Aereo, the Barry Diller-backed Web TV start-up, will soon reach millions of new customers with market expansions into the Windy City this fall.

The $8 per month service, which offers users the ability to record and watch major local TV networks, has expanded from its New York City roots to Boston and Atlanta this month and will launch in Chicago on September 13 to cover 16 counties across Illinois and Indiana. Eventually, the company plans to be in 22 cities.

"There's no place like Chicago, and we're excited to be launching in this world-class city in September," said Aereo CEO and founder Chet Kanojia. "Consumers want more choice and flexibility when it comes to how they watch television, and the enthusiastic response to our technology from people across the country has been humbling. At Aereo, we feel that we've built something meaningful for consumers and we're proud of the work we've accomplished. However, there's still much more to come as we continue our expansion into new cities throughout the summer and fall."

“Aereo is a startup company that is challenging traditional satellite and cable television services with low cost options,” said industry analyst Jeff Kagan. “It uses the Internet, antenna and more to deliver programming. It offers packages at $8 per month over the Internet, which is an incredibly low cost option. This could be very attractive to a slice of the consumer pie.”

Aereo is getting plenty of push back from traditional providers of television like cable TV companies, as well as local TV affiliates and content companies, who say the company is delivering local broadcast feeds over the Internet without paying retransmission fees. Aereo counters that the dime-sized antennae that it uses to deliver service technically makes it an over-the-air service, akin to rabbit ears. In an ongoing set of court challenges, the judge has so far agreed. If it continues to expand it could cause real competitive trouble, Kagan said.

“The traditional cable television industry is broken,” Kagan explained. “Prices keep rising year after year. The industry seems to have no desire to change and update. They push back on new ideas that will cut customer costs like a la carte pricing and now Aereo. The industry is backing itself into a corner and something is bound to happen that will change and transform it. Is Aereo part of that wave of change? Don’t know yet, so let’s keep our eyes on them and see what happens.”