The Future: IPTV

There was an article in the WSJ today in the 'Marketplace' section about the merger of TV and the Web.  The jist of the technology called 'IPTV' is just what it says.  Communication companies such as Verizon and SBC will offer IP addresses for television programming (Microsoft is already in at work on this).  If the consumer subscribes to a channel, then s/he will be granted access to that IP address.  Currently, cable companies have all their channels on the spectrum and they block the channels for which the consumer does not pay.  This IP system will allow you to choose programs and not just channels.  Cable companies are concerned about this getting around and the consumers not needing them.  Comm companies are concerned about piracy. 
Cable companies will continue to further their use of fiber optic cabling through things such as inDemand and new HD channels.  Comm companies are seriously moving towards this new infrastructure.  There could be a potential powershift from cable to comm companies, but my concerns are:
1) Will this discredit this transformation to HDTVs that we've been told we need to invest in because they're supposed to be the norm by 2007 according the Act of '96?
2) If consumers are allowed to choose our programs like we do our websites, what does this do to the people spending the ad buck$?  Initially, it seems as though ads will have the potential to be uber-targeted or uber-non-existant.