Aereo's ISP Opportunity

If Aereo Inc. were to open up shop in the Pacific Northwest, Toledo Telephone Co. Inc. and its COO, Dale Merten, would welcome the OTT video startup with open arms.

That's because the Toledo, Wash.-based telco ditched a money-losing, traditional cable TV service a few years ago in favor of a more profitable strategy that pairs its broadband service with over-the-top video content piped to Roku Inc. boxes. Most of Toledo Telephone's customers can't get access to a decent over-the-air digital broadcast TV signal, so Aereo's service, which sells for $12 per month, would make a nice fit, Merten said at Light Reading's Managing & Monetizing OTT Video event in Boston last week. (See Preparing for Video War .)

Merten discussed Toledo Telephone's OTT video strategy, including its interest in a service like Aereo's, in this LRTV video:

As a reminder, Aereo uses an array of thumb-sized antennas to capture over-the-air broadcast TV signals and send them to subscribers via broadband to IP-connected TVs, tablets and smartphones. The service, which also bundles in access to a network DVR, is offered only in New York City. (See Aereo Makes Cord-Cutting Bid in NYC, Who Are Aereo's Customers? and Could Aereo Deflate the TV Business Model? )

The good news for Toledo Telephone is that Roku, the box it uses for its OTT video package, already supports the Aereo service. The bad news is that Aereo likely won't be expanding to any new markets anytime soon, as it's not expected to make any major moves until its court battles with major broadcasters are resolved. (See Aereo Fights for Its Life , Diller's Aereo Under Legal Attack and Can Aereo Survive a Broadcaster Assault? )

Aereo has been marketing its product directly to consumers, but Toledo Telephone's interest in the product offers an indication that Aereo (if it can avoid an injunction) could find new way to attract subscribers using partnerships with broadband ISPs that are interested in creating scaled-down OTT video service packages that focus on a cloud-based DVR, access to a slate of broadcast TV channels and on-demand fare from sources such as Netflix Inc. (Nasdaq: NFLX) and Hulu LLC . (See Pay-TV: Too Costly to Replicate Online?)

— Jeff Baumgartner, Site Editor, Light Reading Cable

unbearable 12/5/2012 | 5:29:13 PM
re: Aereo's ISP Opportunity

Toledo Telecom markets Roku boxes.

So does Best Buy, Amazon, and everyone else.


Where is the CABLE CONTENT ?


Offering up the 1000 unwanted Roku channels, the already-available OTA channels, or the poor excuse that is the Netflix or Amazon or Blockbuster streaming libraries is NOT an alternative to cable or satellite.


Aereio isn't doing us any favors either, other than making up for OTA DTV's terrible transmission quality - except that we're now contending with our ISP's ability to deliver enough bandwidth for the stream.



msilbey 12/5/2012 | 5:29:11 PM
re: Aereo's ISP Opportunity

I am absolutely convinced that there will be more of these lower-end video services coming to market. And while today the packages combine OTA and OTT content, there's nothing to say there couldn't be negotiations in the future to add select cable network content. Once the distribution model is in place, there will be people who want to experiment with the economics. 

On another note, I wonder at what point it will become viable for a non-traditional service provider to pay broadcast retransmission fees and then deliver that content over IP rather than bundling it as an OTA service. That's assuming, of course, that Aereo fails in its legal bid to bypass retransmission altogether. 

paolo.franzoi 12/5/2012 | 5:29:10 PM
re: Aereo's ISP Opportunity

I have posted about this several times...but I wonder if specialized OTT providers - note broadcast providers - won't be the way of the future (see Skyangel).


I mean you guys keep talking about picking and choosing then fall back and make a cable replacement model.  If you are REALLY doing a low end service, why make it a cable replacer.  Go for a sports package or a reality TV package or a major network package and price it at $9.95 a month.



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