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Intel to launch Internet TV service

Intel Corp., the major supplier of computer semiconductors, has approached major media companies with plans to launch a pay television service over the Internet, according to a recent report by the “Wall Street Journal.” It’s a connected TV strategy that looks to be in line with next-generation television set functionality.

The new IP-based service would bypass cable companies, although it appears to be a virtual cable service, bundling traditional channels together. Subscriptions would be sold to consumers for viewing over the Internet. In addition to a set-top box, Intel has also developed and demonstrated a user interface for viewers to browse programs.

Earlier, Intel produced chips for Google TV and the Boxee set-top box manufactured by D-Link. Now, the newspaper report said, Intel apparently wants to go it alone, marketing the service directly to end-users. It could launch the service by late 2012.

Intel had produced the CE4100 chipset used by Google and others. “GigaOM” reported that the high price of the chip was one of the reasons why Google TV wasn’t able to find more users, and Google started to move its platform toward ARM-powered solutions earlier last year. ARM chips will power all of the second-generation Google TV devices from manufacturers like LG and Samsung.

Intel closed its Digital Home Group last year. At the time, the company said it would focus on semiconductors for the next generation of pay TV set-top boxes. No one suspected Intel wanted to run its own television service.

There were rumors earlier this year that Intel was in talks to buy Roku, a competing set-top box maker for Internet television. However, that deal apparently fell through and it appears Roku is trying to raise about $50 million in new financing for its own Internet television efforts.

Few specifics are known about the Intel effort and nothing is known about whose content the new service would offer. Apple, Amazon and Google, who are engaged in similar efforts, have had trouble getting programmers to sign on with content. The content owners are generally afraid of upsetting their traditional revenue streams and ceding control.