Apple negotiates with Comcast for a new streaming service

medium_351993015There’s been no end to the rumors that Apple’s working on a television set similar to what Samsung and other manufacturers offer in the smart TV sector, but we have yet to see any prototype, or leaks that would confirm any device is in the works.

It was recently reported that the late Steve Jobs flatly stated that the company would not be making a TV as it’s a terrible business, but his biographer Walter Isaacson says that before his demise, Jobs insisted he’d cracked the secret to of integrated TV set.

Whether the iTV, as the media has dubbed this mythical TV set, will ever see the light of day or not, the fact remains that for now Apple’s only product with regards to television is the Apple TV, a set-top box that streams content on iTunes to a bigger screen.

These past few months there’s been a few changes to Apple TV. For one thing, it’s now featured in Apple’s online store in its own category – no longer tucked away in the folds of ‘other’ Apple products. Moreover, it recently received an update though some devices were left bricked. Earlier reports stated that Apple will be releasing a new Apple TV device by April, explaining all the changes that have been implemented.

The latest news regarding Apple’s TV plans is that the company is said to be in talks with Comcast for a streaming service that would trump all other competitors. According to a report from the Wall Street Journal, Apple and Comcast are discussing a service that would utilize the Apple TV as the set-top box, which would get special treatment in Comcast’s cables to ensure content is streamed faster. Apple wants the new TV service’s traffic to be separated from public Internet traffic over the “last mile”, or to be more specific, the portion of cable operator’s pipes that connects to customer’s homes.

People familiar with the matter said that Apple wants people to be able to use their Apple ID for the streaming service, have control over customer data, and get a cut from the subscription fee Comcast charges its customers.

The deal is nowhere near settled though, as Comcast wants to retain significant control over customer data. Also, for this to happen, Comcast needs to invest in network equipment and other back-office technology to support the service. These additional costs to its infrastructure could lead to an increase to its subscription fee, something consumers probably wouldn’t be happy about.

For Apple, it needs to acquire more programming rights from media companies so it can offer more shows. But Comcast wants to make sure that the fee Apple’s paying for the rights won’t result in the service being priced higher than traditional pay-TV services.

If this deal pushes forward, Apple will get a leg up against competitors vying for streaming domination. Though the plan may seem similar to what Netflix struck with Comcast when it agreed to pay a fee to directly connect to the cable provider’s network, that particular partnership doesn’t address how Netflix’s traffic will be treated over the “last mile,” unlike what Apple is proposing.

Apple was said to be in talks with Time Warner Cable since 2012 regarding a potential partnership, but the deal came to standstill when Comcast said it would acquire the cable company for $45 billion. This acquisition will give Comcast more subscribers and more control over cable and internet operations, something that could possibly lead to anticompetitive issues in the future.

The Federal Communications Commission still has to approve the acquisition and others have already sent their appeal to block the deal in fear of a “monopsony,” a type of monopoly in which one buyer interfaces with many sellers giving it the power to dictate terms to its suppliers. The Writers Guild of America stated that the merger would give too much control to Comcast, adding that the company has already shown how biased it can be. In its filing, the WGA noted that Comcast already proved its anticompetitive nature by not setting any data limits to its own streaming service on Xbox, whilst applying data caps to competing services.

“Allowing the company to add eight million subscribers only increases its ability to limit competition and there are simply no conditions that can undo the harm a merged Comcast-TWC would cause,” the guild pointed out in its filing.

Though deals such as the one it has with Netflix, and the rumored deal with Apple, will result in better services for consumers, one cannot dismiss the possibility that in the long run, consumers will be the ones facing skyrocketing fees.
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