It's a hard-to-fathom scenario in the U.S., where cable providers have their own geographic markets largely freed from competition. Most Americans are stuck with their regional cable provider unless they want to go the satellite route. But recent breakthroughs in streaming video technology are spurring early conversations among cable providers, TV content owners and device makers that could open doors to this improbable step in the evolution of TV viewing.
An experimental version might look like this: A customer receives Internet broadband from the locally dominant Cable Company X but has an option to select a package of Internet-streamed channels – including ESPN, AMC and all other popular networks – from Cable Company Y that is not otherwise active in the local market.
Industry analysts and executives caution that streaming live TV, likely to be bundled with an on-demand video library, is a captivating idea that may never become a reality. Technological and economic hurdles stand in the way, and the cautious cable companies may be reluctant to give up control of their services streamed through the pipes operated by competitors. And content owners may not find granting licenses for national distribution financially palatable.
But it's only a matter of time before someone tries to deliver a national service, says Ian Olgeirson, an analyst at SNL Kagan. "These things have been floated out there," he says. "We think someone is going to try."
Several recent developments hint at the national ambitions of pay-TV operators banking on a TV-over-Internet future. Satellite TV provider Dish Network struck a deal with Disney earlier this month for rights to stream Disney content without requiring an underlying pay-TV subscription. DirecTV is seeking a similar agreement with Disney. Apple and Comcast are in talks for a streaming TV ! service delivered to subscribers over Comcast's network using Apple's streaming device, The Wall Street Journal reported Sunday.
"The primary reason why this (Apple-Comcast deal) would make sense is for Comcast to expand its geographic footprint, which is a big dream for cable companies," says Peter Csathy, CEO of Manatt Digital Media Ventures, a streaming media consulting firm.
The goal could be an improved Apple TV service for Comcast subscribers, says Rich Greenfield of equity firm BTIG. "I think the question is, 'What does it look like? Is it just an app that has TV, or does it come with next-gen services such as a DVR in the cloud?"
The company most likely to come out of the gate first is Verizon, says Phil Swann, president of TVPredictions.com. The telecom giant recently bought Intel technology that would enable streaming live TV and also has a wireless unit that can layer the service with wireless coverage for watching TV on the go, he says. Besides, cable companies "would likely refrain to prevent open warfare in their category," he says.
The company also has brick-and-mortar stores nationally for face-to-face sales and customer service. "Way more people know Verizon as a wireless company, and they can easily bill customers," says Joel Espelien, senior analyst with The Diffusion Group.
Traditional pay TV homes have peaked, his firm estimates, and are expected to decline from more than 99 million last year to 94.6 million in 2017, But don't cancel your pay TV package just yet, because the next generation of TV service is not likely to materialize anytime soon.
Content licensing is perhaps the biggest barrier. Providers must secure a slew of licensing deals needed to cobble together a worthwhile package. TV networks prefer to fetch a premium by offering their shows in exclusive deals to a few distributors in limited geographical markets, says Dan Rayburn, an analyst at Frost & Sullivan. Cable operators "would have to charge too much for the service that no ! one will ! pay for it," he says.
Any provider that wants to provide live TV-streaming may have to cut a deal like the one Netflix reluctantly struck with Comcast to ensure a quality experience, Espelien says. Otherwise "you are going to face the same public internet bandwidth limitations that Netflix faces."
"Live streaming is not ready for prime time," Swann said. "(That) is another reason why TV providers and other companies are proceeding cautiously."
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