Amazon (AMZN) launched a new service called Amazon Video on Demand, which allows users, for a fee, to watch any of 40,000 TV episodes or movies, in real time, on their Windows and Macintosh computers, and on specially equipped Sony Bravia TV sets. This service replaces an earlier Amazon video offering called Unbox.

I have been testing Amazon Video on Demand and I found it worked well, although it has some limitations. The user interface is clean and smart, the quality is good if you have a fast Internet connection, and there are some clever features. On the downside, it works poorly with the slow connections typical in places like hotels. And there are some studio-imposed limits on what content is offered and how you can view it.

To date, there have been three major models for legally getting TV shows and movies from the Web.

In one, best represented by Apple’s (AAPL) widely used iTunes store, the TV shows and movies are ad-free, but you pay for each. All of this content is downloaded to your Windows or Macintosh computer or your Apple TV set-top box for later viewing, even when you’re not connected to the Internet — though on Apple TV you can start watching while the material is being downloaded.

A second model, best represented by the studio-owned Hulu.com, presents movies and TV shows on a Windows or Macintosh personal computer free of charge, but requires you to watch commercials that can’t be skipped. The TV shows and movies you view on Hulu are “streamed” rather than downloaded, meaning they are meant to be viewed immediately, in real time, rather than stored for viewing when you’re not connected to the Internet.

The third online model is best represented by Netflix (NFLX), the popular DVD distributor. It offers a “Watch Instantly” streaming option on Windows PCs or on TVs equipped with a special set-top box, for a small portion of its large catalog of TV shows and movies. These videos are ad-free and don’t carry an individual charge, but require a monthly subscription fee.

The new Amazon Video on Demand service is a hybrid of these others. As on iTunes, the TV shows and movies it offers are ad-free and purchased individually, don’t require a subscription, and work on both Windows and the Mac, plus on one type of set-top box. In Amazon’s case, that’s Sony’s Bravia Internet Link, a $299 device that works only with Sony (SNE) TVs.

But, like Hulu and Netflix and unlike Amazon’s older Unbox service, the new Amazon Video on Demand service offers videos via real-time streaming. In many cases, it also allows downloading, iTunes-style, to Windows PCs (but not Macs) and to TiVo devices attached to a TV. The videos can’t be streamed in real time using a TiVo (TIVO).

Amazon’s streaming videos are viewed in any of the major Web browsers and don’t require any special software. I tested the new service on both Windows PCs and Macs, and on a Sony Bravia TV equipped with the $299 adapter box. In my tests, Amazon’s videos looked quite good over a fast Internet connection. However, on a typically lousy hotel Internet connection, the movies were often grainy and kept stuttering.

The new service doesn’t yet offer videos in high definition, something Apple just announced this week it is adding for some TV shows. Amazon says it is working on HD.

Amazon’s user interface for the new service is very nice. All of your purchased videos are available in a library stored on the company’s servers, so you can easily watch them again and again if they are purchased, or resume a partly watched rental. And the service remembers where you stopped watching a video and resumes it at that point, even if you started it on, say, a Dell (DELL), and resumed it on a Mac.

On the downside, the new Amazon service isn’t always simple or consistent. For instance, you can watch only two videos at a time, and not all titles can be either streamed and downloaded, or be either purchased or rented. Most rentals last 24 hours, but some differ.

Selection was OK, but not great. Because of studio policies, many current and recent movie hits aren’t available. There are gaps as well in the TV selection. For example, while iTunes offers the current second season of the excellent “Mad Men” series, Amazon has only the first season.

Prices also can be confusing. Amazon rents most movies for $3.99 and sells them for between $9.99 and $14.99. TV shows generally cost $1.99. But some titles carry different prices, albeit these are often lower.

All in all, Amazon Video on Demand is a good service for people who prefer paying for ad-free TV shows and movies, and is another strong step in the Internet’s rising competition with traditional TV.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.

Beginning this summer, as soon as next month, wireless Internet access will arrive in the passenger cabins of some commercial U.S. airliners.

On these Internet-equipped planes, any passenger with a Wi-Fi enabled laptop — or a cellphone with Wi-Fi — will be able to do almost everything he or she could do online at home or at the office. That includes surfing the Web, using email, having instant-messenger text chats, downloading and uploading files, and streaming video and audio.

In fact, I did all these things a few days ago on a test flight using the new system, called Gogo. During the flight from San Francisco to Denver, on a small test jet, I could operate online as if I were sitting at my desk, or in a Starbucks. I used Dell (DELL) and Apple (AAPL) laptops, a BlackBerry (RIMM), a Windows Mobile phone and an iPhone to perform all the most common online tasks, while soaring over majestic mountains and glorious national parks.

I sent and received emails on Microsoft (MSFT) Outlook and Apple Mail, including messages with hefty attachments. I conducted IM chats on AOL (TWX) Instant Messenger and Google (GOOG) Talk. Using all the major Web browsers, I called up dozens of Web sites, and watched video clips on Hulu and YouTube. I downloaded photos, songs, PDF files and Microsoft Office documents. I used all the Internet functions on the iPhone, and on the Wi-Fi-equipped BlackBerry and Windows Mobile phone.

One important caveat: Gogo is a data-only system. It doesn’t allow phone calls and will block all services that allow voice conversations to be made over the Internet.

Gogo will launch on three American Airlines (AMR) routes, likely in July. The first planes to use it will be American’s 15 Boeing 767s flying between New York and Los Angeles, San Francisco and Miami. Later in the year, Gogo will be available on all of Virgin America’s small number of routes, and possibly additional American routes, if the first deployment works well. It’s supplied to the airlines by a Denver-based company called Aircell, which says it is in negotiations to offer the Gogo service on several other major U.S. airlines by next year.

The Gogo service will cost a flat fee of $12.95 for flights of three hours or longer, and $9.95 for shorter trips. You log into Gogo as you would any commercial Internet service, registering on a special Web page. Aircell plans to allow advance sign-up, so you’d only have to enter an ID and password on the plane. No add-on software, hardware or cables are required.

A few Web functions will be offered free from Gogo, including access to the American Airlines Web site, to Frommer’s online travel guides and to a limited selection of articles from The Wall Street Journal.

Gogo isn’t the first in-plane Internet service. A few years ago, Lufthansa (LHA.MU) offered a satellite-based service from Boeing (BA), mainly on over-ocean flights, but it was canceled.

The service operates at respectable, if not blazing, speeds — similar to what you’d get on a cellular broadband service or a slow home DSL line. On my test flight, download speeds varied from 266 kilobits per second to about 1.4 megabits per second, with the most typical speeds hovering between 500 and 600 kbps. Upload speeds were between 250 and 300 kbps. I found that most of the tasks I tested, except for streaming video, felt smooth and normal.

Speeds could degrade on a large plane with scores of people online simultaneously. But Aircell claims it has the technology to make my experience representative for anyone doing common tasks, such as Web surfing and email. During my test flight, eight laptops and six Wi-Fi-enabled smart phones were using the system simultaneously. All registered decent speeds, except for a couple of minutes when the plane was crossing between the zones controlled by the company’s ground-based towers.

Aircell gets Internet access to the planes through a network of 92 towers scattered across North America. These essentially are cellphone towers, carrying a high-speed cellphone data signal, except that the Aircell antennas point up, into the sky. A receiver on the underside of the aircraft picks up the signal, which is then distributed through the plane via Wi-Fi.

The companies say Gogo is safe and won’t interfere with the plane’s operation. It is government-approved, and pilots can shut the system off should they deem it necessary.

Gogo has some limitations. The service plans to allocate its capacity so that low-bandwidth activities like Web surfing and email take priority over high-bandwidth ones like streaming video. That means you may find video to be slow and halting.

And Gogo is a North American, land-based service only. It won’t work over the oceans and, for now, it won’t work on other continents.

But for U.S. travelers who want to stay connected in the air, Gogo does the job.

• Find all of Walt Mossberg’s columns and videos online, free, at the new All Things Digital Web site, http://walt.allthingsd.com. Email him at mossberg@wsj.com.

There are two models for this legal Internet distribution. Some shows and movies can be purchased or rented from services like Apple’s iTunes or Amazon’s Unbox. You pay a fee for these downloads, which don’t have commercials, and you can keep any videos you buy to watch repeatedly even without an Internet connection.

The other model, common on the Web sites of the TV networks, is free, ad-supported streaming directly within a Web browser. In this approach, you pay nothing, but you have to watch commercials that can’t be skipped. You must be connected to the Internet while watching, and you don’t get to keep the video.

This week, the ad-supported, streaming approach took a big leap forward with the launch of a Hollywood-backed service called Hulu, at hulu.com. Hulu aims to be a legal, one-stop shop for streaming of TV shows and movies from numerous networks and studios. It’s intended as an attractive antidote to pirate sites and to Google’s YouTube service, which has angered the media companies by allowing users to post all or parts of movies and TV shows without permission or payment.

Hulu is a joint effort of two big media conglomerates, NBC Universal and News Corp., each of which operates multiple networks and studios. (News Corp. also owns The Wall Street Journal and the Web sites where this column is published.) But Hulu contains programming from other companies as well, including Sony and Time Warner. All told, it offers full episodes or clips from about 400 TV series, plus 100 feature films.

I’ve been testing Hulu, and I am very impressed with its design and ease of use, and with the fact that it allows users to edit and re-publish its content on their own sites. Despite some drawbacks, it’s the first Web property I’ve seen from mainstream studios or networks that shows a real understanding of both modern Web design and the Internet’s culture of sharing. In my view, it’s far better than the typical network or studio Web site.

Even though Hulu lacks programming from ABC, CBS and many cable networks, it has a fair selection of popular shows, such as “30 Rock,” “The Office,” “The Simpsons,” “Battlestar Galactica” and “Saturday Night Live.” Its movie catalog includes old favorites like “The Usual Suspects,” “The Big Lebowski” and “Sideways.”

The site is organized in a clean, elegant manner. You can browse shows alphabetically, by genre or by network, or you can use an excellent search system. The search system even brings up links to videos of shows on other sites, such as ABC’s “Grey’s Anatomy,” that are missing from Hulu’s own collection.

Watching the material is a pleasure. You can view it in a fixed window or in full-screen view. You can also “pop out” the viewing window so you can place it anywhere on your screen and resize it to your liking. A feature called “lower lights” grays out everything on the computer screen but the video itself.

Even the advertising is relatively painless. TV shows contain just 25% of the commercial time that’s on regular TV. And Hulu allows you, in some cases, to choose the advertisers whose commercials you see, or else to opt to watch a movie trailer at the start of a video in exchange for seeing no further ads during that viewing.

In a break with Hollywood’s past rigidity, Hulu makes it easy to share, even edit, shows and clips. You can repost an entire video, or any portion of it, on your own blog or on social networking sites.

But Hulu also has some major downsides. Most important, Hulu lacks depth. Even with TV series from its owners’ own networks, Hulu typically contains only a small number of full-length episodes, and mainly offers short clips. In some cases, episodes expire after a while. For some shows, such as “Saturday Night Live,” there aren’t any full episodes, only clips. And the wildly popular “American Idol” isn’t in Hulu at all, even though it airs on News Corp.’s Fox network.

This stands in stark contrast to the depth offered on iTunes, where you can find multiple seasons of full episodes of many shows. And it doesn’t begin to compete with pirate sites, where you can find nearly everything.

Also, Hulu requires a decent broadband connection — a speed of at least 1 megabit per second is recommended, and even higher speeds are needed for some content. That means that using Hulu over the slowest DSL lines or cellphone modem cards will likely provide a poor experience.

Another problem is that, unlike iTunes or Amazon Unbox, Hulu can’t be used via a TV set-top box or a portable player. And shows can’t be saved for offline viewing, such as during flights.

Still, Hulu is a good start for Hollywood in finally providing a better experience for Internet streaming of TV and movies. If the service can add a lot more content and make viewing possible in more scenarios, it might strike a real blow against piracy.

Email me at mossberg@wsj.com. Find all my columns and videos online, free, at the new All Things Digital Web site, http://walt.allthingsd.com.

Time Machine is a key selling point for Leopard and the Mac. It is more complete, and yet simpler, than the built-in backup feature in Vista Home Premium, the most popular home version of Windows.

But Time Machine has a major drawback: It works much better on desktop Macs than on laptop models. That’s because it’s primarily designed to operate with backup hard drives you connect directly to the computer. And it’s a pain to plug a backup drive into a laptop, which can move around the house. While Time Machine will work with a remote hard disk under certain circumstances, that option requires a second Mac running Leopard, a costly condition.

Now, Apple (AAPL) has attempted to fix the problem with an unusual new companion product called Time Capsule. This is a $299 stand-alone networked gadget that packs both a giant hard disk and a speedy Wi-Fi wireless router into one slender case. It just plugs into your existing home network, and any laptop within wireless range can connect to it. It can back up multiple computers.

Time Capsule is designed to seamlessly work with Leopard’s Time Machine. But it can also be used as a wireless Internet connection, and/or a remote hard drive, for manually storing and retrieving files by Windows PCs running either Vista or Windows XP, or by Macs running Apple’s older Tiger operating system. And you can also use it with certain other backup programs, such as the ones built into Windows XP or Tiger.

In my tests over the past week, Time Capsule worked well in all of these scenarios. However, Time Capsule isn’t meant to do as many different tasks as some other networked drives.

Apple stresses that Time Capsule is a limited, targeted device meant primarily for backup — especially with Time Machine — and as a wireless base station. Unlike some other networked storage devices, like Hewlett-Packard’s MediaSmart home server, Time Capsule doesn’t allow users to simultaneously stream music or videos to multiple PCs, to easily access its contents via the Web or to stream videos to TV sets.

The $299 Time Capsule model comes with a 500 gigabyte hard disk inside, and there’s also a $499 model with hard disk that can hold one terabyte of data, or roughly 1,000 gigabytes. Both models use the same “n” class of Wi-Fi, the fastest version with the longest range. Both also work with computers equipped with the older “g” and “b” versions of Wi-Fi.

You can buy networked hard disks in these sizes for less money and simply use them with your existing Wi-Fi router. However, Time Machine won’t work with them, according to Apple. The company says the only standalone networked hard disk Time Machine can use is Time Capsule.

In my tests, Time Capsule performed perfectly with Time Machine. It also was easily recognized by several of my Windows machines running Vista and Windows XP. On all of these machines, I was able to speedily access the Internet via Time Capsule. Time Capsule can be set up to either replace or supplement your existing Wi-Fi router.

All the machines, even the Windows ones, also could recognize the Time Capsule as a remote hard disk, and save files to it and retrieve files from it. For instance, I manually copied a song, a photo and a Word document from a Mac laptop running Leopard onto the Time Capsule. On a Dell running Vista, I then opened the Time Capsule and launched that same Word document in the Windows version of Word, opened the photo in Vista’s Photo Gallery program, and played the song in Windows Media Player. This same process worked in reverse.

Apple doesn’t guarantee that Time Capsule will work with all backup programs. But it says it will work with the backup software built into Tiger and will likely work with some other backup software.

In my tests, the built-in backup program in Windows XP Pro worked fine with Time Capsule. But the built-in backup program in Vista failed. Microsoft said the problem I encountered was due to a new Vista security feature for backups that foils some remote hard disks, not just Apple’s.

Setting up Time Capsule was easy, using a step-by-step utility program that Apple supplies in both Mac and Windows versions. The device has a USB port that can be used to add either an additional hard disk or a networked printer. And it can be connected to a network via a wired connection if you don’t want to use its wireless functionality.

If you use Time Machine on a Mac laptop, then Time Capsule’s $299 price is money well spent. If you don’t, there are cheaper or more versatile solutions to the backup problem.

• Email me at mossberg@wsj.com. Find all my columns and videos online, free, at the new All Things Digital Web site, http://walt.allthingsd.com.

For instance, Verizon’s entry-level DSL service, at 768 kilobits per second for downloads and 128 kilobits per second for uploads, is considered high-speed here. But in Japan and Korea, families can buy moderately priced Internet service measured in the tens of megabits per second. They get a race car, while Americans are stuck with a bicycle.

A megabit per second (mbps) connection moves about 1,000 times as much data every second as a kilobit per second (kbps) connection. A service running at 10 megabits per second is more than 13 times as fast as Verizon’s base DSL service. All such services have two modes: downstream, for downloading Web pages, email and files; and upstream, for uploading email or files. Generally, Internet providers offer much faster downstream speeds than upstream speeds.

Even the faster common U.S. broadband offerings, like Comcast’s $42.95 a month basic cable-modem service, which delivers 6 mbps downstream and 384 kbps upstream, are ridiculously slow compared with the Asian offerings.

But now, Verizon is offering Americans in certain parts of the country a new, much faster Internet service for only a little more than Comcast charges for its basic service. This new product, called Fios, offers 15 mbps downstream and 2 mbps upstream for $50 a month, or $45 a month if you use Verizon for your telephone service.

There are also two other Fios plans: 5 mbps downstream and 2 mbps upstream for $40 a month; and 30 mbps downstream and 5 mbps upstream for $200 a month. Both also are discounted if you also use Verizon phone service.

I had Fios installed in my house in July, and I’ve been comparing it with Comcast’s basic cable-modem service. I have been pleased with Fios’s speed and reliability, which are true to Verizon’s claims. On some tasks, it is markedly faster than Comcast. And on my laptops connected via a Wi-Fi wireless network, which tends to degrade Internet speeds, the speed increase has been especially noticeable.

This speed boost, however, isn’t the kind of transforming event that people experience when they first move from dial-up to broadband; there’s a limit to the discernible speed increase you can get when downloading Web pages and email — the two most common Internet activities.

So far, Fios is available to fewer than three million homes and business in selected cities and towns in just 15 states, including the Maryland suburb of Washington where I live. Soon, Fios will have competition. Comcast has been working on its own higher-speed solution, and I expect Comcast to match or exceed the Fios downstream speed in these parts of the country where Fios is available in the next few months.

I chose the middle of three Fios plans Verizon offers — 15 mbps downstream and 2 mbps upstream. It took two visits from Verizon crews to install my Fios service — one to lay a fiber-optic cable to my house, and another to install the indoor electronic gear. The service hasn’t been down for even a minute since it was turned on.

I ran a rigorous series of tests comparing Fios with the Comcast basic cable-modem service, using an Internet speed test site accessed from a hard-wired Windows PC. My Fios service repeatedly was measured at just over 15 mbps downstream and around 1.8 mbps upstream. The Comcast service clocked in at a mere 2.3 mbps downstream and around 360 kbps upstream.

Comcast says I should have gotten nearly 6 mbps downstream in my tests, and that my poor test results are likely due to some problem unique to my house. But even if I had gotten, say, 5.5 mbps downstream with Comcast, Fios would have still won hands down.

On my Windows and Mac laptops connected wirelessly via Wi-Fi in distant parts of my home, test speeds jumped from under 1 mbps with Comcast to around 8 mbps with Fios, a huge improvement.

I also did some real-world comparisons. I downloaded a 65.8 megabyte file with Fios in just 42 seconds, compared with nearly seven minutes with Comcast. An uploading test was even more impressive. I uploaded five digital photos, totaling 10.2 megabytes in size, to an online photo service. Fios did this job in just over eight minutes, while Comcast took one hour and 22 minutes.

Streaming video clips from the Internet were much smoother, and suffered fewer hiccups, with Fios than they did with Comcast, especially on my wireless laptops. But Fios wasn’t markedly faster at fetching Web sites, or downloading email without large attachments.

I consider Fios a good service and a good bargain. If you are a heavy Internet user, and you can get it, I recommend you do so. That is especially true if you use the Internet over a wireless network, and stream a lot of videos, or download and upload lots of files. If you are a light user, just surfing the Web and doing email, a slower service will do fine.

• Email me at mossberg@wsj.com