Is Intel developing an online TV service?

Intel looks to be the latest tech company to want a piece of the online TV action. But it's a tough business and judging how others have fared, it's hard to say whether the chipmaker could ever be successful.

On Monday, The Wall Street Journal reported that Intel, the world's largest maker of microsprocessors for computers, is considering offering an online TV service to consumers that would compete with services from cable operators, satellite TV providers, and phone companies.

The Wall Street Journal said the offering would be delivered via an Intel designed set-top box and would offer a virtual cable service. Consumers would use their broadband connections to access the content. According to people familiar with the effort, the service would bundle TV channels together much like cable, satellite, and telco TV services do today.

In addition to the set-top box, Intel has also supposedly developed and demonstrated a user interface for users to browse programs.

The article said that Intel has been talking to TV content providers but no deals have been signed. An Intel representative declined to comment for The Wall Street Journal's article.

Intel isn't the only established technology company that wants in on the online video business. Amazon, Apple, and Google have built their own solutions. The most successful out of the three so far has been Amazon, which sells and rents individual TV shows and movies via its online service.

Apple and Google have been less successful. Apple has tried to sell its own box, Apple TV, which allows for access to movies and TV shows via its iTunes store. It recently updated the device, which will soon sell for $99. And Google has partnered with device makers to get its Google TV technology into TVs and other consumer electronics.

The biggest hurdle for these companies, along with other online video providers, such as Netflix, has been getting access to the actual video content. TV programming is expensive. And in general, content owners and cable channels have not been eager to upset an already lucrative business model. Still, more viewers are watching programming online, which is why these technology companies see opportunity.

Even the phone companies, which are the newest entrants in the traditional paid TV market, initially struggled against competitors. They often had to pay higher rates for certain programming. And there are still ongoing battles between paid TV providers over certain content, such as live sports.

There are other challenges that Intel could face with such a service. Some broadband service providers are considering moving away from unlimited services so they can charge subscribers by how much bandwidth they use. This metered approach to broadband billing could hurt so-called "over-the-top" video services, such as the one that Intel may be planning to launch.

High-definition video uses a lot of bandwidth, and if subscribers have to be careful of how much bandwidth they use, services that gobble up gigabytes worth of data per month may not be as attractive as a paid TV replacement service.

Intel has been dabbling in online TV for years. In 2008, it had partnered with Yahoo to show off possibilities for Web-connected TVs. The companies set up demonstrations showing off Intel's Widget Channel, which offered quick photo browsing, YouTube viewing, and easy access to social networking sites directly from the TV.

At the time, Intel's involvement still seemed centered on its microprocessor business. The company was simply looking to sell its chips to TV manufacturers rather than just PC makers.