Google mulls offering television via internet

If Google has its way, you might someday get cable television the same way you get Gmail: through any ordinary Internet connection. Foreshadowing a new challenge to entrenched cable and satellite providers, Google is one of several technology giants trying to license TV channels for an Internet cable service, according to people with direct knowledge of the company’s efforts.

No deals are imminent, but Google’s recent meetings with major media companies that own channels are a sign of the newfound race to sell cablelike services via the Internet, creating an alternative to the current television packages that 100 million US households buy from companies like Comcast and Time Warner Cable.

Intel is hard at work on one such service, and companies such as Sony and Microsoft have previously shown interest in the same idea, colloquially called an ‘over the top’ service because the channels would ride on top of existing broadband connections.

Google, which also owns YouTube, the world’s largest online video site, declined to comment on its television interest. But by instigating conversations with channel owners about a service that would compete with the likes of Comcast, the company is taking a different tack than rival Apple, which has been trying to collaborate with both channel owners and their distributors on a TV offering.

Existing distributors

“Google feels the need to beat Apple to the punch,” said one of the people with direct knowledge of the meetings, who like the others interviewed spoke on the condition of anonymity because they were not authorised by their employers to speak. Apple’s thinking, according to these people, is that any next-generation television service must be set up in partnership with existing distributors, in part for quality assurance reasons. A future Apple service could include a user-friendly interface layered on top of Time Warner Cable or Cablevision’s channel lineup. “Apple’s working within our current ecosystem,” one of the people said.

What Google and Intel, and likely others, have in mind is more disruptive and more difficult. One person involved in the talks with Google cautioned that the company might end up just selling a library of TV shows, the way Netflix, Amazon and Hulu already do. But others said that Google had pitched an easy-to-use subscription service that would stream a bundle of live channels as well as on-demand shows, replacing the cable bundles that most households now purchase.

Previous talks with channel owners in 2011 went nowhere. An attempt at an automated TV ad-buying system was shut down last year. Broadband in the meantime has continued to become more popular and more widely available, spurring interest in alternatives to traditional television distribution.

Google’s renewed push was first reported by The Wall Street Journal. Intel is trying to create a similar ‘over the top’ service, but it has run into roadblocks set up by Time Warner Cable and other incumbent television distributors. These include contracts between existing distributors and some channel owners that prohibit the channels from being licensed to new competitors like Intel.

Another challenge involves channel owners like the Walt Disney Co. and Viacom, who could stand to benefit or suffer greatly from ‘over the top,’ depending on how it all shakes out. Some owners doubt that there is much of a market for cable via the Internet in the first place, and they are content with the three methods of distribution they have today: cable companies like Comcast, the satellite providers DirecTV and Dish Network, and the fibre-optic providers Verizon FiOS and AT&T U-verse.

A cable service delivered via the Internet would most likely have to compete on quality - say, superior features like more space for digital video recording - rather than on price. That is because, as a Government Accountability Office report on the marketplace put it last month, “networks generally offer significant discounts based on the number of subscribers a provider has. Thus a substantial disadvantage that an entrant has relative to a large provider is that it will likely have higher programming costs, making entry challenging.”

But Google, Intel and the others eyeing the television space are deep-pocketed giants. And they have another thing going for them: In customer satisfaction surveys, they are a lot more popular than the cable guys.