Bandwidth deal between Apple & Comcast would likely draw federal scrutiny

Posted:
in iPod + iTunes + AppleTV edited March 2014
Though the U.S. government wouldn't need to approve a deal between Apple and Comcast for faster and more reliable streaming video, such an alignment would likely draw regulatory scrutiny, in particular with respect to its effects on net neutrality.

Apple TV


Analysts and experts who spoke with The Wall Street Journal feel confident that any such deal between Apple and Comcast would "draw close regulatory scrutiny." While the deal wouldn't require federal approval, it would raise questions about net neutrality, which is a belief that all content should be treated equally on the Internet, rather than preferential advantages given to those who are willing to pay.

But while experts believe the terms of a potential Apple-Comcast deal would draw eyes from federal investigators, they also believe that such an arrangement would likely be accepted. Guggenheim Securities telecom policy analyst Paul Gallant said he expects the U.S. Federal Communications Commission would be OK with the rumored deal as long as it were nonexclusive and didn't degrade traditional broadband service.

The FCC has a particular interest in preserving net neutrality, and is planning to issue new rules that would prevent service providers, such as Comcast, from charging content providers, like Apple, to reach consumers at faster Internet speeds. But the rumored negotiations between Apple and Comcast are unique, in that they do not actually involve the open Internet.

Instead, it was claimed this week that Apple is in talks with Comcast about a deal that would bypass congestion on the "last mile" of connectivity, which represents the connection between Comcast and the end user's home. During peak usage hours, those pipes can become heavily trafficked, which affects Internet connections, and Apple seeks to have its own dedicated connection to ensure quality streaming video transmission.

Market watchers believe any talks that may be taking place between Apple and Comcast do not likely go far beyond the alleged topics, and it's unlikely that Comcast would completely hand over its customers' user experience to Apple. Instead, it's believed that something like a dedicated Comcast application for a device like the Apple TV could provide live and on-demand content to Comcast subscribers.

Further complicating matters is the fact that Comcast is already expected to face significant scrutiny from the government as it attempts to buy rival company Time Warner Cable. In hopes of pushing that acquisition through, Comcast has pledged to expand its support for net neutrality.
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Comments

  • Reply 1 of 31
    ceek74ceek74 Posts: 323member

    Why would it draw any scrutiny?  The feds already shot down net neutrality.  Seems like a non-issue.  Unless, they're worried about customers actually receiving a quality experience, especially from a cable company.

  • Reply 2 of 31

    There aren't much details, but I didn't see this as a bandwidth deal, more of a content deal.  Comcast is providing content, and Apple is creating the set top box and user experience.  So it's really Comcast continuing to provide content to its own customers, just in a different way.  

     

    Now if Apple is supplying the content over the internet and Comcast is providing a special high priority traffic deal to Apple that degrades data from other sources, I could see that as controversial. 

  • Reply 3 of 31
    malaxmalax Posts: 1,598member
    Whatever Apple does in this area, if it's not controversial, they aren't trying hard enough. The original iTunes music store was controversial for quite a few years.
  • Reply 4 of 31
    tundraboytundraboy Posts: 1,609member
    Good. The more attention is shone on the fact that the Feds are shamefully going along with the network providers in this charade that internet service is not a utility, the better.

    An aside: Fascinating how shameful and shameless can be used interchangeably without changing a sentence's meaning.
  • Reply 5 of 31
    kpluckkpluck Posts: 500member
    Quote:

    Originally Posted by techguy911 View Post

    Now if Apple is supplying the content over the internet and Comcast is providing a special high priority traffic deal to Apple that degrades data from other sources, I could see that as controversial. 


    They aren't stupid enough to actually degrade other sources they will simply ensure Apple's content (or Netflix, or whatever company is paying them money) is operating at 100%. Of course by comparison, the competitor's content will not work as well.

     

    Right now the government has no authority to regulate NN. And I guarantee you whatever new rules the FCC puts in place will be full of holes/exemptions. The "open" internet is dead.

     

    The only thing that could be done to fix things is to define ISPs as common carriers and not allow ISPs to be part of any company that also supplies content. However, that will NEVER happen.

     

    -kpluck

  • Reply 6 of 31
    gatorguygatorguy Posts: 20,032member
    ceek74 wrote: »
    Why would it draw any scrutiny?  The feds already shot down net neutrality.  Seems like a non-issue.  Unless, they're worried about customers actually receiving a quality experience, especially from a cable company.

    kpluck wrote: »
    They aren't stupid enough to actually degrade other sources they will simply ensure Apple's content (or Netflix, or whatever company is paying them money) is operating at 100%. Of course by comparison, the competitor's content will not work as well.

    Right now the government has no authority to regulate NN. And I guarantee you whatever new rules the FCC puts in place will be full of holes/exemptions. The "open" internet is dead.

    The only thing that could be done to fix things is to define ISPs as common carriers and not allow ISPs to be part of any company that also supplies content. However, that will NEVER happen.

    -kpluck

    I mentioned this yesterday.
    http://forums.appleinsider.com/t/170233/apple-discussing-new-streaming-set-top-box-with-comcast-report#post_2498830

    Until 2018 there's a sticky little problem of a legal agreement Comcast made, which the court reserves a right to revisit. Net Neutrality may have tossed aside for now but legal contracts haven't.
  • Reply 7 of 31
    robin huberrobin huber Posts: 3,235member
    Comcast swallowing Tme Warner? No problem.
  • Reply 8 of 31
    pinolopinolo Posts: 91member
    All of this while the biggest untapped market of "the rest of the world" is still without meaningful content... And is in the hands of cable and DSL providers and their "premium" prices for content as well as hallucinatingly bad interfaces and devices. Apple, sometimes, should become more of a world player and less a us centric one (although I understand them). Why not release Apple TV with apps? That would make consoles obsolete overnight, and generate huge sales abroad. All the pieces are there (controller support, developer base, software, ecosystem). Why not?
  • Reply 9 of 31
    jungmarkjungmark Posts: 6,647member
    My understanding is that Apple might be removing the middle guy between Apple's data centers and Comcast like Netflix is doing.
  • Reply 10 of 31
    gatorguygatorguy Posts: 20,032member
    jungmark wrote: »
    My understanding is that Apple might be removing the middle guy between Apple's data centers and Comcast like Netflix is doing.

    I don't think Netflix is doing that are they?
    (Edit: I misread your post the first time thru. :embarrass)

    I know that they get to bypass Level-3 for instance but AFAIK they still have to work the the "last-milers". Verizon wants a little Netflix money now that Comcast got a piece of it. Imagine how much they'd want from Apple in return for installing those little interconnection switches.
  • Reply 11 of 31
    sudonymsudonym Posts: 233member

    I don't see what is so wrong about Apple TV customers getting better bandwidth than others.  If Apple customers pay for the service, they should get what they pay for.  Same for everybody else.

  • Reply 12 of 31

    Paying Comcast and other ISP's extra money to deliver what they should be doing already is like passing out free crack to addicts. Once they get a taste they will never have enough and more and more companies will be cajoled into paying this extra fee to avoid being slowed down compared to companies that pay the protection money. This is a new way to tax the internet. The consumer is the one that will ultimately suffer with higher prices and likely fewer start ups that could ever be able to compete with Netflix, Amazon, or Apple since they likely can not afford to pay for that extra speed bump until they grow large enough. Let's not forget these cable companies have received tens of billions in federal subsidies over the years to help build out their networks with our tax money. This looks more and more like an extortion or protection scheme more suited to the Sopranos. 

  • Reply 13 of 31
    inklinginkling Posts: 731member
    Network neutrality might be the pretense, but the real reason Apple may face troubles is likely to lie elsewhere. There seems to be a cozy and well-established 'relationship' between the DOJ and Amazon, aka crony capitalism Chicago-style.

    A few years back, Amazon owned 90% of the ebook market and was selling ebooks below cost to destroy what feeble competition remained. Apple, with some assistance from major books publishers, was entering the market and about to give Amazon some much needed competition, but at the time had 0% percent of the market.

    Yet the Obama-DOJ doesn't even investigate Amazon for engaging in one of the classic moves of a monopolists. Instead, it went, tooth-and-nail after Apple who, if the DOJ is to be believed, thought that the best way to sell more iPads was to ensure that ebooks on its store cost MORE than those from Amazon. Yeah, I'm sure Steve Jobs, one of the cleverest product marketeers of the last half-century would do something that stupid. (Sarcasm mode off)

    Now fast forward to present. Apple is again about to enter into a turf that Amazon wants to make its own. This time Apple may be forming a useful if someone odd alliance with Comcast.

    Some might suspect that it is highly likely that the DOJ will again be Amazon's hired gun and do whatever it wants.
  • Reply 14 of 31
    The Comcast system has to be upgraded if a deal is sealed between Apple and Comcast. This means Apple will not build its own fiber network as Google is doing, which could mean Apple could have major coverage across the United States faster, cheaper and with much less regulatory headaches.

    Years ago Microsoft invested $5 billion in Comcast for a partnership and stake in the company. Apple could (not should) invest in all the cable companies to make its efforts become real in a more non-exclusive manner. Okay, I am dreaming, but that would change the cable game "overnight"!
  • Reply 15 of 31
    inkling wrote: »
    Network neutrality might be the pretense, but the real reason Apple may face troubles is likely to lie elsewhere. There seems to be a cozy and well-established 'relationship' between the DOJ and Amazon, aka crony capitalism Chicago-style.

    A few years back, Amazon owned 90% of the ebook market and was selling ebooks below cost to destroy what feeble competition remained. Apple, with some assistance from major books publishers, was entering the market and about to give Amazon some much needed competition, but at the time had 0% percent of the market.

    Yet the Obama-DOJ doesn't even investigate Amazon for engaging in one of the classic moves of a monopolists. Instead, it went, tooth-and-nail after Apple who, if the DOJ is to be believed, thought that the best way to sell more iPads was to ensure that ebooks on its store cost MORE than those from Amazon. Yeah, I'm sure Steve Jobs, one of the cleverest product marketeers of the last half-century would do something that stupid. (Sarcasm mode off)

    Now fast forward to present. Apple is again about to enter into a turf that Amazon wants to make its own. This time Apple may be forming a useful if someone odd alliance with Comcast.

    Some might suspect that it is highly likely that the DOJ will again be Amazon's hired gun and do whatever it wants.

    If Amazon tried this tactic again, the outcome would be VERY different. Comcast would destroy Amazon instead of caving like the book publishers. I also doubt Apple will be "innocent" about Washington-style bribery moving forward.
  • Reply 16 of 31
    realisticrealistic Posts: 1,126member
    Quote:

    Originally Posted by AppleInsider View Post



    Though the U.S. government wouldn't need to approve a deal between Apple and Comcast for faster and more reliable streaming video, such an alignment would likely draw regulatory scrutiny, in particular with respect to its effects on net neutrality.

     
    Apple TV





    Analysts and experts who spoke with The Wall Street Journal feel confident that any such deal between Apple and Comcast would "draw close regulatory scrutiny." While the deal wouldn't require federal approval, it would raise questions about net neutrality, which is a belief that all content should be treated equally on the Internet, rather than preferential advantages given to those who are willing to pay.



    But while experts believe the terms of a potential Apple-Comcast deal would draw eyes from federal investigators, they also believe that such an arrangement would likely be accepted. Guggenheim Securities telecom policy analyst Paul Gallant said he expects the U.S. Federal Communications Commission would be OK with the rumored deal as long as it were nonexclusive and didn't degrade traditional broadband service.

    The entire article makes no sense. The 'rumored' 'potential' deal wouldn't require federal approval so it doesn't matter if the government approved of it or not. Analyst Paul Gallant's comment is basically irrelevant since federal approval isn't required to begin with.

  • Reply 17 of 31
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by Gatorguy View Post

     Imagine how much they'd want from Apple in return for installing those little interconnection switches.

    I would be very surprised if Comcast isn't already peering with Apple either at Apple's data center or Comcast's or even at AT&T's data center.

     

    The physical switches are probably not the issue it is the priority of the packets. Similar to how cellular voice has a higher priority than cellular data.

  • Reply 18 of 31
    kibitzerkibitzer Posts: 1,113member
    What's going on here has more to do with the inevitable evolution toward streaming UHDTV (4K), which will place much greater bandwidth demand on cable systems. Expect future Apple TV devices to be able to deliver 4K content to 4K-equipped TVs. If a Comcast-Apple arrangement enables users to stream or download the higher resolution content without being hampered by cable congestion and clogging, it will be a selling advantage for Apple if competitors like Google and Roku don't have the same capability.
  • Reply 19 of 31
    djkikromedjkikrome Posts: 189member
    Apple TV is full of stuff I can't watch. My cable provider is a smaller company and so I don't have access to a lot of stuff on there. Not even the ESPN. Why does this really differ?
  • Reply 20 of 31
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by SudoNym View Post

     

    I don't see what is so wrong about Apple TV customers getting better bandwidth than others.  If Apple customers pay for the service, they should get what they pay for.  Same for everybody else.


     

     

    Here is the thing. Why should Comcast get any extra money from anybody? As a customer, I am paying Comcast to deliver my content. 

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