Popular online video service Hulu will start charging subscription fees sometime next year, says News Corp. Deputy Chairman Chase Carey.

While speaking at a recent Broadcasting & Cable summit Carey announced his plans for Hulu: “I think a free model is a very difficult way to capture the value of our content. I think what we need to do is deliver that content to consumers in a way where they will appreciate the value. Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business.”

Hulu.com has attracted a large online audience by offering commercial-supported TV shows and movies from NBC, ABC, Fox, and other networks since 2007. However, the addition of a subscription fee may send most of Hulu's users searching for alternatives.

I use Hulu frequently to watch everything from Comedy Central's "Daily Show" to Fox's "Family Guy." I stomach the commercial interruptions in exchange for the high-quality streaming content, but I certainly won't be pulling out my credit card if the service puts up a subscription pay wall. And I doubt many other customers will be happy to start paying money for a service they previously received for free.

The move to a fee-based business model is a decision that will still have to be approved by the Hulu board, and I hope someone has the sense to blackball this idea. But common sense doesn't always prevail in the entertainment industry –  if it did, we might still have "Arrested Development."

Net neutrality policies that prevent Internet service providers (ISPs) from managing network traffic based on content may end the age of unlimited Web use. Without the ability to intelligently manage their networks, ISPs are increasingly using data caps, often as low as 5 GB per month, to preserve bandwidth.

A year ago the FCC was breathing down Comcast's neck for throttling Internet traffic related to BitTorrent, the file-sharing protocol. With the threat of Net neutrality regulations looming, Comcast and other ISPs, agreed to drop BitTorrent traffic-management programs and generally treat all Web traffic as equal.

However, the Net neutrality concession wasn't free for consumers. AT&T, Comcast and Time Warner all rolled out monthly data caps shortly after the agreement.

Without neutrality, ISPs are allowed to manage network traffic by restricting content. They may do so intelligently, or they could slow streaming video, disrupt P2P services and even block rival Web sites - which would be highly anti-competitive. Though frustrating, the data caps allow ISPs to conserve their limited bandwidth without relying on network-management techniques that violate net neutrality.

Now the FCC has its sights on mobile broadband providers. FCC Chairman Julian Genachowski is a strong supporter of net neutrality and believes it should also apply to mobile providers. But with much less bandwidth available in the wireless spectrum, net neutrality could mean sluggish speeds and far more restrictive data caps.

In a Washington Post interview, Carnegie Mellon Computer Science Professor David Farber argues net neutrality isn't practical: "We've always said the Internet has infinite bandwidth, but the economics of running a network don't allow you to do that."

Net neutrality policies haven't crippled terrestrial Internet in the way Farber fears, but mobile broadband is not as plentiful. Wireless carriers may have trouble complying with neutrality regulation.

If every smartphone customer suddenly began to take advantage of his unlimited data plan with bandwidth hungry applications like VoIP calls or streaming video, and wireless carriers are not allowed to manage this sudden demand for content, the network would suffer.

Gizmodo thinks net neutrality will eventually cause smartphone users, like those with the iPhone, to lose their unlimited broadband:

You will pay for every ounce of data that you use. And if you're "crowding" the network by downloading a bunch of stuff, you're gonna get slowed down because that's the easy "net neutral" way to keep users in check. How much better is that, really?

Proper network management would be ideal, but there is no guarantee ISPs will manage our internet traffic effectively and fairly. So are you willing to give up your unlimited bandwidth for Net neutrality, or do you trust your internet provider?

Microsoft released a mandatory update for the Xbox Live Dashboard this morning. Along with user interface enhancements, the update provides a variety of functional updates to the game console's online capabilities.

Games on demand

Xbox 360 users with a fast Internet connection and hard drive space to spare can now download complete titles from the new games marketplace. The marketplace only includes about 20 games at the moment, but Microsoft says new titles will be added every Tuesday.

I am a little disappointed by the pricing in the games marketplace. The online games seem to cost slightly more than purchasing a physical copy at your local Best Buy. Plenty of people will likely pay a few extra dollars for the convenience and instant gratification of games on demand. I just can't help but feel the lack of physical packaging and a direct-to-Microsoft payment plan should result in drastically lower prices.

Avatar marketplace

For those of you in love with the customizable cartoonish avatars that represent each person in the Xbox Live universe, the update includes a new avatar marketplace.

According to Xbox.com users can "Download and purchase premium items, including branded apparel from your favorite fashion labels and Xbox 360 games."

I don't think my avatar is getting a flashy new wardrobe if it requires me to open my wallet, but I have no doubt some gamers are excited to distinguish their virtual selves with unique outfits and props.

Netflix

Netflix has been available on Xbox Live for some time, but with the new update you no longer need a computer to add titles to your instant viewing queue.

Xbox boasts that Netflix subscribers can now "browse through new releases and other genre lists based on the types of shows you’ve previously watched, all from the comfort of your couch."

Coming soon

Unfortunately, anticipated features such as Facebook and Twitter integration are not yet available, but Xbox promises social networking and Zune video will be added this Fall.

After toying with the new dashboard for a day, I was impressed by the Netflix updates, additional console settings, and enhanced video controls, but nothing struck me as a radical development.

Are you pleased with the new features included in this dashboard update? Or does your Xbox Live experience seem largely unchanged?

A full list of features included with the new update can be found on Xbox.com.

False alarm: Apple is not - at least not yet - approving iPhone apps containing pictures of naked women.

The blogosphere lit up Thursday with reports that Hottest Girls had the distinguished privilege of being the first application approved for sale in the iTunes App Store that contains nudity. The Hottest Girls iPhone app is not new, but as of Thursday, it added photos of topless women to its gallery of "2200+ sexy bikini babes and lingerie models."

Of course, porn has long been accessible on the iPhone through its Internet browser, but this appeared to mark the first time Apple has sanctioned images of naked women for the popular device.

An image from the 'Hottest Girls' application for sale in the iTunes App Store.

Some speculated the "change" in Apple's porn policy was a result of expanded parental controls in the new iPhone 3.0 OS software.  Age restrictions can now be set to prevent mature downloads from the App Store.

According to a Gizmodo article that seemed oddly excited by this news:

This is not just an application that downloads softcore content from the Web, bypassing Apple's censorship. There is no censorship here, as this is truly an Apple approved app "rated 17+" for "frequent/intense sexual content or nudity" and "frequent/intense mature/suggestive theme."

The editors at Wired.com took the Hottest Girls app for a test drive and were underwhelmed. "The application itself is terrible," wrote Wired's tester, "but you can be sure that there will be more, and better, very soon."

Shortly afterwards, the Hottest Girls app, which claims to be the first officially sanctioned iTunes app to contain topless photos, disappeared from the iTunes store.

A website allegedly run by Hottest Girls app developers explained the disappearance:

The Hottest Girls app is temporarily sold out. The server usage is extremely high because of the popularity of this app. Thus, by not distributing the app, we can prevent our servers from crashing. Those who already have the app will still be able to use our app. To answer the question on everyone's mind: Yes, the topless images will still be there when it is sold again.

By Thursday afternoon, Apple's public relations team felt the need to weigh in. From Apple spokesman Tom Neumayr:

Apple will not distribute applications that contain inappropriate content, such as pornography. The developer of this application added inappropriate content directly from their server after the application had been approved and distributed, and after the developer had subsequently been asked to remove some offensive content. This was a direct violation of the terms of the iPhone Developer Program. The application is no longer available on the App Store.

Did Apple do the right thing? Is the fuss over this episode just silly? And, given how lucrative the pornography industry is, is it just a matter of time before nudie pics become available through the App Store?

Movie studios Lionsgate, MGM, and Paramount/Viacom have teamed up provide a new outlet for their films. Joint venture Epix promises popular movies from all three studios before they hit DVD, and the best part is, cable subscribers can watch on TV or on demand from EpixHD.com for free.

While currently in private beta testing, Epix may soon be in your cable lineup competing with premium channels HBO, Showtime and Cinemax. Epix is working to negotiate deals with cable and satellite providers to offer the channel as part of the standard TV lineup. Ars Technica reports that corresponding online content will then be available to any cable and satellite customer who also subscribes to the same provider's Internet service:

Epixhd.com will only be available to people who subscribe to one provider's TV offering and also subscribe to that same provider's Internet offering. That is, if Comcast were to offer Epix, users would need to pay for both Comcast cable and Comcast Internet in order to access the streaming, on-demand service. That's good for Comcast, and it helps them cover the cost of the service.

It appears that the success of online TV service Hulu and Netflix On Demand may have finally convinced production studios that Internet distribution can be profitable.

An invite-only beta of Epixhd.com began Monday, with a sign-up form for rolling admission over the next few months. With any luck, network negotiations will be successful and we can enjoy films like the new Star Trek on our laptops before they reach DVD... and without having to wait on BitTorrent.

We’re just a little more than two weeks away from the rumored release/announcement of the new version of the iPhone.

It's expected that the Apple will release the 3.0 software at the World Wide Developers Conference on June 8th (no Jobs, but Phil Schiller will be doing the keynote). Having a few friends and colleagues who have started developing for the iPhone - I've actually got to play with the beta a bit. I must say, as nice as cut and paste is, the search is my favorite new feature. Being able to search through emails, contacts and anything else on my phone is way nice (and one of the main features I missed when I first got the phone last year).

The real question is - will new hardware be announced at the same time? Some of the big rumors surrounding video recording (that it will only work on new hardware) point to it coming soon - and has sparked a flurry of rumors to go with it.

Some say you will be able to edit video on the phone. If this comes true, I suspect it will be more about trimming to make the video shorter than making it theater-worthy.

There’s also a host of rumors surrounding Apple developing custom innards for the phone – custom processor, OLED screen, a specially designed battery – although those seem more likely for a further away iteration than anything we're likely to see this year.

I'm hoping for increased capacity (really a no brainer, but how big will it be? ... 80GB iPhone please?) and a better camera. Three megapixels would be acceptable, 4 would be grand and 5 would actually be worth using.

What do you think Apple should provide with a hardware update to the phone? And which of these rumors sound too good to be true? OHH and just to bait the water a little – what are the chances Apple will finally come through with the long rumored netbook/tablet?

I don't own a netbook, but I do own a 5-year-old Dell Inspiron laptop. I like to think of my Inspiron as an "oversized netbook" simply because it makes me appear more trendy.

According to an April survey by Changewave Research, one out of every four computers purchased in the next three months will be a netbook. These small, inexpensive laptop computers are quickly becoming the latest hip accessory. Unfortunately, their bare-bones computing abilities make them about as useful as a chihuahua in a handbag.

In a TECH.BLORGE interview, Lenovo analyst Matt Kohut admits that netbooks may not live up to the expectations of some consumers.

Initially people weren’t sure what to do with them. Retailers were saying, "here’s this new netbook PC," and the average person picked one up and said, "oh wow, that’s small, maybe I can run Photoshop." So, as an industry, we ended up with a lot of returns, because the functionality of what netbooks could do was not well communicated.

However, Kohut is upbeat about the future of netbooks. Second-generation netbooks are expected to have beefier computing power, run Windows 7 and offer 3G wireless capabilities, all while price points continue to drop.

So where is Apple's sleek, user-friendly netbook alternative? Apple CFO Timothy Cook told investors not to hold their breath at the company's quarterly-earnings call:

When I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware, very small screens, and just not a consumer experience, and not something that we would put the Mac brand on, quite frankly.

However, Ars Technica isn't quite buying Cook's skepticism and points out that Apple always trashes an idea before doing it.

Even though they can't play games or edit video and often strain when loading YouTube, netbooks continue to sell. Do these low-priced Internet browsers fulfill an actual need, or are customers simply blinded by impossibly low prices?

Online video is growing faster than a Chia Pet.

According to a recent Nielsen report, the number of American users frequenting online video destinations has climbed 339 percent since 2003, and time spent on video sites has shot up almost 2,000 percent over the same period.

Increased bandwidth, social networks, and sites such as Hulu and CNN.com Live that provide high quality web programming have all contributed to video's explosion onto the Internet. However, before you can say ch-ch-ch-Chia, some Internet Services Providers (ISPs) are threatening to spoil the party.

Time Warner Cable, Charter and Comcast have each tested data caps (or download limits) in certain markets. Fortunately, the caps, which have been called price-gouging by Ars Technica, met with resounding disapproval from consumers. Let's keep it that way.

Unlimited bandwidth is the driving force behind the internet's growth and development. If users begin to closely monitor their downloads to avoid data caps and overages, innovative sites that employ rich media and streaming video will be the first to suffer.

I don't get nostalgic when I recall the days of scrutinizing my AOL time limits, and I'm not looking forward to doing the same with my downloading.

Does your ISP limit your bandwidth? Do you believe the caps are necessary to maintain fairness by limiting excessive downloaders or are they strictly revenue generators for ISPs?

You've probably read by now that Disney on Thursday struck a deal with Hulu, the online video site. That means you can watch a bunch of ABC shows - everything from "Lost" to "Desperate Housewives" - for free at Hulu.com.

NBC and Fox already put content on Hulu.

Here's some background about what this means for online video sites, and for the future of TV. Let me know what you think of the deal in the comments. Do you use Hulu?

CNET says the deal is bad news for Google-owned YouTube (read more about YouTube's partnerships here):

What this all means is there just aren't that many other places for YouTube to acquire high-end content.

"(The Disney-Hulu deal) is not good news for YouTube," said James McQuivey, an analyst at Forrester Research. "Any hope of creating a professional-content business has probably disappeared."

A YouTube spokesman issued this positive-spin statement: "More content coming online in more places is a win for consumers and provides further validation of the growth of the online video market."

The LA Times says what's in the deal for Disney:

Disney views the move as a way to reach a new audience that isn't coming to the network's own website. Although the ABC.com website has attracted regular viewers of its shows, Hulu offers the opportunity to tap into a new group of viewers.

The paper has more on competition in the broadcast world for online viewers:

The new setup also brings the owners of three of the four major broadcast networks - ABC, NBC and Fox - into a fight for online eyeballs against the video streaming site TV.com, which CBS Corp. acquired last year when it bought CNET Networks Inc. for $1.8 billion. In February, Hulu pulled all its content from TV.com.

Wired writes that the deal is pretty sweet for Disney:

The move, though not unexpected, marks a victory for Disney and its ABC television programming: Not only does the deal erase NBC’s and Fox’s early-mover advantage over ABC, but Disney’s Hulu deal appears a bit sweeter than those of the other networks because it requires them to make only certain episodes from a series available on Hulu at any given time. The first taste may be at Hulu, but the full meal will still be on Disney-controlled real estate.

And the New York Times gives some context to Hulu's growth against other online video sites:

Hulu, which in the last 18 months has become the third most popular video site on the Web, behind YouTube and Fox Interactive Media, displays free, high-quality versions of television shows and movies, supported by advertising.

For more on Hulu, see the site's "about" page.