I've moved around a lot, and I've only once ever (in Framingham, MA, of all places) had a cable company that didn't utterly suck. And in my experience, digital cable is an even bigger rip-off.
I've been sort of amused and sort of impressed while digging through Hulu and Fancast. It's babysteps stuff, and the range of content is pretty damned random, but it does make me think that it's a rough shape of what's to come. A Netflix-like subscription model would be fine, and so would a micropayment account-based plan. Maybe 10 cents per hour of watched content? If you had just a million customers watching an average of four hours of content a day, that'd be twelve million bucks a month.
This doesn't bode all that well for advertisers -- it certainly suggests that (A) ads should mostly run while requested content is buffering, and (B) ads should be entertaining all by themselves -- but mostly it doesn't bode well for the cable companies, and good riddance to them.
Fancast has a comparably straightforward website that, for me, is much more pleasant to use than Hulu's, but all too often they have a link for content that then tells me the content isn't available. Hulu is annoying as hell and doesn't buffer well. I noticed last night that if I go to a show's main page and look at the full episodes available, there may only be four or five, and a search won't turn up more, but if I page through the Most Popular stuff I often find at least two or three more full episodes available.
There's no reason they couldn't offer more sports. It's an easy business model if the content providers will get on board, and most of them probably will in the next few years.