Internet-Based TV Service May Not Change The Cable Market

The race to create a viable Internet-based TV service is on, and the contestants include the biggest names in computer technology: Apple, Microsoft, Intel and Google. Sony has apparently reached a deal — as preliminary — with Viacom to carry the company's cable channels on its planned web TV service.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel. For years, we've been hearing stories about TV viewers cutting the cable and turning to the Internet for video. Well, the number of cable cutters has been small. One reason is that some of the best shows are still not available online. Well, here's some news on that front. Viacom, the owner of such channels as MTV and Comedy Central, is reportedly close to a deal with Sony. Viacom could offer its channels directly over the Internet to Sony devices. NPR's Dan Bobkoff tells us what that might mean.

DAN BOBKOFF, BYLINE: Sony is thought to be working on a kind of virtual cable service that will let you subscribe to cable channels directly from its game consoles and TVs. All you need is a good Internet connection. Brett Sappington researches consumer technology with Parks Associates.

BRETT SAPPINGTON: They're looking to become the hub of the living room and not just in games but really on all aspects of entertainment.

BOBKOFF: The deal will be the first time a network owner like Viacom strikes a deal with a technology company like Sony instead of a traditional TV provider like Time-Warner or Comcast. News of the deal was first reported by The Wall Street Journal. A source at one of the companies didn't deny the report. But officially, Viacom and Sony would not comment. If it happens, it's a big deal because Silicon Valley is in an arms race to see who can invent the future of television first.

Besides Sony, Intel, Microsoft, Apple and Google are all known to be working on projects with many trying to launch by the end of the year. Sappington says it's a sign that the traditional TV business model is starting to fray.

SAPPINGTON: The market has really become unsettled. Consumers are now consuming content in different ways than they have been in the past.

BOBKOFF: So you're probably thinking it's great news that the big tech companies are all trying to shake up the TV business, giving us our channels over the Internet. That should mean more choice and lower prices.

SUSAN CRAWFORD: Well, you know, the rosy scenario of increasing online choices is not necessarily guaranteed.

BOBKOFF: Susan Crawford is a professor at the Cardozo School of Law. Even if the tech companies manage to strike deals with the channel owners, like Viacom and Disney, the unproven upstarts like Sony will likely pay far more per channel than the incumbent cable companies. And Viacom is unlikely to let a Sony sell its channels one by one, so we'd still be forced to buy a bundle, and that can get expensive. The future of TV could be kind of like buying an airplane ticket.

You see a bunch of airlines, but they all charge the same amount. So you pick the airline with the more comfortable seat. That's kind of what companies like Intel are banking on. It's racing to sign similar deals and launch a competing virtual cable service this year, but it will be pitching its high-tech interface as the selling point. It's not going to save you money. And many of us still get our Internet service from the local cable company. So consumers won't have that much power.

CRAWFORD: We're seeing the cable distributors put in place use caps, so just like we have on cellphones, you're able to access lots of stuff. But if you do, you're going to pay through the nose because you'll exceed those caps, start running into overage charges.

BOBKOFF: But something has to change. Crawford says younger customers who've grown up on YouTube and Hulu and Netflix may not want to play by the old rules.

CRAWFORD: Especially when it comes to people under 40, they don't want to wait for programming they want, everything they want when they want it, wherever they want it.

BOBKOFF: The question is whether any of these new offerings from the tech companies will give them that choice or just put a shiny new package on the same old cable TV. Dan Bobkoff, NPR News.

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