Apple in talks with Comcast for streaming TV, RIP net neutrality?

Apple in talks with Comcast for streaming TV, RIP net neutrality?

Summary: A WSJ report claims that Apple's in talks with Comcast for a new streaming service that could end net neutrality as we know it. Comcast could become the first toll road on the Internet superhighway.

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TOPICS: Apple
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According to The Wall Street Journal's sources, Apple is in talks with Comcast to build a streaming television service that would bolster its digital content portfolio and guarantee a high level of quality (via prioritization) to Comcast subscribers' homes. But Apple paying for priority access to Comcast's subscribers would be another blow to net neutrality and could signal that content distributors will have to pay for access to cable customers. 

It wouldn't be a precedent for such an arrangement, however. In February Netflix and Comcast announced a "mutually beneficial interconnection agreement" that provided "a high-quality Netflix video experience" for Comcast subscribers "for years to come." Terms of the deal weren't disclosed although the WSJ indicates that Netflix paid for the privilege.

Netflix was forced to pay for priority access to Comcast subscribers after its streaming performance began to lag and customers complained of poor video quality and buffering. Comcast prioritizes data packets for its own Xfinity streaming TV and Video On Demand (VOD) services ahead of competing video streaming packets.

Netflix tracks its performance on various service providers in its ISP Speed Index and this chart pretty much tells the whole story.

Netflix performance was over 2 Mbps on Comcast in September 2013 but dropped to 1.5 Mbps in January 2014. As you can see from the chart below, Netflix bounced back up significantly in February 2014 after the announcement of the interconnection agreement with Comcast.

The Netflix ISP Index tracks its performance on Comcast - Jason O'Grady
(Chart: Netflix)

Netflix performance should continue to climb on Comcast in the next few months as communications director Joris Evers touted in a blog post after the deal. If it doesn't, Netflix just has to pick up the phone and call Comcast – not an option for video services lacking such an agreement. 

Google also offers a Video Quality Report but results for my location "were not yet available" at the time of publication. 

Although Netflix was probably wise to cut a deal with Comcast (Netflix traffic consumes a whopping 30 percent of all Internet bandwidth during prime time) the move could spell trouble for other video streamers like Hulu and YouTube/Google who could begin to see their video performance drop on Comcast as the service "prioritizes" its own (and now Netflix's) video traffic ahead of providers that don't pay the toll.

Apple is negotiating for two of Comcast's crown jewels: access to its streaming video portfolio and speedy access on the last mile into Comcast's 30 million plus homes. Apple could conceivably gain access to live television (which it doesn't currently offer) and higher-speed service to Comcast customers' homes. Apple couldn't launch a video streaming service that its customers would find disappointing, so it makes sense to cut a deal with the number one broadband provider for priority access. 

WSJ notes that there are still many hurdles that remain between a deal between the world's most valuable company and the largest cable company in the U.S., but the possibilites are tantalizing. Imagine having live television programming (like news and sports) on your iPad or iPhone and an iCloud DVR for watching recorded shows on demand. When combined with the deep TV and movie catalog that earned Apple's iTunes division almost $13 billion in revenue in 2012, its an even more compelling product – and one that will bolster Apple's bottom line. For context, if the iTunes empire of content and services was spun off into its own company, it would be ranked 130 in the Fortune 500, slightly below Alcoa and above Eli Lilly.

If the WSJ is correct in assuming that Netflix paid for the Comcast deal (which I bet it did), it stands to reason that Apple will also be paying for the privilege to access its subscribers – which should give Comcast a boost in revenue. Other broadband Internet providers could follow suit. You can bet that Cox Communications Inc., Charter Communications Inc., and Cablevision are paying close attention to Comcast's new negotiating power and its ability to productize the last mile. 

As new toll gates are being erected on the Internet, other high-bandwidth video services like Hulu, Vudu, and YouTube may be forced to step in line and pay Comcast (and other broadband ISPs, potentially) if they expect to see good performance in customers homes. 

Should the largest ISPs be able to charge content providers for priority access?

Topic: Apple

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27 comments
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  • I will never understand why

    people think that bandwidth should be the only consumable you can have unlimited for a flat rate.
    baggins_z
    • Epic FAIL Baggins. No one pays for unlimited bandwidth/speed.

      "I will never understand why people think that bandwidth should be the only consumable you can have unlimited for a flat rate."

      Focus McFly.

      People DO pay for a their bandwidth. It's in the package you choose for your download and upload specs from your internet provider. If you're paying for a 15MPS download package, then you should be able to download at that speed from any site you choose.

      What Comcast is doing is charging Netflix and Apple for cutting in line and standing at the front of the line. This current push is restricting the download speeds from all other sites you access. It amounts to a toll tax (comcast is charging) simply for the privilege of standing at the front of the line. Who do you think that cost will be passed onto? The consumer of course.

      We will see more of this as the line is pushed further with each act comcast commits. The question is when will the FCC or whatever federal office is supposed to be watching this abuse will take action in defense of the consumer?

      Of course we already know we can't trust our current government offices (IRS, EPA, NSA, FCC) to be neutral in these matters due to the unwritten signals coming from the executive office.

      ~Best wishes
      GotThumbs
      • Comcast has gotten to big like old ATT and needs to be broken up IMO.

        ~Best wishes,
        GotThumbs
      • I thought

        that the Comcast / Netflix was around their peering arrangement and not net neutrality.

        With a peering arrangement, they agree that data flowing between the two networks will be more or less free, as long as the amount of traffic flowing in both directions is roughly the same. As Netflix was sending much much more data than they were taking back over their infrastructure, they should have been paying for this big difference, which they originally refused to do.
        wright_is
        • same thing I heard

          I had heard Comcast was asking for Netflix to pay for peering fees, as well. Basically when one network sends more data to another network than it receives, the receiving network asks for a peering fee to pay for hardware and maintenance for the traffic the other network generated on their network. On the other hand, Netflix wanted to do was put its servers and equipment on Comcast's side and supply maintenance and Comcast refused and insisted on the fee.
          Clewin
        • Netflix is not "sending", it's responding

          They aren't flooding Comcast's network with unwanted multicast or something. Individual Comcast subscribers each make a request for a Netflix stream. Netflix is responding to those requests.

          Comcast is trying to act as a gatekeeper. Netflix will only be on the top of the heap for so long. Then the next best thing on the Internet is supposed to pay the extortion fee to Comcast? That's called racketeering.
          RationalGuy
          • No

            They might be replying to requests from Comcast subscribers, but they are still flooding the gateway. If Netflix received 1GB incoming traffic for every GB streamed to Comcast, there wouldn't be a problem, but in this case Comcasts network was sending a few KB for every GB coming back down.

            It is for that discrepancy that they were asked to pay. Plus as Clewin said, Comcast didn't want an alien server in their network, which would also have eased the problem.
            wright_is
          • Yes

            As Comcast's customer, I already paid for it. My answer to Comcast is, "Fix your sh!t."
            RationalGuy
          • Peering is a flawed argument

            By that logic, comcast should request a peer agreement to every single website out there. Because we, me and you at home, browse websites we don't upload websites.

            The whole idea is that a few people create content that millons can access. This is tilted in favor of the viewer by nature. At least until now. And comcast may tilt it in favor of a few distributors.
            arthernan
          • Not websites

            With the backbone providers. Netflix decided to cut out the middleman and set up their own peering company, well they do still use some traditional peering companies as well, but in the case of Comcast, Netflix is peering directly with them, so they are responsible for seeing that the flow of information in both directions is similar, or they have to pay for the difference.

            If they routed a lot of other Comcast traffic through their network and out onto the Internet, they wouldmhave to pay less.
            wright_is
          • Residential broadband will always be mostly one-way

            The nature of residential broadband is that consumers download far more than they upload. ISPs like Comcast know this -- that's why they have download caps but usually not upload caps, and why download speeds are usually much greater than upload speeds. If they don't have to spend as much on upload provisioning, that's a plus for them.

            A residential user has a download cap. It's a contractual right with his or her ISP. As long as it's not exceeded, why does it matter if it all comes from Netflix or from a dozen other smaller sources? It all comes from outside the residential service area anyway. Comcast just wants to shut Netflix down.
            wilback
          • It seems to me that Comcast is double-dipping

            Comcast offers higher bandwidth packages for more money. I imagine that 90% of the people getting such packages are getting it because of Netflix. People are already paying Comcast indirectly for better access to Netflix. What is needed is a class action lawsuit from users if comcast throttles sites below the rate that comcast puts on their ads for their faster Blast Internet packages.

            We have a problem with our ISPs and their business models, whether phone or cable. They keep offering packages that they can't afford to deliver. Before streaming video and binge watching became so popular, this was not an issue apart from the people who felt their Internet slow down when their neighbor downloaded bit torrents. Now that so many people are watching video, ISPs are beginning to have to deliver on the service that they sold for a large number of users and they cannot handle it very well.

            The fair solution is to bring bad data caps and to only sell speeds that Comcast can deliver. If they can't deliver, don't sell it. To be fair, I have been satisfied with my Internet performance on Comcast, so I suspect that they are just trying to exploit another source of revenue.

            The stats about what percentage of Internet traffic Netflix accounts for are really irrelevant since the users of Netflix are already paying for access. Why should ISPs care about what sites their users pull data from? It seems the main reason they care is that they can extort money instead of just delivering to customers what they sold them.
            DaveJMo
          • Comcast is extorting money

            They are saying, "Hey Netflix, WE own your customers. How much are you gonna pay us to let you talk to them?"

            Well, screw you, Comcast. You are just my pipe to the Internet. I am not leverage you can use in your racketeering scheme.
            RationalGuy
          • Its the nature of the business how nice or not a company is

            When businesses are 'friendly' with 'great service', just because they 'are there for "you"', and think its great to see "you" (who am 'I'?), its because the nature of their business is you will just go somewhere else, since its easy or its easy to talk you over to them. Like you go to a different restaurant. Its really all phony, but we pretend its because they like us.

            When its basically a monopoly position, like communications providers, where you little and often no choice or its a big pain to switch, they are naturally uncaring jerks that will attempt to force more $$$ wherever they can with crappy customer service.

            Of course bandwidth is sold with an average expected usage, which has been ramping up with more netflix watching. Too bad - you sold the customers 30Mbit or whatever, and you have a responsibility to provide that 24/7 to every one of them, without charging netflix or whomever.
            drwong
    • Because that's what ISPs advertise and that's what I pay for

      If I'm paying a monthly fee for a 50Mpbs connection with no usage cap, I should expect to get that performance 3600 seconds per hour, 24 hours per day regardless. What I'm using that bandwidth to request is non of the ISP's damn business. And if they have crappy peering agreements, that's on them. And if the business model isn't sustainable, that's on them. Let's break up the cable company monopolies and introduce competition.
      RationalGuy
      • the problem with your assumption is

        that Comcast clearly says that the actual speed to a particular site will vary. You and I DO get 50 Mbit connection to the Comcast network. They do not control your bandwidth, they control bandwidth to within their own and outside servers. I personally do not see a problem with what they do. If I run a server and 95% of the bandwidth is occupied by traffic from one company I would probably limit their bandwidth as well to be fair to the other customers and other web-sites.
        pupkin_z
        • The problem with your assumption

          If 95% of Comcast traffic is from Netflix, it stands to reason that a lot of Comcast's customers want a fast and reliable connection to Netflix. They should give their customers what they want. It's not as if Comcast's network is congested to the point of link saturation. Comcast is getting hit with peering fees and they don't want to pay them. There is not a single Comcast customer who can't get to the site they want to get to because other Comcast users are all watching Netflix at the same time.

          Instead, they want to force their customers to get their content from Comcast by ARTIFICIALLY throttling access to Netflix while keeping access to their content fast. It's just greed and a complete disregard for their customers.
          RationalGuy
          • Not Greed, but extortion

            Comcast is a monopoly in my area. I live to0 far away from the phone office to even be offered a DSL option and satellite internet is not even close in comparison. So given this power, Comcast charges their subscribers whatever they want, they provide horrible service (I get pixelization and drops all the time) and they slowly turn down the priority of the traffic of the company they want to squeeze (extort) more money out of. We need competition in this arena big time.

            What we need is for the infrastructure to be independently owned and these cable companies to be service providers and have access to multiple potential providers no matter where you live. Then there could be competition. By the way now that Comcast has Netflix money and the potential for Apple money does anyone think our cable bills will go down? They won't so don't try to tell me that these users need to pay because they use so much bandwidth, they only need to pay because the cable companies are greedy bastards.
            bws605
  • Comcast?

    I understand most people have access to Comcast services, but their services are terrible. If Apple is talking to Comcast, they need to include some sort of upgrade for their customer service. Comcast reps are not very bright, rude and always make you feel like you are being ripped off (because they are ripping you off). I am a huge Apple fanboy, but will NEVER use Comcast for cable TV, Internet access or phone service. Comcast is the devil! ;)
    randynchicago
  • The rest of the world doesn't care

    What's a comcast?
    vincewansink