Both Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC) are negotiating deals with programmers that would give the MSOs permission to offer content via the Internet, via mobile devices, and other methods, as first reported by The Wall Street Journal.

"We think there is a great opportunity to get consumers content on-demand and online so they can watch it whenever and wherever they want to," Jennifer Khoury, a Comcast spokeswoman says. "We're working with programmers today to enable consumers to do that."

One issue on the table, sources say, is whether those rights will involve on-demand access to shows via the Web as well as "place-shifted" access to the linear feeds of programming networks, a technique that Sling Media Inc. has popularized with the standalone Slingbox.

EchoStar Corp. LLC (Nasdaq: SATS) (Sling's parent) has already baked that capability into some new receivers for corporate cousin Dish Network LLC (Nasdaq: DISH) and expects to do the same in some upcoming cable boxes that use the tru2way platform. (See Dish Box Bakes In Sling and EchoStar Blazing Way to Tru2way .)

Comcast says it has a project underway that carries the internal moniker of "On Demand Online." The product, expected to be launched sometime later this year, will likely take on a different brand name. The MSO isn't providing much detail on it yet, but it will likely extend into other initiatives already underway, including "Project Infinity" and Comcast's Fancast Internet video hub, which today offers a menu of more than 44,000 video titles. (See Fancast Does Downloads, Comcast Fires Up Fancast, and Comcast Launches 'Project Infinity'.)

Time Warner Cable, which is also playing a key role in these discussions, was not available for comment Friday. However, the MSO has been very vocal on the topic, warning programmers to be careful with their Internet initiatives because their business models rely on a dual revenue stream that incorporates both advertising revenues and affiliate fees.

Moreover, Time Warner Cable has long held the belief that its video customers should have to only pay once for access to content, and be able to view that content "on any screen at any time," as opposed to having to pay separate subscriptions or fees for that right. (See Is Broadband TV a Cable Killer?)

Among recent examples, TWC is rapidly expanding the availability of HBO on Broadband, a service that gives existing HBO subs access to about 1,000 hours of content from the programmer via PCs with high-speed Internet connections. The MSO is supporting that with an "entitlement" system that taps into the TWC billing system to authenticate and authorize the broadband offering. Presumably, this system would apply if TWC's Web video initiatives extend beyond HBO. (See TWC Scaling Up 'HBO on Broadband'.) To Page 2

'Cord Cutting': Myth or Reality?
Although MSOs are starting to embrace Web video, or are at least eager not to have to pay more for that access, these latest negotiations are also viewed as a hedge against "cord-cutting," where consumers would keep their high-speed Internet services, but cancel their cable TV subscriptions. Cord-cutting is said to be a byproduct of more and more TV shows, movies, and other video becoming available via the Web through Hulu LLC , Netflix Inc. (Nasdaq: NFLX), VUDU Inc. , Boxee, and other "over-the-top" services.

According to one analyst, the cable MSOs are protecting themselves against something that's not really there. "Cord-cutting does not exist. It absolutely does not exist," says Bruce Leichtman, president and principal analyst of Leichtman Research Group Inc. (LRG) . "There's no evidence whatsoever of cord-cutting happening. People need to stop being cheerleaders and stop doing mother-in-law research and really analyze this."

Leichtman, who is selling a study called "Emerging Video Services III" next week, says his data shows that one percent of U.S. adults watch television shows online on a daily basis. And those who do engage in that do so mostly because they missed a show on regular TV. Most other video viewed over the Web, he says, is largely made up of short clips that are generally complementary to traditional TV viewing.

"All of this [cord-cutting] stuff is based on anecdotal data from a 25 year-old... or an industry reporter that does not [indicate] what's happening in the marketplace," Leichtman says.

On Wednesday's earnings call, Comcast cable division president Steve Burke addressed cord-cutting, saying Comcast is "not seeing large numbers of people dropping their television service due to either financial hardship or the fact that they can get video increasingly on the Internet." (See Comcast Sub Growth Weakens in Q4 .)

He also said programmers are attuned to the fact that affiliate fees are "the most attractive part of their business," particularly in a soft ad market. "Most of them [programmers] are not making very much money, if any money at all, on the Internet," Burke said.

Cord-cutting isn't pervasive yet, but the mere threat could be snuffed out by the use of metered Internet service business models and consumption caps.

Time Warner Cable is expanding a usage model that tacks on extra fees if Internet usage extends beyond certain thresholds during a given month. Comcast, meanwhile, has set a monthly 250-gigabyte ceiling to keep "excessive use" in check. (See TWC Tees Up More Meters and Comcast Draws the Line at 250GB.)

— Jeff Baumgartner, Site Editor, Cable Digital News