How the FCC's repeal of net neutrality could affect Apple

Posted:
in General Discussion edited May 10
The Federal Communications Commission's roll-back of net neutrality rules take effect on June 11, re-igniting a firestorm of debate and speculation over the future of the internet in the U.S. But Apple, who supports net neutrality, finds itself in a unique position in the discussion: It is one of the few companies that has actually been affected by the kind of restrictive internet provider practices that net neutrality aimed to prevent.




tl;dr: The FCC's repeal of net neutrality probably won't affect users of Apple's services, but it could end up costing Apple money to ensure its services are delivered properly.

Apple officially supports net neutrality, a policy that was undone by the FCC on Thursday. Under chairman Ajit Pai, the FCC repealed the rules put in place under the Obama administration, which sought to make sure that the internet remains a level playing field for all businesses and services.

The potential implications for Apple are significant: The company's online services, such as the App Store, Apple Music and iTunes, could be affected by throttling or a hypothetical "tiered" internet, if service providers were to head in that direction.

Opponents of net neutrality, including Pai and the administration of President Donald Trump, view it as unnecessary government regulation that stifles innovation. They believe that the Federal Trade Commission, and not the FCC, should be used to punish internet service providers who abuse open access.

Supporters of net neutrality fear that without protections in place up front, service providers like Spectrum or Verizon will be able to create a tiered internet, where certain services -- like Apple Music or the App Store -- could see their speeds throttled or even blocked. Customers, in this hypothetical situation, might need to pay more for true access to various services.

Their fears are not far fetched: Prior to net neutrality rules going in place, ISPs did pick and choose favorites. A few of those cases, in particular, are relevant to Apple and its users.

AT&T vs. Skype

When Apple's App Store debuted in 2008, it paved the way for new and unique uses for the iPhone. While Apple was initially reluctant to allow voice over IP services that competed with the phone function of the iPhone, it eventually relaxed those rules, allowing Skype onto the App Store in March of 2009.




The release was not without significant restrictions, however. Apple reached a deal with AT&T that barred Skype -- and other VoIP providers -- from using cellular data, restricting calls to Wi-Fi only.

From AT&T's perspective, VoIP services used considerable bandwidth over cellular, and widespread use could reduce service for all customers. Their justification was that the restriction was in the best interest of customers, ensuring quality mobile service at a time when its network struggled with an influx of data-heavy smartphone users.

Of course, that's not the whole story. VoIP services like Skype also allowed customers to avoid placing calls over AT&T's voice network, thus allowing users to not use precious minutes on their plan, at a time when unlimited calling was not quite yet the industry standard.

In other words, blocking Skype not only helped ease traffic on AT&T's networks, but it also helped the company's bottom line.

AT&T eventually relented in October of 2009, announcing it would allow VoIP calls via its 3G network. It came as the FCC threatened increased pressure on ISPs who violated net neutrality principles, even before they became the commission's official rules.

AT&T vs. FaceTime

Apple again found itself at the center of the net neutrality debate back in 2012, when its carrier partner, AT&T, restricted use of FaceTime video chat over cellular to certain customers.




Only those who paid for a Mobile Share data plan, sacrificing the legacy unlimited data plans AT&T previously offered, were able to use FaceTime over cellular. As with the block on VoIP services, AT&T once again claimed the restriction was intended to ease network congestion and offer better service for all customers.

Again critics cried foul. Net neutrality advocates believe data and services on the internet should be truly neutral -- even if a data cap is in place, how a customer uses the data within that cap should be their decision. You can sip your 2 gigabytes by browsing the web, or burn through it by streaming video, if you choose.

Under pressure from customers, and amid the prospect of federal intervention, AT&T relented in late 2012, and enabled FaceTime over cellular for all users with compatible iPhones and mobile data plans.




Apple's brushes with net neutrality policies were not isolated.

In another high-profile net neutrality incident, streaming video provider Netflix paid ISP Comcast for direct access to its broadband network. The partnership ensured Netflix would stream at higher quality to Comcast customers, but also raised concerns about a modern internet where major corporations could have a leg up on smaller startups and competitors.

Given that situation, it's easy to see how repealing net neutrality could potentially affect Apple and its deep pockets, rather than Apple's users themselves.

Pay for play

Apple's services business has become a huge part of its bottom line, and is now the size of a Fortune 100 company. Services from Apple include the iTunes Store, App Store, Apple Music, and iCloud.

Of course, those services use considerable internet bandwidth, the likes of which can hurt network providers. Both home broadband companies and cellular data providers frequently see their own services slow to a crawl during peak traffic hours, when users are streaming on Netflix or downloading from the App Store.

With net neutrality repealed, the concern is that ISPs like Cox, Optimum, Sprint and others could once again play favorites with content. Apple, with billions of dollars in the bank, would likely bite the bullet and pay providers to ensure its services are not throttled or blocked.
Apple, with billions of dollars in the bank, would likely bite the bullet and pay providers to ensure its services are not throttled or blocked.
The issue becomes even more complicated as the lines blur between ISPs and content providers.

Apple is a content provider, but not an ISP.

Conversely, Comcast is the owner of NBC Universal, while AT&T offers streaming television through DirecTV Now. If Comcast or AT&T were to favor bandwidth for their own content over competitors like Apple or Netflix, it would create an uneven playing field on an internet where, historically, all companies have had equal access.

Would it be fair for AT&T to treat its own content differently on its own network, than it does with competing services? As it turns out, they already do this.

We're not there yet, but we could be close

For all of the hue and cry over the repeal of net neutrality, the disaster scenarios presented by critics remain, for now, mostly hypothetical. That doesn't mean they're not possible, or even likely -- but it does mean that consumers should remain vigilant in the upcoming transition.

Net neutrality opponents suggest that a free market will sort out the kinds of issues that would enrage consumers. They say fears of ISPs blocking services like Facebook are unfounded, and they're probably right.

But a free market is most effective when consumers have choice, and access to the internet in the U.S. is limited -- in most markets, for example, there is only one broadband provider available, making it impossible for customers to take their money elsewhere if they disagree with an ISP's policies

In repealing net neutrality, the FCC believes it should be the FTC's responsibility to go after companies that restrict open access to the internet. It remains to be seen whether that will happen -- and AT&T is challenging the FTC's ability to do so in court.




ISPs, for their part, have pledged to offer fair and equal access on the internet, without tiered services or favored parties. It also remains to be seen whether that will happen.

In many existing cases, questionable practices with regard to net neutrality are already in place. For example, AT&T customers who have DirecTV or U-verse TV can stream without it counting against a data cap, whereas streaming on Netflix or from iTunes would still use up capped data.

T-Mobile also offers a "Binge On" service that allows free streaming of video and music without using capped data. It works with a wide range of video services, including Apple Music, YouTube and Netflix, but lowers the quality of the data to reduce the network hit. Users can opt out of Binge On for the highest quality video, but then the data will count against their monthly cap.

It's a matter of debate whether data-cap-free access to DirecTV Now or Binge On are, in fact, in violation of net neutrality -- the programs were actually launched when net neutrality was the policy. But they occupy a gray area at a time when the government will shift to a more hands-off approach on internet regulation.

If ISPs do begin charging for preferred access after net neutrality, and paying for access becomes the norm, customers who use services from Apple, Google, Amazon, Facebook and other major players are unlikely to be affected. In that worst-case scenario, the most likely outcome is that the companies themselves would pay for access, rather than the ISPs charging customers.

But it does raise questions about smaller companies who want to compete online, particularly as the media consolidation continues with mega-mergers like Disney's acquisition of 21st Century Fox. Would an online startup be able to compete if they couldn't afford to pay ISPs for preferred access?

No matter how things shake out, Apple and its deep pockets will be safe. But the internet is a lot more than just Apple.
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Comments

  • Reply 1 of 103
    SoliSoli Posts: 7,847member
    tl;dr: The FCC's repeal of net neutrality probably won't affect users of Apple's services, but it could end up costing Apple money to ensure its services are delivered properly.
    But that does affect users. It means that the costs are passed onto the users from Apple (an overall minor issue), and it means that corporations, like Apple, can afford to ink deals that push their services ahead of others, as well as squash smaller competitors (major issue for the free market).
    Grimzahnnumenoreanradarthekat1STnTENDERBITScornchipflashfan207jony0lolliverGeorgeBMac
  • Reply 2 of 103
    GET READY FOLKS! We have the following exciting packages for you savvy Internet users... take a look at the following offerings we have coming for 2018... The SURFER Package: this includes our homepage, shopping sites, banking, religion & some YouTube. The SCHOLAR Package: adds Wikipedia and many informative News, Literature, Art and Science sites. The SOCIAL Package: for Facebook, Instagram, among others (we’ll let you know). The LATE NIGHT package: for those that might venture a bit on the dark side - plus comedy & music. AND for you power users... The WORLD ACCESS Package: all of the above services - plus Netflix and dozens more enriching websites, even ones in other countries. These features are now available to you at VERY affordable tiered rates. Think about it ... YOU have the power to customize what you can know! BONUS - once we finalize which websites will pay us to give our users access to them, more web services will be added almost daily!
    Grimzahnnumenoreananantksundaram2old4funMacProcornchipflashfan207jony0boogerman2000minicoffee
  • Reply 3 of 103
    cgWerkscgWerks Posts: 1,521member
    One thing to keep in mind in this debate, is that the policy was never law. So, if it had any impact, it just kept the telecoms scared that it might someday.
    cf. 10m20s in https://congressionaldish.com/net-neutrality/

    Soli said:
    But that does affect users. It means that the costs are passed onto the users from Apple (an overall minor issue), and it means that corporations, like Apple, can afford to ink deals that push their services ahead of others, as well as squash smaller competitors (major issue for the free market).
    I think we need some form of net neutrality (the principal), but w/o the baggage. But, first, we need to get control of our government so we can keep them from doing worse than the corporations. Also, whatever form it takes, it will have to include some kind of common-sense aspect. For example, companies like Netflix and Apple can afford and currently put systems in place that give them unfair advantages to any competing service I might want to startup. All content hasn't been treated equally for a long time.

    To me, it's more about evaluating any collusion between a content producer and the distribution network. A content producer cutting some kind of deal with a particular content distribution mechanism is problematic. For example, if Disney wants to implement some kind of localized caching boxes to speed delivery of their content, they can't do so only with Comcast, or stuff like that.
    numenoreanwilliamlondon
  • Reply 4 of 103
    Next: Tollroads on all highways. Because Trump revives industry
    numenoreanBluntradarthekatxzuBuffyzDeadjony0minicoffeebaconstangGeorgeBMac
  • Reply 5 of 103
    Free markets need strong rules and regulations, otherwise it’s just the winner takes all.
    Soliapple jockeyradarthekatwilliamlondonanantksundarammacxpresscgWerksjSnivelyBuffyzDeadasdasd
  • Reply 6 of 103
    It’s time for Apple to become an ISP. They could dominate or at least provide a network for people using Apple gear. They have partnered up behind the scenes with some companies in the satellite field. One such was for low orbiting satellites. Imagine the value of owning Apple gear if it also bought you into a state of the art “open” wireless network.

    http://www.idownloadblog.com/2017/04/21/boing-apple-satellite-service/
    edited December 2017 apple jockeyRayz2016emoellermac_dog
  • Reply 7 of 103
    Free markets need strong rules and regulations, otherwise it’s just the winner takes all.
    Yup and yup. No market is 'free'. By the very definition it means that rules are in place, that there is an expectation of how business is carried out and that there are repercussions if the rules are broken. The Government is the entity that has the responsibility to manage and regulate a marketplace in our system. And another aspect is that when powerful companies are involved  markets always drift further away from 'free' (whatever that means) as all companies don't want 'free' they want an advantage. All a company has to worry about is a bottom line, so bending, breaking, manipulating and exploiting others can all have positive effects on bottom lines (especially if you don't get caught and nobody knows what you are up to) . And this ruling also begins to allow for the 'pipe' companies to decide how fast and which news travels at all. Good article in the NYT about how China has very quietly killed any content they don't like internally. It's worth a read. No matter your political POV it has some great information and you realize how easy it would be for companies to take that roll on in this country.
    https://www.nytimes.com/2017/12/14/opinion/net-neutrality-china-internet.html?smid=fb-nytopinion&smtyp=cur&_r=1

    apple jockeyradarthekatSoundJudgmentbaconstangmuthuk_vanalingamGeorgeBMac
  • Reply 8 of 103
    Rayz2016Rayz2016 Posts: 3,948member
    MisterKit said:
    It’s time for Apple to become an ISP. They could dominate or at least provide a network for people using Apple gear. They have partnered up behind the scenes with some companies in the satellite field. One such was for low orbiting satellites. Imagine the value of owning Apple gear if it also bought you into a state of the art “open” wireless network.

    http://www.idownloadblog.com/2017/04/21/boing-apple-satellite-service/
    Yes indeed!
  • Reply 9 of 103
    Before net neutrality: "AT&T eventually relented in October of 2009, announcing it would allow VoIP calls via its 3G network. It came as the FCC threatened increased pressure on ISPs who violated net neutrality principles, even before they became the commission's official rules." "Under pressure from customers, and amid the prospect of federal intervention, AT&T relented in late 2012, and enabled FaceTime over cellular for all users with compatible iPhones and mobile data plans." Seems market and political pressure can shape things. The FCC believes the FTC is a better place to control these unfair practices which the media and political hyperbole have ignored.
    glindoncgWerkspscooter63steven n.
  • Reply 10 of 103
    Maybe Presidential tweets will be throttled...? :)
    anantksundaramGeorgeBMacMacPromac_dogmacxpress
  • Reply 11 of 103
    dcgoodcgoo Posts: 198member
    Maybe Presidential tweets will be throttled...? :)
    Depends on the package to which you have subscribed.
  • Reply 12 of 103
    spacekid said:
    Before net neutrality: "AT&T eventually relented in October of 2009, announcing it would allow VoIP calls via its 3G network. It came as the FCC threatened increased pressure on ISPs who violated net neutrality principles, even before they became the commission's official rules." "Under pressure from customers, and amid the prospect of federal intervention, AT&T relented in late 2012, and enabled FaceTime over cellular for all users with compatible iPhones and mobile data plans." Seems market and political pressure can shape things. The FCC believes the FTC is a better place to control these unfair practices which the media and political hyperbole have ignored.
    This 1000x.   
    adm1
  • Reply 13 of 103
    Apple should get into this game and offer both privacy and net neutrality to internet users in every state.

    Fortunately, it would not take a long time for Apple to do that, because of new technology that is just around the corner. In 2020, 5G cellular (phone) technology will provide much faster speeds than today’s 4G service, rivaling speeds offered by today’s cable-based internet service providers. For that reason, the move to 5G will directly pit mobile operators against ISP’s in the provision of internet service. In this battle, the ISP’s will be at a big disadvantage because their markets are segmented into relatively small market areas and because they don’t have established toeholds with hundreds of millions of mobile phone users.

    With that in mind, Apple should purchase T-Mobile for some $52 billion and fully upgrade its network for 5G service over the next two years. Then it could invite everyone in America to purchase a package of wireless, go-anywhere internet service plus unlimited phone calls and texts for perhaps $50 per month — including the aforementioned privacy and neutrality benefits.

    T-Mobile has already started down this path by offering free streaming of a limited range if lower-quality video, but what Apple could do with T-Mobile’s network would be far more ambitious. For a start, millions of devoted Apple customers would catapult T-Mobile to a scale that rivals AT&T and Verizon. That would enable Apple to extract concessions from TV networks and movie studios which have heretofore spurned Apple’s attempts to develop a full range of video entertainment similar to what it has done with Apple Music.

    Having a major player (Apple/T-Mobile) offering privacy and neutrality would also incentivize other ISP’s and wireless operators to follow suit, to avoid losing even more customers to Apple.

    Apple could accomplish all of this without undermining either company's culture by leaving current T-Mobile management in place, and issuing a few guidelines that establish the company’s new mission. Apple’s deep pockets, brand name and well-known commitment to privacy virtually guarantees the success of such a venture. After all, T-Mobile will upgrade to 5G in any event, so its prospects could only brighten with Apple accelerating the transition and attracting millions of new customers.

    Finally, Apple needs a large, high-quality investment where it could deploy a large amount of cash that earns more than a portfolio of government bonds. However, if Tim Cook is reluctant to acquire T-Mobile, he could pay T-Mobile $1 billion each year to offer the $50 monthly package of phone and internet services to iPhone users, plus a zero-interest loan to finance its 5G network upgrade. The ability of iPhone customers to get a bargain on mobile phone and internet services would give iPhone a marketing advantage not enjoyed by the buyers of other phones.
    2old4funjcs2305
  • Reply 14 of 103

    With that in mind, Apple should purchase T-Mobile for some $52 billion and fully upgrade its network for 5G service over the next two years. Then it could invite everyone in America to purchase a package of wireless, go-anywhere internet service plus unlimited phone calls and texts for perhaps $50 per month — including the aforementioned privacy and neutrality benefits.

    This is not a bad idea, at all. It might even be a brilliant move. Moreover, there is no reason then that Apple can’t provide that backbone to everyone else, including Amazon, Google, Facebook, etc. (Look at how successful AWS has become for Amazon). 
    2old4fun
  • Reply 15 of 103
    sdw2001sdw2001 Posts: 16,892member
    I, for one, appreciate the balance in this article.  I went from somewhat of a supporter of NN to a pretty staunch opponent.  Contrary to popular belief, NN has nothing to do with ISP competition or likely even prices.  It has to do with data cap waivers as described and faster data for certain high use services like Netflix.  

    It’s also worth noting that NN wasn’t even on the books until 2015.  Everything was fine without it.  One has to wonder why Big Tech and Obama wanted it (the latter tells me it’s bad on its own).  
    randominternetpersonpscooter63indyfx
  • Reply 16 of 103
    lkrupplkrupp Posts: 6,194member
    The author explains that Apple has had several brushes with net neutrality that had a negative effect on them. Then he goes on to say that that those issues were eventually resolved by public pressure and the possibility of government intervention. And all of this happened without net neutrality laws.

    Next, the author explains that most of the apocalyptic predictions of throttling, blocking, denied access will likely not happen because of the same public pressure and threat of government intervention (the FTC). But they might, they could, the possibility exists, what if, maybe, and so on. 

    So we are left with the hysterical rantings of the conspiracy theorists whose sole purpose in this argument is to scare people into taking their side. Just take a look at some of them in this very thread.
    randominternetpersoncornchip
  • Reply 17 of 103
    sdw2001 said:
    I, for one, appreciate the balance in this article.  I went from somewhat of a supporter of NN to a pretty staunch opponent.  Contrary to popular belief, NN has nothing to do with ISP competition or likely even prices.  It has to do with data cap waivers as described and faster data for certain high use services like Netflix.  

    It’s also worth noting that NN wasn’t even on the books until 2015.  Everything was fine without it.  One has to wonder why Big Tech and Obama wanted it (the latter tells me it’s bad on its own).  
    Net Neutrality is not just about speeds.  It is also about content:  Your ISP can prevent you from seeing any content that they disagree with.   You could be limited to right wing propaganda sites like FauxNews, Breitbart and InfoWars ... (excuse me while I barf....)

    Those who have wrapped themselves in the cloak of Free Market Ideology claim that free markets would prevent that from happening.  Yet, the fact is: That is nonsense.  There is NOTHING now to prevent that from happening.

    Like our electric grid, airwaves and cables are part of the national infrastructure and no one organization (or group of colluded organizations) should control it.  If you have more faith in Comcast or Verizon than in our democracy to do what is best for the American people, then there is simply no hope for you...
    apple jockeymuthuk_vanalingam
  • Reply 18 of 103
    jungmarkjungmark Posts: 6,547member
    Interesting read here. 
    https://stratechery.com/2017/pro-neutrality-anti-title-ii/

    nothing is going to change. As with issues prior to 2015, the market sorted it out. 

    The opposition to this change is the fear of what might happen. 



    glindonSpamSandwichlkrupphodarrandominternetpersonpscooter63cornchip
  • Reply 19 of 103
    This a very good article that puts the issues into perspective.  Of note, free markets fixed perceive unfairness within months.  The FCC is a political organization and has no business being involved in the internet.  It would take years to fight improper use with the FCC.  I see a few posts making this issue a political game...which is exactly why a political commission should not be involved. The article only postulates there may be unfairness in the future and did not sight any case of unfairness in the past...that wasn't fixed by competitive pressure within a few months.  It was nice to see the FTC was not part of any pressure on AT&T (or was it?) and allowed free markets to solve the issues.
    SpamSandwich
  • Reply 20 of 103
    Just like apple doesn't give anyone a free ride on their app store why should they get a free ride on the ISP's infrastructure. If apple wants to provide top service to it's customers they should pay for it or lay their own pipes. They will be getting a big tax break soon, repatriate the money, lay down infrastructure and generate some jobs here in the US.
    SpamSandwichmacwise
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