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When profits are threatened, the first instinct of any business is to protect its main revenue sources. With Cable TV, this is subscriptions. What’s the threat? Between Cable and Satellite, about 85% of American homes are served. Of that number, about 60% are Cable wired, making it the big Gorilla. That is why most of the cable channels are just that: owned by the Cable cabal, not satellite.

The cabal is feeling challenged these days. Younger viewers accustomed using Internet for access to everything see less reason to invest in a cable subscription. Hulu.com has risen to one of the most popular sites on the web with its offering of TV programs, less commercials, and Internet style search. And it’s free.

Cable’s answer to Hulu, first proposed by Time-Warner Chairman/Chief exec Jeff Bewkes, is “TV Everywhere.” Bewkes was formerly head of the HBO division and is sensitive to viewer defection from cable. Since his main customers for HBO, CNN and other Time/Warner-owned channels are the cable companies, he has to make them happy. TV Everywhere works like this: you will pay, as you do now, for all the channels you don’t want to get the few you really do want, but in addition, you’ll get a special code so you can watch these channels on the Internet as well.

Understand? You will again pay for what you don’t want (cable) to get what you do want (Internet). The advantage TV Everywhere will have over free Hulu is news, sports, and The Daily Show. You can’t currently get those on Hulu. Do the cable companies really expect you to pay full cable rates for the few things you really want? Hasn’t the iTunes model shown us that consumers prefer to select and pay for their preferred songs? Isn’t TV Everywhere another version of the old CD album?

Jeff Bewkes is a smart guy and I am sure he knows this. My guess is he’s egging on the cable industry to fail withTV Everywhere so he can introduce something similar to iTunes, direct from producers to consumers, cutting out the cable company middleman.

He knows the cable guys are hung up on the word “free.” They supply the pipes for most of our internet connections but get a measly 50 bucks a month for it. Without additional revenue from offering tiers of channels you must pay for but don’t want, plus more from set top boxes (STBs), video recorders (DVRs), and high definition (HD) service; they would cry poverty.

That old revenue model is sure tough to change. My guess is it must, and very soon. Napster appeared in 1999, and was shut down by recording industry lawsuits two years later. Six months after, iTunes was introduced.

How long will it be before the next unshaven entrepreneur explains how Comcast’s TV Everywhere drove him to invent his TV workaround out of concern for the millions of fed up cable watchers? Maybe he’s already here. Avnar Ronen, a slick Israeli, is doing the talk show circuit selling Boxee; his bid to be the ITunes of TV.He’s savvy enough to know he must offer it free at first, capture the market, and add pay services later.

Boxee says they will introduce their own STB this summer. You won’t even need a computer to connect, just a wifi signal. As soon as the numbers look appealing, you can bet the cable channels will start making deals. What would you pay for CNN? Comedy Central, HBO? Or would you rather pay for just Rachel Maddow, Jon Stewart, and Larry David? You’ll get it any way you want to pay for it. Cable will still supply the pipes, but the programming revenue may circumvent them entirely.

I took a tour of downtown Philadelphia last weekend. The tour guide remarked that the AT&T building looks like a giant RJ-11 telephone wall jack and the Comcast Center looks like a giant USB flash drive. Will these be two memorials to a past age of glory when connection was more important than content?