Coming soon nationwide? Comcast, Time Warner, AT&T and CenturyLink sure hope not.

Verizon is talking to major cable programmers about launching a nationwide version of FiOS TV as an over-the-top video service that works with your existing broadband provider.

The NY Post reports Verizon is looking at launching an online pay television service for customers without installing additional fiber optic lines to deliver it.

The service would likely be an extension of the “TV Everywhere” online video platforms that many national cable and telco-TV providers already offer existing cable TV subscribers. What would make Verizon’s offer radically different is selling the virtual cable TV service in areas where it does not offer FiOS service.

Verizon must carefully negotiate with programmers to distribute networks over an online video service that would likely compete directly with those programmers’ best customers: cable operators and telco IPTV services like U-verse and Prism TV.

The concept was rejected out of hand Wednesday by Time Warner Cable chief operating officer Rob Marcus, who agreed with Comcast executive vice president Steve Burke’s contention that “over the top” video services that offer virtual cable television outside of their respective service areas lacked a compelling business model and would be difficult to monetize.

“At this point we don’t really aspire to delivering an over-the-top service,” Marcus said. “Our value proposition is delivering video via our facilities as opposed to being a retailer of somebody else’s video, which is a somewhat commoditized product.”

Neither cable executive mentioned the fact cable operators have also maintained an informal “wink and nod” agreement to steer clear of head-on competition with each other for decades.

Verizon: The next big supporter of Net Neutrality?

Verizon apparently wants to shake things up and sell online video without incurring the cost of expanding its fiber optic network FiOS to deliver it.

“They’ve had exploratory talks about how to become a virtual [multiple-system operator],” one person close to the conversations told the Post. “It’s a question of how to get there.”

Interestingly, Verizon CEO Lowell McAdam is worried about developing the service without Net Neutrality protection or some other form of government oversight of broadband. Verizon could spend millions to negotiate programming contracts only to find competitors with their own TV packages to protect outmaneuvering the venture. Without Net Neutrality, Verizon could find its service blocked by competitors or made untenable with the implementation of broadband usage caps or consumption billing that would make a subscription too costly to consider.

The company is now trying to figure out exactly which branch of government (or agency) controls broadband policy in the nation.

The FCC’s current Net Neutrality policy depends on a shaky regulatory framework now being challenged in federal court.

Verizon declined to comment.

Pay television providers forced Al Jazeera to remove or block its online video content from American viewers in return for launching its new news channel on cable systems this week.

The Qatar-based news network had maintained a loyal, but small online audience for its English language news programming, using video streaming to reach American audiences that could not watch on cable or telco-TV.

For Time Warner Cable and AT&T U-verse customers, neither of which carry the new Al Jazeera America network, the move effectively cuts off viewing of the news channel’s English language programming.

The removal of Al Jazeera video content began with the termination of its live global English language stream within the United States. That was followed by blocking the network’s video clips on YouTube. The only way for viewers to watch the network now is by paying a cable, telephone, or satellite operator, assuming they are willing to carry it.

AT&T U-verse suddenly dropped predecessor Current TV just hours before Al Jazeera America was scheduled to launch in its place. The loss of five million potential viewers came as a complete surprise, culminating in a lawsuit filed against AT&T for violating its contract.

“Unfortunately, AT&T’s decision to unilaterally delete Al Jazeera America presented us with circumstances that were untenable — an affiliate that has willfully and knowingly breached its contractual obligations,” Al Jazeera America wrote in a statement issued Tuesday night. “Al Jazeera America’s strong hope is to resolve this matter quickly.”

AT&T issued its own statement stating the company “could not reach an agreement with Al Jazeera that we believed provided value for our customers and our business.”

Riyaad Minty, Al Jazeera’s head of social media has fielded complaints from loyal viewers who never got to watch the channel through their pay television provider and now can’t access the network without one. Minty tweeted the network was considering a new online offering within weeks, but it would not include Al Jazeera America.

The news channel is forced to tread carefully because of restrictive terms in its carriage agreements, designed to cut off cord cutters who refuse to pay for cable television. Most cable contracts forbid allowing cable networks to stream their programming online unless they offer it only to those who can prove they already pay an authorized provider.

Time Warner Cable is reportedly still negotiating with the news channel, which usually asks for less than five cents a month per subscriber. But no decision had been reached. Time Warner dropped predecessor network Current TV hours after news stories reported Al Gore, Jr. and other owners had sold the channel to the Qatar news organization.

Sony’s bid to enter the “over-the-top” online video business has gotten a shot in the arm with news it has reached a preliminary agreement with Viacom, Inc., to carry its popular cable networks on the Japanese electronics giant’s planned online subscription TV service.

Sony wants to build its own virtual cable television service, offering live and on-demand programming delivered over broadband lines in direct competition with cable and phone companies Comcast, Time Warner Cable, AT&T and Verizon.

Getting agreements with traditional must-have cable networks like Comedy Central, ESPN, and USA have been difficult because the networks fear alienating their traditional customers — large cable, telco and satellite TV companies.

The Wall Street Journal reports Viacom’s agreement remains preliminary at the moment and the final details have yet to be worked out. If a final agreement is reached, it will be a breakthrough for so-called online cable systems which have gotten nowhere with other cable network owners, including Comcast-NBC, Walt Disney, Time Warner, and CBS.

Cable executives have repeatedly warned that a wider distribution of cable network programming would make them more reluctant to pay higher prices for the cable networks because of the loss of relative exclusivity. Many cable programming contracts restrict the ability of network owners to sell to would-be online competitors.

Viacom has had contentious relationships with cable and satellite companies in the past, so observers suggest it is no surprise Viacom would be among the first to break with tradition. Viacom’s CEO, Sumner Redstone, also controls CBS which is currently off Time Warner Cable systems in three major cities and has had its pay movie channels Showtime and The Movie Channel blacked out on Time Warner systems nationwide. If Sony’s service gets off the ground, CBS could ask Time Warner customers to sign up with Sony instead to get those networks back.

Cord Cutting is Real (Graphics: The Wall Street Journal)

Competing online video services from Intel and Google have largely gone nowhere because of stalled programming negotiations. How Sony managed a breakthrough remains a mystery. To secure rights, Sony may have been asked to sign a lengthy contract with favorable financial terms for Viacom, or Sony might have agreed to carry the full roster of Viacom-owned cable networks, which include:

The next generation of the Sony PlayStation may be your next cable box.

• BET
• CMT
• Comedy Central
• Logo
• MTV
• MTV2
• Nick at Nite
• Nick Jr.
• Nickelodeon
• Nicktoons
• Palladia
• Spike
• TeenNick
• Tr3s
• TV Land
• VH1

A source told the Journal Sony hopes to launch its new venture by the end of the year, perhaps on the next generation of Sony’s PlayStation gaming console due soon. Sony also could offer the service on its line of Bravia high-definition televisions, as well as tablets and smartphones.

The Journal:

People who have seen demonstrations of Sony’s system say it has some features that are appealing in comparison to traditional pay TV distributors, including one that recommends shows for users based on what they’ve previously watched. Content providers are allowed to supply some of those recommendations, so they can steer users to other episodes on their channels, according to the people familiar with the matter. Sony provides other content suggestions for viewers based on an algorithm.

The development of online cable television in direct competition with large cable and phone companies could spark a new wave of broadband usage restrictions including usage caps and metered billing. The same telecom companies that earn a substantial part of their revenue selling cable television service are likely to find it unsettling to discover Sony undercutting them on price and using “their” broadband lines to do it. Placing restrictions on the amount of broadband traffic a customer can use each month would deliver a significant deterrent to would-be cord cutters.

Cablevision may eventually get out of the cable television business.

Although industry analysts, consumer advocates, and technology columnists have long proclaimed the era of “cord cutting” is upon us, cable operators have always been in denial the product that got them their multi-billion dollar business — selling packages of television channels — is rapidly becoming obsolete.

But at least one CEO sees the writing on the wall.

If you don’t “ride the wave” you “get eaten by the wave,” declared Cablevision CEO James Dolan.

The Wall Street Journal sat down for a lengthy interview with Dolan, who predicted “there could come a day” when the cable television company quits selling television service, because a growing number of viewers have shifted to online video.

Dolan, like many Americans, isn’t watching television as much as he used to, and admitted that both he and his young children prefer spending their viewing time with Netflix, not Cablevision’s television package.

Jim Dolan

Dolan worries the next generation of television viewers don’t need or want a cable television package with hundreds of video channels. Today’s youth wants fast broadband with on-demand viewing of series, movies, and video clips. The transition may have already started. Cablevision reported Aug. 2 it lost 20,000 video customers over the last three months, many moving to broadband-only service and 11,000 abandoned the cable company altogether.

Dolan believes the industry is setting itself up for obsolescence.

“I don’t want to be saddled with an infrastructure that is as big as the one that I have now,” Dolan told the Journal, fearing the bloated cable television package is becoming too costly and unmanageable.

Instead, Dolan has ordered network upgrades to improve broadband service and help boost the company’s image with customers. Cablevision focused most of its spending on broadband and Wi-Fi service upgrades over the past year, both to meet relentless competition with Verizon’s fiber network FiOS, but also to develop the platform Dolan thinks will eventually be the only product the company sells. Although Cablevision cannot match Verizon’s upload speeds, the cable company offers a free Wi-Fi service for customers Verizon lacks. But the changes and network upgrades have been expensive and noticeable, because few cable operators are spending as much as Cablevision to improve service.

The changes in approach were too much for former chief operating officer Thomas Rutledge, who departed Cablevision to run Charter Cable in December 2011.

One of the primary reasons Rutledge left was Dolan’s increasing involvement in the business, causing a clash of business philosophies. Just a few months before Rutledge departed, the FCC issued a report that exposed Cablevision marketing broadband speeds its network could not sustain, especially during prime usage periods. Rutledge believed this was primarily a marketing problem. Dolan concluded the existing broadband infrastructure was inadequate.

“I felt that we needed to reinvest,” Dolan said. “When we took a hard look at what we were offering,… it just wasn’t what we wanted it to be.”

As Rutledge and his allies rapidly departed for Charter Cable, Dolan ordered a 32 percent increase in capital spending to $1.1 billion last year, at least $150 million targeted exclusively on broadband improvements. This year he has already informed Wall Street it will be more of the same, bringing expanded Wi-Fi, new and improved broadband modems for customers, even faster speeds, new outage detection equipment, and an improved cloud-based DVR service.

Existing customers like the changes, but don’t appreciate the price hikes that have accompanied them. Wall Street has the exact opposite point of view, welcoming increased revenue from rate hikes, but concerned about the company’s spending. Investors complain Cablevision’s returns are well below those of other cable operators which don’t face the Verizon FiOS juggernaut.

Still, for some customers, the changes have come too late and Verizon’s promotional offers to switch to fiber have been too good. Cablevision did at least manage to add 1,000 new broadband and 3,000 new voice customers during the second quarter.

“We’re not prepared to starve the business,” said chief financial officer Gregg Seibert. “In terms of upgrades, I think what you’re seeing with the high-speed rollout that we just did is that we feel that our plant is in very good condition. We’re delivering over advertised speeds in every day part. We intend to keep the plant in that type of condition.”

Dolan’s philosophy of upgrading service to improve customer relations also clashes with John Malone, who is rebuilding his cable industry power base at Rutledge’s new home — Charter Cable. Malone believes industry consolidation, not expensive network upgrades, is a better proposition for shareholders.

Dolan told investors Cablevision is, for now, out of the mergers and acquisitions business. It has completed selling off its Optimum West systems to Charter and plans no further expeditionary buyouts in the near future. Instead, the company intends to focus on its business in the northeast. Dolan acknowledged the company is a likely acquisition target, most likely by Charter or Time Warner Cable.

Dolan currently shows little interest in selling out what is and always has been a family affair. Chuck Dolan, 86, founded Cablevision and still offers almost daily advice to his son James, who now runs the business. James also appointed his wife Kristin to lead sales, marketing and product management, with questionable results.

Some other highlights from the second quarter:

• Cablevision has enhanced its Remote Storage DVR product, now providing two tiers: 160GB and 500GB. Customers can record up to 10 channels at the same time. The service is available on customers’ existing set-top boxes;
• Last month, Cablevision announced an increase in our broadband data speeds;
• Wi-Fi remains a major priority for Cablevision and customer usage of its wireless network continues to grow. More than 1 million customers have used the service over more than 90,000 access points;
• Price increases were critical for Cablevision’s revenue growth this year. The company booked increased revenue from a broad-based $5 broadband rate hike implemented in January as well as a “sports programming surcharge” initiated earlier this year. The average subscriber that buys a package including cable television pays $5.49 more this year than last — $162.42 a month.

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The Wall Street Journal sat down with Cablevision CEO James Dolan, discussing the future of the business as the industry watches another cable television programming dispute between Time Warner Cable and CBS.  (5 minutes)

CBS has blocked Time Warner Cable and Bright House Networks’ broadband customers from watching CBS online video in a retaliatory move against Time Warner Cable’s decision to pull CBS-owned programming off the lineup because of a contract dispute.

Broadband customers of both cable companies (Bright House relies on Time Warner Cable to negotiate its programming carriage agreements) started losing access to CBS streamed content late Friday, now replaced with a message blaming Time Warner Cable for the loss. Earthlink customers using either cable operator are collateral damage — Earthlink is effectively reselling the others’ cable broadband services.

“If Time Warner Cable is a customer’s Internet Service Provider, then their access to CBS full episode content via online and mobile platforms has been suspended as a result of Time Warner Cable’s decision to drop CBS and Showtime,” said a CBS spokesperson. “As soon as CBS is restored on cable systems in affected markets, that content will be accessible again.”

In place of the programming, cable customers get to see a brief attack ad criticizing Time Warner for yanking CBS-owned channels and networks, despite the fact CBS authorized the companies to keep the channels up and running until the dispute can be worked out.

Time Warner Cable shot back with their own rebuttal.

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Time Warner Cable claims it does not want a war over programming costs in its latest ad regarding the blackout of CBS programming, which now also affects the cable company’s broadband customers. (1 minute)

“CBS has shown utter lack of regard for consumers by blocking Time Warner Cable’s customers, including our high-speed data only customers, from accessing their shows on their free website,” the company said in a statement. “CBS enjoys the privilege of using public owned airwaves to deliver their programming – they should not be allowed to abuse that privilege.”

Customers well outside New York, Dallas, and Los Angeles discovered several CBS-owned cable channels were missing, even though they are not served by a CBS-owned local affiliate. The most obvious — Showtime/The Movie Channel came during the middle of the latest season of Dexter.

New York City residents can sat least keep watching WCBS by signing up for Aereo, which streams local stations over the Internet. A 30-day free trial is available. Getting programming in other cities is going to be much tougher. Some predict hardcore viewers will just look for pirated copies of their favorite shows.

CBS said no further negotiation took place over the weekend. Some industry analysts predict the impasse could run for weeks, even potentially until the start of football season — considered a line of PR destruction neither company is willing to cross.

Golf is not as critical, apparently. The PGA Championship taking place in Rochester, N.Y., this weekend is likely going to get a smaller viewing audience because of the blocked programming.

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The blackout of CBS programming by Time Warner Cable enters its third day with no light at the end of the tunnel, suggests this Bloomberg News report. (3 minutes)

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This is not the first time broadcasters and cable operators have cut viewers off, sometimes for more than a week. Bloomberg News reports the soft deadline for Time Warner and CBS to sort out their differences is the start of the fall football season. Sources say Time Warner now pays $1 a month for CBS, but the network now wants $2 a month. (3 minutes)