Aereo in middle of CBS-Time Warner Cable blackout

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Aereo's streaming service reaches small group, but it could play a big role when disputes end in network blackouts.

The high-stakes dispute between Time Warner Cable and CBS is ultimately about TV shows that are broadcast over the airwaves -- for free.

That's a fact that Time Warner Cable (TWC) has continuously reminded its customers during its hotly contested and very public debate with the network, just as other cable companies have done when they were negotiating so-called retransmission fees with broadcasters. After CBS blacked-out its programming to Time Warner Cable customers on Friday, the cable company gave subscribers several alternative methods for watching CBS.

The problem is that those options are easier said than done: Most cable customers don't have a spare pair of rabbit ears to hook up to their TVs, and CBS (CBS) has blocked Time Warner Cable customers from accessing the shows CBS posts online.

But this time around, there's another easy way to watch CBS that Time Warner Cable is making sure to promote: Aereo.

Aereo allows customers to stream live broadcast television on Internet-connected devices, such as a computer, tablet or TV. The services costs $8 per month and offers a free trial month that some Time Warner Cable customers are already taking advantage of since losing CBS at the end of last week.

Related story: Time Warner Cable proposes CBS truce

Aereo assigns one of thousands of tiny antennas to each of its subscribers through which it retransmits networks' over-the-air broadcasts. By using an antenna, Aereo claims that it does not have to pay CBS or any other network for the signal -- a point that has spurred a number of lawsuits, including suits brought by CBS.

The tech startup, backed by billionaire investor Barry Diller, launched just last year and is currently only available in three cities. Two of those, New York and Boston, are Time Warner Cable markets.

Cable TV blackout angers customers
Cable TV blackout angers customers

"Today there are new competitors like Aereo which take much of the sting out of this for customers," said Jeff Kagan, a technology industry analyst. "That is a completely new wrinkle."

Within seconds, a customer can register for Aereo and begin streaming CBS.

That's potentially even more convenient than searching through an aggregation site like Hulu. And it's much quicker than installing a rabbit-ear antenna.

"These solutions were simply far too inconvenient for subscribers," wrote BTIG researcher Richard Greenfield in an analyst note in April.

Aereo may still not be convenient enough for cable customers who want to be able to simply turn to channel 2 on their TV to find CBS programming. The company will not disclose subscriber numbers and whether or not demand has increased during the recent cable battle. But as wars rage on between networks and cable providers, a live streaming service could become more appealing to some subscribers.

"This conflict just further highlights the importance of having alternatives in the marketplace," said Chet Kanojia, Aereo's CEO in an e-mailed statement.

Time Warner Cable customers lost CBS-owned channels Friday when the two parties failed to come to an agreement over retransmission fees by the deadline they had set. CBS was demanding more money for the right to retransmit its programming, and the cable company refused to pay the increase. CBS (CBS) and Showtime are currently for about 3 million customers largely located in New York City, Los Angeles and Dallas.

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