As I walked the exhibit floors of the NAB Show this week, I asked dozens of people the same question: Is IP-based TV delivery shrinking the satellite TV market? Or will it soon? Except for a few satellite folks who ventured that it’ll probably shrink it one of these days, everyone agreed that it has, and that IP is hitting satellite even faster than had been expected.

One case in point is PBS, which announced in late March that it was in the process of switching to IP file-based delivery for its non-real-time programming. And then there’s the demonstration project from the folks at Ryerson University that you can transmit live 1080p, 30 fps HD video from New Zealand to Toronto … as long as you have internet2-quality, university-grade fat data pipes. In what must be an understatement, the Ryerson professors told me, “The television networks are very interested in this.”

The reason for the change is money. Satellites are very, very expensive. It costs millions to launch one, and if it makes it successfully into the right orbit, it’ll only last for an average of a decade or so. During that time, the only way to recoup those millions is to rent slices of transponder time, and that’s why it costs so much to use satellites to distribute programming. Anything IP-based is bound to save distributors a lot of money, as long as it works.

There are several markets for transponder time. One is for program originators such as PBS to distribute to their broadcasters. Another is for companies who send their signals to homes with dishes. (Yet another is for beaming news stories back to stations. I saw a lot of nascent IP-based alternatives promoted at the show, so that’s changing too.)

At the Akamai booth, I was chatting with Pete Condon, a senior service line manager, and I said that the unexpected speed of adoption of over-the-top TV to homes reminded me of the switch from vinyl records to CDs. Pete said this switch would go even faster. “This time,” he said, “everyone already has the player.” It took years for the CD infrastructure to become ubiquitous, but most households already have the internet.

But most is not all. Some folks don’t have any internet access at home, and even more don’t have broadband, and that’s one of the caveats here. In areas such as South America where there is little broadband penetration in homes, satellite remains an attractive option. It’s also still the best way to distribute live programming, such as sports and news, so satellite distribution probably won’t go away completely for a long time. But for now, watch as fewer signals are beamed up to the sky and more are relayed through the cloud.