The tech world is abuzz after the Wall Street Journal reported Apple and Comcast are in discussions about teaming up to deliver a streaming TV service that could compete with Netflix. The news sent Apple shares soaring this morning, and Netflix plummeting. But even the Journal says a deal is not imminent, and before we get carried away, there are three significant hurdles any agreement would first have to clear:
1. Net neutrality: According to the Journal, Apple would pay for a direct line into customers’ homes, traveling on Comcast’s “private” Internet pipes as opposed to its “public” broadband feed. In effect, Apple programming would be delivered as if it was Comcast on-demand content, and wouldn’t have to compete for bandwidth with Netflix, Hulu, Facebook, etc. Technically, that could fit under a vague “managed services” loophole in Comcast’s 2011 net neutrality agreement with the federal government that allowed it to purchase NBCUniversal.
Or would it? Open Internet advocates certainly don’t think so. “I don’t see how striking a special deal to provide a separate path for some video services . . . could be seen as anything other than a way of prioritizing the favored video, evading the rules,” Matt Wood, policy director of the consumer advocacy group Free Press, told Ars Technica. An Apple-Comcast deal would surely raise howls of protest, and if opposition could gain enough momentum it’s not out of the question that the feds could rule that such a deal is in violation of Comcast’s agreement.
2. Will they share? Both Comcast and Apple have long records of not playing well with others, and maintaining tight control over their own services. Apple reportedly wants users to sign into the service with their Apple IDs, so it could control the consumer data. But Comcast would likely be loathe to give up access to their own subscribers’ data. In the past several years, Comcast has beefed up its on-demand content and blocked out others (good luck getting HBO Go to work with Roku if you’re a Comcast customer). The music industry was decimated by tech companies’ inroads. Don’t think the TV industry hasn’t been paying attention. Why would Comcast suddenly open its network to a content-delivery competitor when it doesn’t absolutely need to? (Don’t forget, Comcast posted big gains in subscribers and revenue last quarter, and with the pending Time Warner merger is poised to control a third of America’s cable market. It ain’t hurting.)
On the flip side, would Apple really cede control of its streaming content to Comcast? Apple has always exerted tight control over its products’ ecosystems. Trusting a third party to deliver their content, while not out of the scope of possibility, would be virtually unprecedented.
3. Licensing: As Variety notes, Apple has been discussing content licensing — and failing to reach agreements — with studios for its long-rumored ‘iTV’ since 2009. A host of companies, including Microsoft, Sony and most recently Intel, have attempted to strike content deals for their own set-top boxes, but failed. The question isn’t so much could Apple finally reach such a deal, but would Hollywood let Apple make such a deal? Ask Netflix, or Amazon, or Starz how difficult it is to acquire the content it wants at a price it can afford. And according to the Journal, “Comcast would want to ensure that the price Apple has to pay to acquire rights wouldn’t cause the service to be priced higher than traditional pay-TV service.” Good luck convincing studios to take it easy on a tech company that has somewhere in the neighborhood of $150 billion in cash on hand. Negotiations would almost certainly be a beast, and last a long, long time.
All in all, an Apple-Comcast streaming TV deal isn’t impossible. Just unlikely. And don’t expect it anytime soon.
At top, Associated Press file photo