Apple is apparently taking a note from Netflix and chatting with Comcast about bypassing clogged Internet traffic and getting a direct connection to subscribers for a streaming TV service. That’s according to a report from the Wall Street Journal, which notes that the talks are far from a deal.
The reported deal would create a managed service, which the U.S. Court of Appeals in DC had reservations about when it struck down the FCC’s previous net neutrality regulations in January. Under those regulations, Internet service providers would have been allowed to treat managed services differently from public Internet traffic, but the court expressed concerns over whether that would result in ISP’s focusing more heavily on investing in those managed services than continuing to expand network capacity for the public Internet.
And isn’t that exactly what has happened in the Netflix/Comcast deal? While Charter and Cablevision were upgrading their ports to accommodate increasing Internet traffic to ensure users didn’t encounter any hiccups or delays, Comcast neglected to do the same. Consequently, Netflix users (who account for up to 30% of Internet traffic during peak periods) saw their streaming quality degrade 27% over the course of a few months. Longer downloading and buffering times and frequent streaming freezes finally strong-armed Netflix into essentially paying a toll for a direct route to subscribers that bypasses the public Internet tubes altogether.
The Apple deal would be different a few key ways. For starters, it wouldn’t be paying for an entirely separate route, but rather for separation over the congested “last mile,” which is the portion of an ISP’s pipes that connect to a user’s home. That’s the section that tends to get bogged down when too many people in a region try to log on.
The Apple deal would also differ from Netflix in another key way: Apple isn’t willing to share the costs unless it’s also going to share in the revenue. That was a point made by Netflix CEO Reed Hastings last week when he ranted that while ISPs are asking for Internet companies like Netflix to share in the costs of accommodating Internet traffic, but they’re not handing over a share of the revenue. Apple, on the other hand, has reportedly stipulated that if it pays extra for a separate connection, it wants a cut of the monthly subscription fees subscribers will pay.
Apple also wants subscribers to sign in using their Apple IDs and it wants control over consumer data, which is apparently not so cool with Comcast.
And there are other roadblocks, such as the fact that Comcast would have to make some heavy-duty investments in network equipment and back-office technology. There’s also the fact that Apple would have to acquire content licensing rights from media companies, which is no easy feat in itself.
Either way, it looks like we may be entering a new era of net neutrality side-stepping for large companies while smaller Internet companies slog through congested and neglected tubes.
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