Google docs isn't the best example since they are doing it through the web and are of course limited by web browsers. The basic concept is there though.
The technology is there to do it and 10mb is sufficient to get HD, which is cheap and easy to get hold of overseas. IMO, the real problem is scale. Sure, it works great with 5 people testing, now scale up to a million people and there's going to be a problem. Think for yourself, whats the minimum hardware to play a modern FPS (bad company/modern warfare) AND run Fraps (remember they are recording game video ouput and sending it to you over the wire) and then compressing that video. You'd need that hardware available and dedicated to each and every player online. The costs would become astronomical in a very short amount of time as the service would need more processing power than Google, Youtube and World of Warcraft combined.
