(ii) is a real threat to the cable companies. My apartment building pays for basic cable, but I haven't even hooked up a tuner the entire time I've lived here. I pay for Comcast's 50Mbit/s plan and get my video from Hulu/Netflix/YouTube, and yet YouTube still stutters and buffers frequently.
you bet. one underlying problem is the pricing model. you get "take it or leave it" packages that were negotiated by guys in suits between cable companies and content owners (who are often different units of the same business.)
as a result, you pay for Fox News when you pay for basic cable in many places, but you can't get Al Jazeera English. The consumer's got no way to say "I don't care for Spongebob Squarepants" or "I don't want my kids watching those stupid live action shows about rich kids that are on the Disney Channel" short of withdrawing from the system alltogether.
With no market discipline on the individual channels, they can keep sucking worse and worse until people eventually give up on the whole package.
