In a move that bodes well to strengthen TV programming overall in both primetime and late night, NBC has confirmed that Jay Leno will be moved back to his original 11:30 slot and his 10 p.m. show canceled on February 11, as rumored over the past week. USA Today reports:

Under the new plan, Late Night With Jimmy Fallon would move from 12:35 a.m. to 1:05. (Carson Daly‘s talk show, which now follows Fallon, would be canceled, though Daly would remain under contract at the network.).

There are details yet to be worked out, however:

But “as much as I would like to tell you we have a done deal, we know that’s not true,” [NBC Universal TV chief Jeff] Gaspin said. “The talks are still ongoing.”

NBC expects to resolve O’Brien’s fate, one way or the other, by the time the Winter Olympics begin Feb. 12. The Olympics are expected to deliver a big audience the network plans to use to promote its rebuilt prime-time and late-night schedules starting March 1.

Update, 4:2o EST: O’Brien says that he will leave NBC, Tonight.

The new 10 p.m. schedule will likely include a return to scripted dramas. Insiders argue that cost-cutting moves at NBC instituted by CEO Jeff Zucker denuded the primetime schedule of quality shows and helped make way for the disastrous Leno-O’Brien moves. That allowed a big increase in audience numbers on cable/sat stations in particular, while also helping NBC’s broadcast competitors. NBC is now playing catch-up, but analysts consider the move good both for the network and primetime TV in general:

To replace Leno at 10 starting March 1, Gaspin said, NBC is likely to add two more hours of scripted dramas (it can use repeats of Friday Night Lights and Law & Order: Criminal Intent, which now first air on other networks), along with an expanded Dateline NBC. Other current series, such as Law & Order: Special Victims Unit, could shift to later slots.

For fall, NBC ordered seven drama pilots Sunday as potential replacements, including series from high-profile producers David E. Kelley, Jerry Bruckheimer and J.J. Abrams and remakes of Prime Suspect and Rockford Files.

Gaspin said NBC is spending 30% to 35% more on new-program development than in recent seasons and promises viewers will see “high-quality, more traditional NBC programming” next fall with “smart, sophisticated and fun content.” After years of audience erosion, “I think we have a shot at actually going up.”

Jonathan Littman, who heads Bruckheimer’s TV division, welcomed the Leno news.

“Any time you can get more scripted programs on the air, the better,” he said, noting that a typical drama employs 200 workers.

“A lot of people really saw this as having a pretty negative impact on our business,” said CBS programming chief Nina Tassler, who called Leno’s move to prime time “an experiment that obviously did not work.”

The analysts are correct: a stronger, more competitive NBC will make for better programming at the other broadcast and cable/sat networks as they compete more aggressively for viewers.

The flattening of the audience disparity between broadcast and cable/sat outlet has been highly salutary for TV audiences, creating more variety and more options as networks such as USA, TNT, Lifetime, and A&E, but the process was reaching the point where weaker networks such as NBC, CW, and MY TV were in serious danger of insolvency. The cutbacks in original scripted programming at NBC and MY TV were reducing variety and competitiveness in the TV industry.

NBC’s addition of at least some original scripted programming will help stabilize the network and increase the amount of choice for TV viewers. Thus it can be a good thing for all parties—provided NBC plays it smart and schedules programs intended to please audiences, not transform them into political progressives. The current reworking of the schedule is Gaspin’s first big move since taking over as NBC Universal chairman, and it’s a smart and tough choice on his part. Perhaps NBC is headed for an upswing under his tutelage.With the increased amount of competition already provided by stronger cable/sat channels, any arrogance toward the audience NBC covets will be quickly and severely punished by the audiences themselves.

That’s what brought on the network’s current travails, and it will happen again if they don’t learn the right lessons from all of this. The same applies to the other networks as well: competition makes for better products, and the customer is always right.