The TV set would end up as a commoditized monitor, warned...

on the connected TV to lead the product category well into the future. Gray said at the DisplaySearch Flat-Panel Conference last week that Internet video is creating a large traffic jam on the road to the future and few solutions are in sight. The world is dreaming of a “wonderful” future in which data and video “will flow unencumbered down this gorgeous open road to our living rooms,” Gray said. “I'd love to believe that, but the reality is this is what it’s starting to look like already,” showing an image of bumper-to-bumper traffic. He said 20 percent of evening Internet traffic in the U.S. results from Netflix streaming by about 20 million households. Describing his experience at home using a connected Blu-ray player, which “works great until 9:30 at night” and then “buffers and grinds to a halt until half past midnight,” Gray said Internet capacity is a “problem of success” and “we have to start thinking about what will happen.” He said Internet TV doesn’t scale the way broadcast TV does. “With broadcast, when you turn on your TV it doesn’t affect your neighbor,” Gray said. “Connected TV may not be like that.” It’s unknown who will pay for the pipeline, “dig up the street, run fiber, and build content delivery networks,” he said. Additional issues Gray said are affecting the broad expansion of Internet infrastructure are net neutrality, “which could suddenly go from being an esoteric, academic subject to one that actually affects business,” conflicts of interest in who installs the infrastructure, tiered data rates and quality of service. Despite all the talk about “cord cutting,” with consumers canceling paid TV subscriptions and getting all their programming online, Gray said the percentage of paid subscribers having made the switch is about 1 percent. Cord-cutting “remains to be proven as a phenomenon, but it’s definitely a growing competitive threat if you're a paid TV operator,” he said. And connected TV is “as much an opportunity as a threat” for providers willing to “think differently,” he said. Intel’s Wilfred Martis, retail consumer electronics general manager, said software compatibility could limit smart TV expansion. TVs that aren’t connected operate in a “monolithic” world determined by broadcast standards, he said. With a smart TV, “you have to make sure the middleware stack can co-exist with any operating system or app environment,” Martis said. If audio from one app overlaps with another’s, as in the PC world as users move between applications, “you can’t mute a screen on a smart TV,” he said. “You have to figure out how the resources don’t step on each other,” which involves “lots of work” for those developing different standards, programming data and audio streams, Martis said. “That limits how fast you can scale around the world.”