The Apple-TV nut of Steve Jobs - Not yet cracked!!

[frahse]

The Daily Ticker, Yahoo

Apple's talks with Comcast reveal that Apple is no closer to "cracking" TV

Apple (AAPL) is in talks with Comcast (CMCSA) about a new TV-over-Internet service, The Wall Street Journal reports.

"The service would allow Apple to replace the cable TV set-top box and, thanks to a special deal with Comcast, provide streaming TV services with better performance than most video-streaming services like Netflix can currently offer. Apple wants to control the customer relationship and get a cut of Comcast's subscriber fees..."

It is readily seen that the Apple-TV nut Steve Jobs spoke of cracking is still way up high in the tree.

Read on--

[wizwor]

Roku has already done something like this with TWC. Of course, Roku competes on price and is still spending venture capital. Is that what Apple wants to compete with? The proposed deal really plays loose with concessions Comcast made in acquiring NBC/Universal. Even talk of this should have the FCC looking carefully at the proposed Comcast/TWC deal. I don't think this happens...ever.

I'd like to see the FCC break up Comcast as they did with AT&T. No company should be allowed to monopolize content and delivery in any single market. Comcast should be split into Comcast ISP and Comcast Entertainment. Let CI sell bandwidth to all comers while CE competes with the comers.

Of course such a breakup would find a lot of politicians looking for second jobs to make up for lost revenue.

[tubemonkey]

Originally Posted by wizwor

I'd like to see the FCC break up Comcast as they did with AT&T. No company should be allowed to monopolize content and delivery in any single market. Comcast should be split into Comcast ISP and Comcast Entertainment. Let CI sell bandwidth to all comers while CE competes with the comers.

Totally agree. No company should be allowed to deliver both services.

[Sregener]

As long as Dish and DirecTV keep beaming their signals onto US soil, there's not much hope of a cable company being a true monopoly.

[fjtorres]

Originally Posted by Sregener

As long as Dish and DirecTV keep beaming their signals onto US soil, there's not much hope of a cable company being a true monopoly.

You don't need to be a monopoly to exert or abuse market power.
Antitrust law is about more than market share. It is in fact about anti-consumer behavior.

The cablecos do in fact pose a consumer problem because of their throttling practices: with Netflix and other TV-alternative services making up the bulk of consumer internet bandwidth consumption, the cablecos have control over the service quality of their competitors, which is why Apple has been trying to tilt the table in their favor through backroom deals to grease their entry into the market.
A familiar tactic, no?

The cablecos in general, and Comcast in particular, are under enough net neutrality pressure that the kind of deal Apple needs to enter the business this late in the game is unlikely until the merger is complete and probably beyond.

[shalym]

Originally Posted by Sregener

As long as Dish and DirecTV keep beaming their signals onto US soil, there's not much hope of a cable company being a true monopoly.

Maybe for television you have a point, but where I live, my cable company is the only way to get a high speed internet connection. I would love for there to be any sort of real competition, but unfortunately, there isn't.

Shari

[wizwor]

The thing is, Comcast is television plus internet plus phone. I would be OK with this except that they use a technique called bundling to block market access. If they had a national price plan, that would be one thing, but they sell internet access and throw in television in some markets while selling television and throwing in internet access in others. When Aereo offered content to ISPs, Comcast went to Congress and the Courts with wallet wide open.

When I installed my antenna, I intended to continue to use Comcast as my ISP, "You may as well get basic cable -- it's only a few dollars more a month." A phone call later I had a new ISP -- twice the bandwidth at half the price with the rate guaranteed for life. Since that company is in business five years later, how can anyone believe Comcast is not using their monopoly power to gouge the consumer?

[Sregener]

Originally Posted by wizwor

Since that company is in business five years later, how can anyone believe Comcast is not using their monopoly power to gouge the consumer?

Whenever an exchange happens on the free market, it only happens because both sides believe they come out ahead in the deal. If consumers believe they are losing out, they won't purchase the product. Consumers can only be gouged when they are forced to make an exchange.

In the short run, Comcast may be able to take advantage of their market position. But they will create an incentive for competitors to enter those markets, and if enough people switch to a different service, they'll find their practices to be against their best interests and change them.

Any time there is a developing market, which Internet-delivered television definitely is, there are periods of adjustment and growth. Nobody needs television, and nobody needs it to be streamed to their home. It is a luxury good, and doubly so when we're talking about Internet-delivered video. And luxury goods often go through periods of high prices before they become commodities.

We might as well be arguing the price of yachts.

[wizwor]

In theory, this is nice. In reality, monopoly exists. That's why there are antitrust laws. In the case of cable, the monopoly was created to mitigate risks associated with investing in infrastructure. This monopoly was tempered with concessions to the public good. Over the generations, the risks have disappeared, concessions have evaporated, and the internet happened. Cable industry consolidation and 'bundling' have, for the most part left the largest providers without competition. Where market forces have created competitors, the cable industry has used litigation and bribery to tamp it out. The consequence -- higher prices, less innovation, and little choice.

When Wal-mart built a new store where my parents live, they built the store between existing retailers and the Massachusetts border so that their store is the first retailer people coming from that sales tax state into sales tax free New Hampshire would encounter. Wal-mart improved the roads leading to the facility -- adding lanes and lights. Imagine if Wal-mart reserved the new lanes for traffic to their store. Imagine if Wal-mart controlled the lights in a way that restricted traffic past their store. Imagine if Wal-mart charged a toll to those traveling past their store. Some might bear the tax and traffic to teach Wal-mart a lesson, but most would shop at Wal-mart. That is what Comcast has done.

I don't want to create another monster to deal with the cable industry. I don't want to put Comcast out of business. I just want to make sure they do not put everyone else out of business. Since Comcast is a publicly held company, the best way to do that is to simply outlaw bundling of transport and media.

Originally Posted by Sregener

Whenever an exchange happens on the free market, it only happens because both sides believe they come out ahead in the deal. If consumers believe they are losing out, they won't purchase the product. Consumers can only be gouged when they are forced to make an exchange.

In the short run, Comcast may be able to take advantage of their market position. But they will create an incentive for competitors to enter those markets, and if enough people switch to a different service, they'll find their practices to be against their best interests and change them.

Any time there is a developing market, which Internet-delivered television definitely is, there are periods of adjustment and growth. Nobody needs television, and nobody needs it to be streamed to their home. It is a luxury good, and doubly so when we're talking about Internet-delivered video. And luxury goods often go through periods of high prices before they become commodities.

We might as well be arguing the price of yachts.

[fjtorres]

Originally Posted by wizwor

Since Comcast is a publicly held company, the best way to do that is to simply outlaw bundling of transport and media.

It may come to pass and sooner than you think.

In times past the broadcast networks were forbidden from owning the shows they broadcast. That lasted for decades and while the elimination of the rule hasn't turned the networks into one studio channels, they all have become outlets for their parent studios and sibling networks. (ABC Sports was once an industry powerhouse on its own but is now just an outlet for ESPN product.)

On the cable side, the Comcast/TWC merger is happening because TimeWarner decided they wanted out of content distribution to focus on content creation and ownership. Comcast buying TWC suggests they want to grow their distribution arm as big as possible before cutting NBC/Universal free, probably as a "concession" to the feds.

Over time, the combination of content and distribution under one roof has been losing its value so the split is inevitable, whether voluntary or mandated. The road ahead is clear to all: TV becomes just another internet service. The chief obstacle, though, is the bundled subscription model that sells 500 channels to subscribers who only want ten. Consumers want ala carte service but everybody upstream fears what it will mean to their cozy little businesses.

Much like book publishing, tech disruption of TV means gains for consumers but losses for the middlemen and the middlemen are still in command in TV. But the tide of disruption can't be held back forever. The pressure is building.

Apple is but one of a dozen players looking to do IP TV and they are, if anything, behind the curve compared to Microsoft, Sony, Roku, Netflix, Amazon, Verizon, and Hulu among others who already own significant chunks of the TV over IP market; beacheads from which they hope to expand once the roadblock of cableco obstructionisn goes away.

It's coming and fairly soon. 2020 at the latest, 2015 at the earliest.
Just don't expect to save much money in the near term.

BTW, the next tech disruption after that is Movie Theaters.

[fjtorres]

Here's a sign of where things are headed and how fast:

http://gigaom.com/2014/01/21/why-ver...ng-on-comcast/

[pwalker8]

Originally Posted by wizwor

In theory, this is nice. In reality, monopoly exists. That's why there are antitrust laws. In the case of cable, the monopoly was created to mitigate risks associated with investing in infrastructure. This monopoly was tempered with concessions to the public good. Over the generations, the risks have disappeared, concessions have evaporated, and the internet happened. Cable industry consolidation and 'bundling' have, for the most part left the largest providers without competition. Where market forces have created competitors, the cable industry has used litigation and bribery to tamp it out. The consequence -- higher prices, less innovation, and little choice.

When Wal-mart built a new store where my parents live, they built the store between existing retailers and the Massachusetts border so that their store is the first retailer people coming from that sales tax state into sales tax free New Hampshire would encounter. Wal-mart improved the roads leading to the facility -- adding lanes and lights. Imagine if Wal-mart reserved the new lanes for traffic to their store. Imagine if Wal-mart controlled the lights in a way that restricted traffic past their store. Imagine if Wal-mart charged a toll to those traveling past their store. Some might bear the tax and traffic to teach Wal-mart a lesson, but most would shop at Wal-mart. That is what Comcast has done.

I don't want to create another monster to deal with the cable industry. I don't want to put Comcast out of business. I just want to make sure they do not put everyone else out of business. Since Comcast is a publicly held company, the best way to do that is to simply outlaw bundling of transport and media.

For all practical purposes, it's impossible to maintain a monopoly unless it's enforced or otherwise aided by the government. In the case of Comcast, it's monopoly was maintained by the various local governments. The biggest hurdle for companies who wish to compete with Comcast is the local governments which use their regulatory powers and control of utility right of way to keep other companies out.

I'm afraid that your analogy is a bit off. Comcast doesn't restrict traffic or charge a toll. Even with all the hysteria over Comcast throttling netflix traffic, it turned out that the issue wasn't Comcast throttling traffic, but rather the basic architecture of the internet, which doesn't give priority to any specific traffic and which sometimes routes traffic through congested nodes rather than uncongested nodes. The solution that Comcast and Netflix worked out was Comcast establishing a direct connection to Netflix for their customers rather than depending on the normal internet routing.

[wizwor]

Originally Posted by pwalker8

For all practical purposes, it's impossible to maintain a monopoly unless it's enforced or otherwise aided by the government. In the case of Comcast, it's monopoly was maintained by the various local governments. The biggest hurdle for companies who wish to compete with Comcast is the local governments which use their regulatory powers and control of utility right of way to keep other companies out.

Obama has weighed in against Aereo in advance of Supreme Court hearings. A number of state courts and politicians have done the same. Comcast and the cable consortium spend a lot greasing palms.

Originally Posted by pwalker8

I'm afraid that your analogy is a bit off. Comcast doesn't restrict traffic or charge a toll. Even with all the hysteria over Comcast throttling netflix traffic, it turned out that the issue wasn't Comcast throttling traffic, but rather the basic architecture of the internet, which doesn't give priority to any specific traffic and which sometimes routes traffic through congested nodes rather than uncongested nodes. The solution that Comcast and Netflix worked out was Comcast establishing a direct connection to Netflix for their customers rather than depending on the normal internet routing.

The Netflix agreement provides a speedier onramp for a fee and Apple is interested in having a protected 'flow' for its traffic. Do you doubt that Comcast uses QoS to ensure high quality television and voice calls? The unprioritized traffic is everything else.

I think the analogy stands up.

[fjtorres]

Originally Posted by wizwor

The Netflix agreement provides a speedier onramp for a fee and Apple is interested in having a protected 'flow' for its traffic. Do you doubt that Comcast uses QoS to ensure high quality television and voice calls? The unprioritized traffic is everything else.

I think the analogy stands up.

Before Netflix signed the deal with Comcast, they were routinely throttling their streams forcing quality down. Many (most?) cableco ISPs do it, too.

A google search for Comcast throttling will find hundres of reports. Comcast was also called on the carpet by the FCC for selective throttling of streaming applications.

http://en.wikipedia.org/wiki/Bandwidth_throttling

If you pay for a specific bandwidth level but can't use all of it because of throttling, you are effectively paying a higher rate for the service you do receive which is the same thing as a tax. And a non-trivial one at that.

[Barty]

Originally Posted by Sregener

As long as Dish and DirecTV keep beaming their signals onto US soil, there's not much hope of a cable company being a true monopoly.

It's really broadband + tv. Satellite is no good for broadband, so they are not true competition.