Consumer Alert: Apple in Talks with Comcast to Allow 'Special Treatment' for Streaming-TV

Consumer groups reacted angrily Monday to news that Apple is reportedly in talks with cable giant Comcast to launch a streaming-television service that would give Apple special treatment and bypass congestion on the web.

The discussions, first reported by the Wall Street Journal, are in early stages, and many hurdles remain. If a deal is struck, it would be the second time this year that Comcast has made special arrangements for a tech company after February’s announcement of a special deal with Netflix, the largest video streaming service.

According to the Journal, Apple’s intention is to allow users to stream live and on-demand TV programming using Comcast’s own network rather than the public internet.

The newspaper reported that Apple has asked for a separate “flow” for its traffic. It has not asked for its service to be prioritized over any other service, a situation that would challenge “net neutrality” – the concept that everyone should have open and equal access on the web. But consumer groups charged that Comcast was using a loophole to circumvent the open access rules.

Derek Turner, research director at internet rights lobby group Free Press, said: “This is very concerning. This is what happens when you have one major company that is effectively the owner of the internet and a major player in pay TV. This deal and the one with Netflix suggest that Comcast is going to make its own competition pay the quality of service they want for their services.”

“The promise of the internet is competition,” he said. “If you are not already a major player, it’s going to be very hard raising money to compete in the pay TV business. And for the major players, their costs are about to rise and will be passed on to their customers.”

Michael Weinberg, vice-president of consumer rights group Public Knowledge, said the deal was clearly in its early stages but it still presented a “huge problem for an open internet.”

“The idea that a company that wants to launch a service that competes with Comcast needs Comcast’s approval is worrying,” he said.

Apple chief executive Tim Cook has long made clear he has grand ambitions for TV. So far the company’s TV efforts have been disappointing, but earlier this year he told shareholders that Apple TV, its set-top box business, had sales of $1bn in 2013 and was no longer a “hobby”.

Streaming services using the public internet can suffer over the "last mile" – the portion of a cable network that connects to customers' homes – when too many people access too much bandwidth at the same time.

Comcast was ordered to uphold net neutrality until 2018 after its takeover of NBC Universal. The largest cable provider is also in takeover talks with Time Warner, the second largest cable provider, and consumer groups are already up in arms about the likely impact on competition.

The Federal Communications Commissions’ (FCC) conditions have an opt out for “managed” services that could allow Comcast to circumvent the net neutrality issue.

The US court of appeals threw out an earlier set of net neutrality regulations the FCC had in place in January, ruling that Comcast. Verizon and others were entitled to make deals with Netflix, Amazon and others to pay for faster services.

FCC chairman Tom Wheeler has expressed concern that tiered access to the web could mean entrepreneurs are “unfairly prevented from harnessing the full power of the internet.” The regulator is currently drafting new rules aimed at blocking internet service providers from slowing services for content providers that don't pay a toll.

Turner said the Netflix deal and the emerging terms of any Apple agreement suggested that Comcast had found “very large holes” in the FCC’s net neutrality ruling. He said the FCC should reassess its rules on open internet access in the light of Comcast’s latest moves.

“The FCC should be encouraging abundance rather than increased profits through the creation of artificial scarcity, he said.