Could Energy Costs Doom Aereo’s TV Streaming Service?

Back before Netflix, Hulu, or even cable television, we all relied on antennas to capture video signals. What's old is new again with Aereo, a TV streaming service that takes the concept of rabbit ears into the 21st century.  

Most of the news about the start-up has centered on its legal battles with incumbent broadcast networks, but according to a report in the Wall St. Journal, it's the company’s hardware that could pose the biggest challenge as it tries to grow.

When you sign up for Aereo, you are assigned a tiny remote antenna and DVR that can record live broadcasts and play them back as streaming video. If you want to record Parks and Recreation on NBC, for instance, that miniature antenna tunes into the right frequency for your location. Even if other people record the same show, the recording for each customer is unique. The signal goes to Aereo’s transcoding equipment that converts the signal to one that can be sent over the Internet. 

The problem is that each antenna uses about five to six watts of power. That’s less than many set-top boxes consume, but the difference is in who pays the energy bill. With cable, the customer, not the cable company, pays for the power consumption of the set-top box. The Wall St. Journal noted that if Aereo were to scale its New York subscription base to about 350 000 customers, the energy cost would be roughly US $2 million per year. New York, which has relatively high energy prices for the United States, is also not its only market. Chet Kanojia, CEO of Aereo, told the Wall St. Journal he hoped to be in nearly 20 markets by the end of the year. 

The company is busy looking into solutions, like integrated hardware designs with lower energy needs and going off of the grid with fuel cells. Aereo is not alone in trying to slash power consumption to deliver its service. Other sectors that enable our digital and mobile lifestyles, including data centers and telecoms, are also looking at low-power designs to cut costs.

If distributed generation or technological fixes do not pan out, another solution would be to raise the subscription price from its current $8 per month. But raising the price for access to traditional broadcast TV might be a hard sell against other streaming services like Hulu or Netflix, the latter of which took home an Emmy Award this year for its show House of Cards.

Kanojia spoke with IEEE Spectrum earlier this year, and he said he relishes the challenges, technical and otherwise, that his company faces.

“It’s really an incredible experience to be able to be part of something this interesting,” he said at the time, “because it’s got fascinating technology that spans from RF to compression technologies to hardware systems that we build ourselves to massive storage systems, playback equipment, consumer experiences, not to mention legal and policy stuff that goes around our business.”

Photo: Bebeto Matthews/AP Photo

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