Your next Apple TV could come from Comcast

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We still don’t know what Apple’s long-rumored, near-mythical TV effort will look like, or exactly how it’ll work, or what it’ll cost, or whether it’ll be a big enough improvement over today’s status quo to really change the game. But on Sunday, The Wall Street Journal’s anonymous sources gave us a glimpse at the deals being struck, claiming that Apple is working with Comcast on this TV of the future.

Comcast customers everywhere likely groaned at this news and crossed Apple’s not-yet-a-product off their imaginary Christmas lists. But Apple’s partnered with an unpopular communication monstrosity before (remember AT&T’s nearly four-year exclusive lock on a little item called the iPhone?), so it’s possible that a Comcast-Apple partnership could work out. Or maybe not.

What’s happening

Since Comcast is the nation's largest ISP, it's a no-brainer for Apple to want to lock down preferred status on that network.

According to the Journal’s report, this device will likely be an Apple-branded set-top box that replaces your cable box and gets priority treatment on Comcast’s network. Apple had been allegedly working with Time Warner Cable, which is now being swallowed by Comcast if the $45 billion proposed merger goes through. So it makes sense for Apple to continue those talks with Comcast, because partnering with a cable company could get Apple “managed service” status. Part of the “last mile” of the Internet pipeline from the cable ISPs to your house is reserved for the cable company’s own managed services, including cable TV, video on demand, and VoIP. The rest of the pipe is for the public Internet, and with streaming video becoming more and more popular, that public bandwidth is getting more and more crowded.

After an appeals court struck down the FCC’s net neutrality rules in January, ISPs like Comcast are legally able to prioritize some content over others. Netflix had to cut a deal with Comcast in February to improve the streaming experience over the public pipe for Comcast’s customers, although that didn’t stop Netflix CEO Reed Hastings from complaining about it after the fact, in a call to strengthen net neutrality rules. (The FCC has gone back to the drawing board to write new rules.) So Apple is wise to want to sidestep that whole kerfluffle and secure itself managed service status with Comcast, the nation’s biggest ISP.

Why we’re skeptical

The details of such an Apple-Comcast deal are still up in the air: Content rights and customer data were both mentioned by the WSJ article as sticking points. Apple wants to control the entire service, meaning users would log in with Apple IDs and Apple would own all the customer data. But Comcast wants to keep a tight handle on customer service and user data too.

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Apple has experience dealing with content providers, evidenced by apps like HBO Go and MLB on the current Apple TV.

Plus, Comcast is leaving it up to Apple to secure the content rights, and that could be even tougher, especially since, according to the WSJ, “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.” Ryan Lawler at TechCrunch points out that many tech companies have tried and failed to roll out over-the-top TV services because they couldn’t get enough content rights. Sony struck a preliminary deal with Viacom for an online pay-TV service last August, but we still haven’t seen that service appear yet.

Why it could work anyway

Let’s say for the sake of argument Apple can overcome these hurdles and get its set-top box and service to market. Will partnering with Comcast, which has notoriously awful customer service, shoot it in the foot? Anecdotally, my own hatred for Comcast was a huge factor in my decision to cancel cable TV last summer, and I’ve never looked back. I’m really not eager to subscribe to another Comcast service, but Apple products have a long track record of sucking me in—the iPhone’s nearly four-year exclusivity on AT&T kept me from switching to Verizon, for example.

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Comcast already has the X1 DVR, which combines cable service, on-demand, and OTT, just like the rumored Apple box.

And guess what—AT&T didn’t botch the iPhone experience too badly, because Apple wouldn’t allow it. Apple insisted on controling the whole experience, and all AT&T had to do was keep the network infrastructure humming and stock a few phones at its retail stores. Oh sure, AT&T tried to mess it up, from dragging its feet on tethering, to eventually abandoning unlimited data plans. But my iPhone never had an AT&T logo on it, or AT&T bloatware clogging the home screen—Apple even got to redo the voicemail system. It was an Apple product that happened to run on AT&T’s network, and that was enough to keep me renewing my AT&T contracts and paying my AT&T bills.

If Comcast lets Apple handle everything but the network, the new Apple TV service could be great. However, Comcast has invested plenty into its own next-gen TV delivery systems, including its X1 DVR, which combines live and recorded programming with OTT services and apps. As Janko Roettgers at Gigaom points out, Comcast is notoriously competition-adverse—it won’t allow its own customers to watch HBO Go on a Roku box, for example, preferring to route them through the company’s Xfinity apps and products instead. So it’s possible Apple needs Comcast’s priority network traffic more than Comcast needs Apple to whip up a next-gen set-top box.

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