service, people familiar with the matter said.

In other words, such an arrangement with AT&T would let Aereo subscribers use the service heavily without fear of exorbitant data bills.

Meanwhile, the talks with satellite TV-provider Dish Networks may have centered on an acquisition. Although Dish CEO Charlie Ergen said on a February investor call that Dish had no plans to buy Aereo, he added “we never say never.” Ergen has also repeatedly expressed admiration for Aereo and, unlike other incumbents in the TV industry, acknowledged the reality of consumers quitting established TV models in favor of “cord-cutting.”