'Aereo' to Test Copyright Law With Internet-Streaming TV Service

Aereo, a startup whose backers include media mogul Barry Diller, is launching a subscription service in New York City that provides live broadcast TV channels and network-based DVR over the Internet for $12 per month, pitched as an alternative to cable TV -- a proposition that may earn a legal fight from the broadcast industry.

Aereo's service is based on dime-size antennas. In New York, these are housed in giant arrays somewhere in Brooklyn, which receive over-the-air TV signals and transcodes them in real time for delivery to Apple iPhones and iPads and other devices, without the need for a set-top box.

The company's legal justification: Each antenna is dedicated to an individual Aereo subscriber, so the service isn't subject to the same retransmission laws that pay-TV operators are. Similarly, the DVR service -- which provides up to 40 hours of storage per account -- allocates dedicated storage to each user so as not run afoul of copyright laws.

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