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Aereo's Atlanta capacity runs out on heels of NY sellout

Two of Aereo's 11 cities have stopped accepting new customers, as the company that streams over-the-air broadcasts runs out of capacity in Atlanta and New York ahead of the Olympics.

An array of Aereo antennae
Aereo's arrays of tiny antennas let consumers watch live, local television broadcasts online.

Aereo, the online TV startup that streams broadcast television, appears to have run out of capacity for new members in Atlanta, the second city to stop accepting new members in the last week.

An Aereo spokeswoman didn't immediately respond to a message seeking confirmation of several trade reports.

Aereo, backed by IAC Chairman Barry Diller, offers a cloud-based DVR that lets users record over-the-air programming and play it back on personal devices, charging $8 a month for its cheapest package. It has been sued repeatedly by media companies, who claim the service infringes their copyrights.

Last week, Aereo said its New York service was at capacity and it wasn't accepting new members. The company has not disclosed how many members it has, or how much capacity it has in any given market.

The sellouts come before the Sochi Olympic games, one of the biggest broadcast television events of the year, which will air on NBC through most of February.

Aereo is set up to assign an individual, tiny antenna for every subscriber, and it makes an individual copy of the content for each user. That format is a tool to circumvent copyright restrictions -- anyone is allowed to watch broadcast TV free with an antenna, and Aereo argues it is simply operating each member's antenna on his or her behalf -- but the one-antenna setup also means that when enough people sign up for Aereo in one of its markets, no more can join until more antennas, networking, and real estate are added.

Media companies (including CBS, the parent of CNET) have sued Aereo in multiple states, and the US Supreme Court will hear the case later this year.

Read: Aereo's Supreme Court battle may change how you watch TV

Aereo launched in New York in March 2012, and since then has expanded to 11 total cities, including Boston, Atlanta, Miami, Salt Lake City, Houston, Dallas, Detroit, Denver, Baltimore, and Cincinnati. San Antonio is set to launch later this month.

The company aimed to be in 22 total cities last year, but has been held back by technical difficulties on top of accumulating legal wrangling.

Its rollout in Chicago, what would have been its biggest market after New York, remains in limbo because of difficulty weatherproofing antennas, and the company has faced problems in Pittsburgh as well.