This brings up a good question. Why hasn't anyone tried to undercut cable providers by creating a "TVoIP" service that piggybacks on Internet connections the way VoIP services have done to undercut phone companies? I imagine the requisite Internet speeds are there, since Netflix works for most people.
If http://Aereo.com wins their fight with the broadcasters they could become the next generation cable company, as they will be able to attract a fairly large sized audience.
By accumulating a nice user/audience base Aereo could then begin to add other channels like small to mid size broadcasters like Al Jazzera and possibly even AMC or a live netflix channel and more.
I am hoping they win this fight with broadcasters as I want to watch my local antenna channels via the net!
Also and recently I saw an article of Bit Torrent live streaming app, which could be another way to disrupt and destroy the cable business.
Update: I'm reading other entries and wonder if the OP actually wants to build a cable company the old fashion way, i.e. running wires and stuff? Seems old fashion to me, as opposed to creating the new cable industry using the net.
A major point is that the content sellers do not want you to undercut their cable partners (cannibalize their sales), so they will charge you more than the cable companies. In essence, expect that if they are getting $x from subscriber that is getting 10 of their channels from a cable package, then they will want you to pay at least $x for the same subscriber. It is not in their interest to allow the subscriber to get less channels for less money, so they can simply disallow it.
VoIP service providers are creating and selling their own "goods". Cable companies and "TVoIP" companies are resellers of something that is owned and controlled by others, and it's not a commodity. If a channel owner decides that they don't like TVoIP (or your particular TVoIP) for whatever reason, tough luck. You might convince them with a lot of money - but even Netflix and Hulu are not really enough for that.
> A major point is that the content sellers do not want you to undercut their cable partners
Why not? By reducing my costs (by piggybacking on existing internet infrastructure), I could pass on (part of) the savings to the content sellers. So it would be a profitable decision for them.
The big question is, can you?
The cable TV delivery costs are not that big compared to content costs. Can you really offer a substantial markup for the content even if you halve the delivery costs, and still offer a competitive solution that customers would want?
And internet delivery is far from free. If you want live TV, the bandwidth and jitter requirements are enormous, the burst requirements for fast channel switching are a pain. We launched a small IPTV project last year, and IIRC our delivery costs were actually higher than those of a comparable cable operator - the benefit was flexibility and extra features, not cost.
> The cable TV delivery costs are not that big compared to content costs.
I was under the impression that infrastructure buildout was very expensive and was the main reason why it took someone of Google's size to create a new fiber service.
> If you want live TV, the bandwidth and jitter requirements are enormous, the burst requirements for fast channel switching are a pain.
Netflix seems to be pulling it off OK. Do you mean that the costs are high for the business (in terms of bandwidth spent delivering content) or that the costs are high for consumers (in terms of getting a fast enough connection to make this realistically possible)?
The reason it took Google is that this is an economy of scale industry - it doesn't make financial sense to do anything small, you invest either a lot or nothing. That's what "barriers of entry" mean.
I am speaking about the technical bandwidth burst + jitter requirements on the whole channel from your [caching] servers to the settopbox or equivalent.
Netflix is not available where I live, but as far as I know, it's not a TV service, it's a completely different animal. Launching a movie is trivial because it's done once. For TV, imagine a person on a couch with a remote pressing the 'next channel' button, browsing through 10+ live TV channels in one minute. It is a major pain to get this experience to feel pleasant on an internet TV setup.
Movies can have a small buffer for better viewing experience, but a live football game needs to be, well, live - so that you see a goal before getting a tweet or SMS about it.
Isn't that how Verizon's FIOS and AT&T's Uverse TV services work? The difference is that they don't decouple the TV service from their Internet service. But there's no real technical reason I couldn't get their TV over IP delivered to their set top box through my cable modem…
And a more direct answer to "Why hasn't anyone tried to .." is that many have tried to do that and failed - but the general public doesn't see that because such attempts tend to simply result in a wasted year and a wasted million, written off before even getting to a launch.
The failure point is content. If you wonder where to start - try to figure out the content deals, because all other aspects (technical, customers, design, etc) are much easier and can be solved if you have money; but without [good] content, your TV service is useless.
Why not real IPTV over the Internet? Probably wouldn't want to without multicast, but wouldn't this be feasible when IPv6 adoption starts reaching decent percentages?
Infrastructure is/was the easy part of cable (due to the monopoly grants). Content is, and always was, the hard part. Without the proper licenses to stream Video over IP, you're DOA.
But it has been done before, many times, successfully...by the data companies (see e.g., Verizon FIOS).
OK, so why can't anyone get those licenses? Google was able to get the licenses for the TV service that goes along with Google Fiber, for example.
Why is this always done by the companies that own the infrastructure? Why was Vonage, a company with preexisting no phone infrastructure, able to get into the VoIP business, but no one has been able to do that with TV?
Is it perhaps because some of the cable companies also own the content companies, and so they don't allow this sort of system to develop?
It's because you have to commit to a minimum viewer count if you want anybody to talk to you - i.e., if you want to negotiate content rights for a good channel, expect to pay for a minimum 100.000+ subscribers even if you have 0 or 10.000 viewers for that one.
That means that either you have a large 'captive' viewer base already to make up for it, or you have to be willing to bet a large amount of money (hard to estimate, but think 100m+) before you get your first viewer.
Google Fiber seems to offer a standard cable TV licence, you can subcontract them from resellers if you follow all standard rules and offer the same service as everyone else. Or they might have a cableTV partner that handles that - I don't know their details.
However, if you want anything (I mean, changing a single word in the agreement) nonstandard, then you need offer a decent size deal to make it worth the bother.
