Net Neutrality Could Derail Apple-Comcast Deal

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Earlier this week, The Wall Street Journal reported that Apple (NASDAQ:AAPL) and Comcast (NASDAQ:CMCSA) are currently in talks to build an Apple TV streaming service, citing people familiar with the matter. Now the Journal is saying that such a deal could come under tough regulatory scrutiny as net neutrality laws are being revised and Comcast waits for approval on its purchase of Time Warner Cable (NYSE:TWC).

In the proposed deal between Apple and Comcast, the Apple streaming service would be kept separate from other Internet traffic to ensure that users receive the best possible service and don’t experience the slowdowns that people have been complaining about with Netflix (NASDAQ:NFLX). The overruling of the Federal Communication Commission’s net neutrality laws, which required that all Web traffic be treated equally, would allow Apple and Comcast to make such an arrangement.

Analysts and industry experts cited by the Journal said that the FCC and the Department of Justice would be interested in exploring such a deal because despite the overruling of net neutrality, Comcast agreed to comply by those rules when it acquired NBC Universal. While the Comcast-Apple deal wouldn’t need government approval, it could come under scrutiny if it’s shown to violate previous agreements made by Comcast. The company could be forced to stand by the net neutrality agreement even though the law as a whole has been overturned.

Regulators will also be interested in the deal since Comcast is currently the largest cable provider in the country and is set to get much bigger should the Time Warner acquisition be allowed to pass.

The FCC is currently rewriting new net neutrality rules. Advocates for net neutrality — including Netflix, which is none too happy about the fees it’s now being faced with for taking up so much bandwidth with all that binge-watching traffic — say that the rules helped keep the Internet on an even playing field, offering the same opportunities to startups as established companies.

Apple fans have been geeking out about a potential Apple television or TV streaming service for some time. Apple’s current set-top box has been growing in popularity as consumers increasingly turn toward the Internet rather than traditional cable for their television fix. A software update for the current Apple TV was released recently, but rumors continue to swirl that Apple will release an updated version of the product soon.

Industry watchers have been on the lookout for a game-changing Apple television product ever since former CEO Steve Jobs discussed the possibility of an Apple television with his biographer. “I’d like to create an integrated television set that is completely easy to use. It would be seamlessly synced with all of your devices and with iCloud,” Jobs told Walter Isaacson according to The Washington Post.

The Wall Street Journal’s sources acknowledged that the talks between Apple and Comcast are in the very early stages and could still break down. In addition to the potential scrutiny from regulators, Apple would also need to obtain more programming rights, and the companies would need to reach an agreement on financial terms before such a service could be created.

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