Still, some younger people are abandoning conventional cable TV in favor of Internet services. Dish wants to reach consumers around 18 to 28 who would rather pay $20 a month for a smaller package of channels to watch on computers or mobile devices, CEO Joseph Clayton said in an interview this month.
The challenge is getting a "critical mass" of companies to give online rights to live shows, Clayton said. Negotiations bog down because programmers aren't willing to sell Dish the rights for a low enough price to make a service viable, he said.
Dish's satellite customers paid an average of about $78 a month in the second quarter.
Netflix and Hulu, two of the biggest providers of TV and movie content over the Internet, don't carry live programming, which is considered valuable to advertisers because viewers are less likely to skip commercials.
One hurdle to an Internet-only service, according to programmers: Nielsen doesn't measure online video the same way it does with television. That makes it harder to track how many people are watching and sell advertising based on that audience.
Nielsen can measure online viewing audiences provided that programmers broadcast the same ads online as they do on television, said Brian Fuhrer, a senior vice president at the ratings company. Websites such as Hulu, which sells different ads during the shows it streams, would require special coding for Nielsen to count.
Dish would be competing with Aereo Inc., a startup backed by Barry Diller's IAC/InterActiveCorp that lets users watch some live television over the Internet for a fixed monthly fee.
The broadcast networks, including Fox and CBS, sued the company in March for what they consider the illegal retransmissions of their broadcast signals. The networks normally receive fees from television distributors such as Dish. New York-area cable provider Cablevision Systems Corp. filed a brief in support of the broadcasters last week.
Dish and Aereo don't expect to get separate Internet rights from the major broadcast channels - Fox, CBS, NBC and ABC - according to two people familiar with the negotiations. Fox, CBS and NBC also are suing Dish over its AutoHop Ad-Skipper, which allows Dish customers to instantly bypass commercials for network shows the day after they're first aired. Dish has filed its own lawsuit against all four networks.
Aereo, based in New York, is in talks with a number of cable networks, including Viacom, to get rights to an older library of shows, similar to what's available on Netflix, according to two executives with knowledge of the discussions. Aereo would pay for that content, unlike what it does with the broadcast channels' programming, according to the people.
Aereo CEO Chet Kanojia said at an investor conference last week that additional content would be packaged a la carte or in "micropackages" for an additional $2 or $4 a month. The company plans to pair the broadcast networks with independent cable channels and new Internet-only products from network companies to give customers streaming movies, news and sports.
Aereo charges $8 a month plus tax for its standard service, which is only available in New York City. Kanojia said he plans to expand Aereo to as many as 15 markets before the end of 2013.
Dish already delivers an online service called DishWorld to overseas audiences, who watch it using set-top boxes from Roku Inc. Anthony Wood, CEO of Saratoga, California-based Roku, said he has been approached by several media companies looking to offer over-the-top services and expects to see some blossom in the U.S. soon.
"We will see that in the next year," he said.