I've heard this rumor before and it seems to have slowly picked up speed since Microsoft unveiled this at E3. Microsoft is talking to Comcast and Verizon about integrating cable to the Xbox 360. So you don't need a cable box, but you still have to subscribe to their services. I wonder if they'll have different options for the Xbox 360 or if it's just the same prices as a regular subscription. The details are still limited, but it seems all this does is give gamers another way to pay for cable.
What's the point? I ditched my cable company because I was sick of paying for services and channels I don't watch. I didn't need 50,000 channels in pretty HD. (And I don't watch sports) I want a service where I can sign up for just a few channels. I was hoping when Microsoft announced its Xbox TV in June that it would take more independent approach.
If Microsoft is just getting rid of the cable box, but keeping high prices, unwanted channels and all other fun things about cable, I'll pass. I do hope in the future consoles will be able to provide a different way on how we watch TV, like Hulu or Netflix. (Although Netflix just freshly pissed off customers this morning with the Netflix blog post and an email)
Unless Microsoft changes its tune and grows a pair, (see this article where it reports Microsoft didn't want to "pick a fight with cable") Xbox TV won't make a big difference.