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Chip Maker Intel Working on Online TV Service

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The "virtual cable operator" could launch later this year and would compete with pay TV operators, but some analysts have doubts that the business will take off.

NEW YORK - Chip maker Intel Corp. is developing a Web-based TV service, or "virtual cable operator," in the U.S. that would compete with pay TV operators, the Wall Street Journal reported.

Intel has in recent months pitched content companies on the plan that would see the company offer TV networks in a bundle similar to cable, satellite TV and telecom operators, it said.

Intel has told industry players that it hopes to launch the service by the end of the year, but the Journal cited high content costs and bandwidth issues as key challenges.

The tech giant has asked at least some entertainment companies about the cost of particular channels and on-demand programs, but the paper said it doesn't appear to have struck content deals yet.

A team of Sanford C. Bernstein analysts have said that content will be the key challenge for a potential virtual pay TV provider. "Now, all they need is…everything else," the Bernstein team wrote in an investor note on Tuesday. "Content, for example. According to the Journal, they have now asked for “rate cards” from the media companies. Sounds like a great place to start. Good luck and Godspeed, Intel."

The Intel online TV service would use Intel technology, the firm's own set-top box and could also use its brand name, according to the Journal.

An Intel spokeswoman declined to comment.

BTIG analyst Richard Greenfield has predicted that a virtual pay TV operator, which wouldn't be tied to a specific geographic region, could launch this year.

Several companies have looked at offering Internet-delivered TV network bundles, including Sony Corp. and Dish Network, the Journal said. Google, Apple and Microsoft Corp., have also discussed the idea with entertainment companies, but no-one appears to be moving forward for now, the Journal said, citing industry executives.

Intel is best known for making computer chips, but has in the past made forays into other fields. Some of Intel's past Hollywood ventures have failed, including a hardware project called Viiv.