March 24th 2014
By Mike Flaminio
The Wall Street Journal reported over the weekend that Apple and Comcast are in talks. Reportedly Apple is seeking a partnership in a new video service. Essentially it seems a new version of an Apple TV would replace a Comcast cable box. Such a plan would seem to ambitious as it would challenge a lot of conventions in the cable business. The advantages for Apple would seem obvious as it would boost hardware sales, content sales, and perhaps share of subscription fees. For Comcast, it should help retain customers who may be most likely to cut back on video services in exchange for online content.
The deal also would reportedly require network infrastructure changes to allow Apple content direct access to said boxes. In addition there may be regulatory hurdles.
Under the plan Apple proposed to Comcast, Apple's video streams would be treated as a "managed service" traveling in Internet protocol format--similar to cable video-on-demand or phone service. Those services travel on a special portion of the cable pipe that is separate from the more congested portion reserved for public Internet access.
People familiar with the matter said that while Apple would like a separate "flow" for its video traffic, it isn't asking for its traffic to be prioritized over other Internet-based services.
Those distinctions are important because of merger conditions Comcast agreed to as part of its 2011 acquisition of NBCUniversal. Those "net-neutrality" restrictions, which will be in place through 2018, say Comcast cannot "unreasonably discriminate" in how it transmits network traffic.
Any potential service appears to be a ways out. Even if there's an agreement on the details the technical issues will take a while to resolve. WSJ reports Comcast would need to upgrade its infrastructure to accommodate such a service.
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