Will Aereo Redefine Video Service Provider Content Costs?

Aereo, the Web television venture that captures over the air broadcast TV signals and then makes them available as an Internet video stream, is a test case of whether service providers who do so are obligated to pay carriage fees to the broadcasters.

So it is no surprise that Aereo has discussed partnerships with major Internet service providers and video service providers. In principle, video distributors could make carriage deals with Aereo instead of each TV broadcaster in a local market, which might mean lower service provider content fees.

The other issue is that if Aereo can amalgamate a relative handful of additional channels, Aereo might emerge as a supplier of a new sort of low-cost tier of service, positioned somewhere between "antenna service" (broadcast channels only) and "basic cable" (broadcast channels plus 40 or so additional channels).

Video distributors therefore have an interest in seeing whether Aereo survives legal challenge. A new Aereo tier might appeal to some consumers who think a "full" expanded basic tier costs too much.