Google considering Pay TV.

GOOGLE is considering a plan to offer paid cable-TV services to consumers in the US. The move could unleash a new wave of competition within the traditional TV business.

Google has looked at ways to expand a previously announced project to build a high-speed Internet service in Kansas City in Missouri and Kansas, adding video and phone service in a mirror of offerings from cable and telecom companies, according to people briefed on its plans.

As a result, Google has discussed distributing major TV channels from companies like Walt Disney, Time Warner and Discovery Communications as part of the video service, though the discussions were exploratory and no final decisions have been made.

In September Google hired a former cable-TV executive, Jeremy Stern, who is spearheading talks with media companies, some of the people briefed on the plans said.
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The discussions underscore the intensifying battle for control of the TV set. In recent years phone companies have jumped into a market previously dominated by cable-TV operators and satellite-TV providers. Now companies such as Amazon.com are bulking up their content offerings, while Apple and others are trying to reinvent the viewing experience with iPads and other devices, and potentially a new type of television set.

Meanwhile, Comcast and other incumbent cable and satellite operators are fighting back, creating their own apps and lining up Internet-rights to programs that tie into their existing offline TV subscriptions.

Much is at stake. Television reaps more than $US150 billion per year in the US from advertisers and consumers paying monthly fees. Google, the biggest seller of ads on the Web, wants to snare a share of the TV ad dollars. And with its latest plan, Google threatens to undercut cable and satellite companies in subscription fees it may charge consumers.

Just last week, Google unveiled a series of deals with celebrities and production companies to create roughly 100 free, ad-supported online "channels" for its YouTube online video service.

Google has also launched Google TV, software that can be installed in TVs or on cable TV set-top boxes and helps people search and find content to watch from the Web and broadcast channels. Google released a new version of the software last week, after the first was slow to be adopted by consumers.

Google has been thinking about a move into TV for many years, says Keval Desai, a former Google product director who is now a venture capitalist at InterWest Partners LLC.

"TV is built on a closed system, which is why traditional cable and satellite operators are the only place where consumers can get ESPN and other channels," he said. As more TVs become connected to the Web, he said, "Internet companies like Google will be able to give you that same high-quality content," possibly at lower prices.

When Google unveiled its plans to build a test broadband network in one market, in February of last year, it said it didn't intend to build a nationwide network.

Theoretically, most entertainment companies could refuse to license their programming, with the possible exception of channels owned by distributors like cable operators. Even so, some media executives say that owners of channels historically have been willing to license their channels to various distributors, whether satellite-TV operators or phone companies, assuming they paid as much or more than existing outlets.

The big question is how broad Google's ambitions go.

Executives at the Mountain View, California company have kicked around other ideas with media executives in recent months. One is the possibility of expanding its YouTube lineup of channels by licensing a full complement of cable channels for paying customers, according to people briefed on the discussions.

That would turn YouTube into a "virtual" cable service. But another person familiar with the thinking at Google said that while there may have been preliminary discussions about such an idea, it is "not on the table right now."

Still, executives at some media companies say they believe that a technology company like Google or Apple will eventually offer a virtual service over the Internet that is similar in content to what's sold by wired or satellite TV providers.

That would go further than the idea envisaged by Google in Kansas City, where it would use only its own network to deliver the video. Such offerings could change the patchwork pattern of TV service in the U.S., where apart from satellite TV operators, most TV providers offer service only in discrete geographic areas.

The Kansas City broadband plan is well advanced. Google has said it aims to get that project up and running by early 2012. Currently, the top three TV providers in the Kansas City market, by subscribers, are Time Warner Cable Inc. and satellite firms Dish Network Corp. and DirecTV, according to data from SNL Kagan.

Google currently has partnerships with Dish and DirecTV to sell some of the companies' advertising inventory.

Quoted from http://www.theaustralian.com.au