Back To The Future

So Pandora’s Box creaked open yesterday and out flew HD digital antennas, this time in the form of Aereo, a legally tenuous startup funded by the likes of Barry Diller.

Aereo (né BamBoom) offers consumers two lightweight mini-antennas (they’re about the size of a dime and look like doll-sized Silly Bandz bracelets.) With your antennas, Aereo gives you access to all the broadcast channels in your area (all the major networks) and a cloud-based DVR that holds 40 hours of programming (you can even upload from both antennas simultaneously.)

For potential cord-cutters, this is huge news. Access to live news and sports has long been the main thing keeping viewers tied to a pay TV provider. With Aereo, they’ll get news and weather. For the most part, anyway. Broadcast-only means no cable networks like ESPN and CNN.

But ESPN and CNN have web-based apps that feature live TV. And along with popular cable staples like HBO, Showtime, AMC, USA , TWC, TBS and TNT, they could start their own web-based subscription services. (NB: Could is a lot different than will -- the pay TV providers still turn a serious profit from their deals with the cable networks, while providing the networks with the bulk of their user base. Neither side wants to mess with that arrangement any time soon.)

Aereo, as the LA Times notes, faces a gauntlet of legal challenges and may never actually see the light of day. But the back-to-the-future notion is now out there that miniature HD antennas can easily pick up broadcast signals and stream them across a variety of devices (BTIG’s Rich Greenfield was duly impressed with the 3G stream on his AT&T iPhone- check his post (registration required) for pictures and video ) and once it's out there, there’s no turning back. Developers will continue to innovate newer and smaller antennas, while improving both picture quality and range.

As that happens, more and more consumers will decide that a handful of broadcast stations (including the big 4 networks) coupled with à la carte OTT solutions (Netflix, Hulu, iTunes, et al) are all they need. That in turn, puts pressure on pay TV providers to create smaller, more customizable packages in order to compete.

While we are still a while away from this, there’s no small irony in the future of television being an antenna. After all, in pre-cable days, TV was actually free.