You're generally right on #2 and #3. Even the biggest IP transit networks in the world only have capacity on the order of a few terabits per second (or a few m

You're generally right on #2 and #3. Even the biggest IP transit networks in the world only have capacity on the order of a few terabits per second (or a few million simultaneous video streams). However, "bandwidth" isn't really what matters. It's the last mile connection to end users. Big CDN's like Akamai have this figured out and can pump millions of simultaneous live streams directly into end user networks without congesting any internet backbones. It turns out that the main reasons we aren't all watching TV online right now is that big TV networks 1) are afraid of cannibalizing their existing revenue streams, and 2) think it costs a lot money. Neither of these are strictly misconceptions, but they aren't nearly as true as they were even a year ago. Justin.tv has developed technology and infrastructure that brings the cost of distributing live video below the cost of serving static video, so I guess that makes it all about the revenue streams. It should be interesting to see what happens to this space in the next couple of years.