At the start of the Olympics, NBC's live video stream was unsatisfactory, but we noted improvement by day 9.
More good news -- the video seems even better now. On day 12, I was comfortable watching events streaming at 1080p at full screen on my Dell laptop with 4 GB of RAM an Intel Core 2 CPU with a 3.06 Ghz clock speed and an Nvidia Quadro FX 770M display chip.
This is not to say the video was perfect. It stuttered a bit, but was watchable. As you see below, there were thousands of dropped frames:
When the video was running smoothly, the frame rate remaiined in the low 20s per second, but during stutters, it dropped to single digits. I played around with resolution a bit, and was surprised to see that the dropped frame rate did not change much when I switched from 240p to 1080p. I checked the Task Manager, and noted some, but not much, increase in processor load variablity when displaying 1,080p (shown between the arrows).
Based on this, it looks like my old laptop is not limiting video quality, and my next laptop will be faster and will not be running Flash. The link from my house to my ISP runs at around 15 Mbps, so that is not a problem. It seems like the frame-rate variability is in the network.
But, given the compression and network improvement NBC and their streaming partner YouTube have made during the last 12 days, I am confident that by the time of the next Olympics, Internet video will be TV quality.