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Photo: Johnny Hanson / Houston Chronicle Image 1 of / 15 Caption Close Image 2 of 15 Kanojia founder and CEO of Aereo Inc. walks up to one of two cabinets where Aereo's antennas receive television signals. Kanojia founder and CEO of Aereo Inc. walks up to one of two cabinets where Aereo's antennas receive television signals. Photo: Johnny Hanson / Houston Chronicle Image 3 of 15 Inside the cabinets are racks of circuit boards with thousands of tiny antennas, and equipment that converts the TV signals into video in the MP2 standard format. Inside the cabinets are racks of circuit boards with thousands of tiny antennas, and equipment that converts the TV signals into video in the MP2 standard format. Photo: Johnny Hanson / Houston Chronicle Image 4 of 15 The cabinets, which are easy to add to Aereo's platform atop its data centers for expansion, are connected by 10-gigabit fiber-optic cables to servers inside the data center. The cabinets, which are easy to add to Aereo's platform atop its data centers for expansion, are connected by 10-gigabit fiber-optic cables to servers inside the data center. Photo: Johnny Hanson / Houston Chronicle Image 5 of 15 Image 6 of 15 Kanojia says the back side of the cabinets have coverings that are "invisible" to TV signals. The data center location - which is kept secret - was picked partly because it gets good TV signals from area stations. less Kanojia says the back side of the cabinets have coverings that are "invisible" to TV signals. The data center location - which is kept secret - was picked partly because it gets good TV signals from area ... more Photo: Johnny Hanson / Houston Chronicle Image 7 of 15 Aereo's server area in the data center is in a small cage. The servers receive the MP2 signal and transcode it into MP4 video. Aereo's server area in the data center is in a small cage. The servers receive the MP2 signal and transcode it into MP4 video. Photo: Johnny Hanson / Houston Chronicle Image 8 of 15 The MP4 video is then stored on 3-terabyte hard drives with separate partitions for each customer. The MP4 video is then stored on 3-terabyte hard drives with separate partitions for each customer. Photo: Johnny Hanson / Houston Chronicle Image 9 of 15 The small antennas are made of copper and coated in silver, bent into an M shape. The small antennas are made of copper and coated in silver, bent into an M shape. Photo: Johnny Hanson / Houston Chronicle Image 10 of 15 Image 11 of 15 Kanojia previously founded an interactive advertising agency, Navic Networks, which was sold in 2008 to Microsoft. Kanojia previously founded an interactive advertising agency, Navic Networks, which was sold in 2008 to Microsoft. Photo: Johnny Hanson / Houston Chronicle Image 12 of 15 Kanojia said he came up with the idea for Aereo after dropping cable and moving into a house where he couldn't pick up broadcast signals over the air. Kanojia said he came up with the idea for Aereo after dropping cable and moving into a house where he couldn't pick up broadcast signals over the air. Photo: Johnny Hanson / Houston Chronicle Image 13 of 15 This image provided by Aereo shows a screenshot from the iPad with Aereo.com streaming Bob the Builder on New York s PBS station, WNET 13. This image provided by Aereo shows a screenshot from the iPad with Aereo.com streaming Bob the Builder on New York s PBS station, WNET 13. Photo: AP / AP Image 14 of 15 Aereo's tiny antennas are made of copper and coated in silver. Aereo's tiny antennas are made of copper and coated in silver. Photo: Aereo Image 15 of 15 Supreme Court rules Aereo's streaming service is illegal 1 / 15 Back to Gallery

Aereo, the startup that uses individual, tiny antennas to stream live TV over the Internet, was ruled an illegal service in a 6-3 United States Supreme Court decision on Wednesday.

It’s a win for traditional broadcasters and cable TV operators who had argued that New York-based Aereo was redistributing their content without payment or permission. Aereo lost in the Supreme Court despite earlier wins in federal district courts.

In an interview with the Chronicle earlier this year, Aereo CEO and founder Chet Kanojia said there as no “Plan B” if the court did not rule in the company’s favor. Houston is one of 11 cities in which Aereo operates, and it was not immediately clear when or if the local service would be switched off. About 40 minutes after the ruling was announced, Aereo’s service was still active in Houston.

Aereo works by capturing over-the-air broadcast signals using dime-sized antennas – one for each customer – and storing the content on local servers. Customers pay as little as $8 a month to watch live broadcasts streamed over the Internet, or saved for later watching via virtual digital video recorders.

Broadcasters were worried that a legitimate Aereo would threaten lucrative retransmission fees paid to them by cable companies. If the court had ruled in favor of Aereo, broadcasters argued, then cable companies could use similar technology and quit paying the fees.

Some broadcasters – including CBS and Fox – had threatened to take their operations off the air and go cable-only if Aereo won.

In a statement, Kanojia called the decision “a massive setback for the American consumer”:

We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry. It is troubling that the Court states in its decision that, ‘to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress.’ (Majority, page 17) That begs the question: Are we moving towards a permission-based system for technology innovation?

His statement didn’t indicate what would happen to the local operations, but he did say that “our work is not done.”

“We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world,” Kanojia said.

Aereo does have the option to pay retransmission fees, as do cable companies, but that likely would cause a big jump in the prices Aereo charges its customers.

Broadcasters and cable companies hailed the ruling. In a statement, the Walt Disney Company – with owns the ABC television network, a plaintiff in the case – said:

We’re gratified the Court upheld important Copyright principles that help ensure that the high-quality creative content consumers expect and demand is protected and incentivized.

Writing for the majority, Justice Stephen Breyer rejected Aereo’s notion that its process merely outsourced an antenna and DVR, technologies TV watchers have the right to use in their own homes. Breyer said changes to copyright in a 1976 law cover a service such as Aereo, which is effectively the same as a cable company.

You can read the full Supreme Court decision below.

Aereo decision