Washington -- Federal Communications Commission chairman Michael Powell -- who's paid to know better than most where markets are heading -- has a warning for the cable industry: Internet video is coming.
The U.S. pay TV business is a highly concentrated market controlled by handful of cable operators and direct-broadcast satellite companies. But rapid consumer adoption of broadband technology is attracting new video-distribution ideas in the skunk works of Silicon Valley and in labs runs by major phone companies.
“IP [Internet protocol] TV and video are going to start coming on very, very strong,” Powell told reporters Wednesday at FCC headquarters here. “The No. 1 thing being worked on in small companies and in labs ... is what I would call IP TV -- the ability to put together integrated products that use a broadband connection as the infrastructure source for video content.”
Powell said an example was the proposed alliance between Netflix Inc. and TiVo Inc. that would allow consumers to download movies from the Internet for storage on TiVo personal video recorders, which, so far, have been positioned as digital-TV recorders with push-button controls to zap commercials.
“That’s something we saw at TiVo several months ago when we visited there,” Powell added.
To take a run at cable, SBC Communications Inc. has partnered with EchoStar Communications Corp. and Verizon Communications with DirecTV Inc., but Powell called the DBS alliances stopgap measures.
“What they’re really working on is IP-delivered television,” he added. “SBC has a major initiative, other companies have major initiatives. I’ve seen them. They’re partnered with companies like Microsoft [Corp.] and Intel [Corp.]. That’s a major component that is moving fast.”