Why Comcast's proposed Apple deal may be even worse for the Internet than its Netflix deal
Apple is reportedly developing a streaming media service that would allow its consumers to get their monthly movie fix through a dedicated set-top box instead of through other services. The company is said to be holding talks with Comcast to negotiate access to a "fast lane" that would prevent its videos from being slowed down because of Internet "congestion" in a deal similar to the one announced -- and later condemned -- by Netflix earlier this year. Much of the coverage based on the report has focused on how the deal might affect Apple, but there's something far more insidious about the agreement: It's the latest evidence of Comcast's stranglehold on the Internet.
Comcast is effectively creating a two-tier system through which large companies like Apple and Netflix will pay for the ability to reach consumers without having to worry about slow loading times or other infrastructure problems. It's also trying to merge with Time Warner Cable, a move that would allow the combined company to control roughly 35 percent of all broadband Internet access in the United States. If the Internet is fucked, as Vox's Nilay Patel argued in February, it has a lot to do with Comcast's rapacious attempts to control it.
Let's begin with the deal Comcast made with Netflix. Most people know that Netflix's videos account for much of the total Internet traffic in the US. (Some estimate that the company's videos represent some 33 percent of peak Internet traffic in North America). As a result, the content delivery networks (CDNs) that help ferry Netflix's content to ISPs like Comcast have become overloaded. Netflix thinks ISPs should be responsible for upgrading the infrastructure to keep video speeds up. ISPs naturally think Netflix or the CDN should pony up the extra cash.
Netflix's size has made it a prime target for Comcast's attempts to create a system where large companies would pay to quickly deliver their content to consumers already paying for what they think is high-speed Internet service. The companies announced in February that they had finally reached a deal that would allow Netflix to bypass Internet congestion -- which will allow its videos to reach consumers without constant buffering or quality issues -- so long as it continues to pay Comcast for the privilege. Financial terms of the deal were not disclosed.
Some, like Motherboard's Derek Mead, argued that the deal doesn't affect net neutrality. "While the deal may result in improved streaming quality for Comcast customers, is it a blow to net neutrality? No," Mead writes. "The principle of net neutrality is that all content gets treated the same by a network on that network. This deal is about connecting Netflix's CDN to Comcast's network more directly, not getting Netflix preferential bandwidth treatment on Comcast."
But others, like Bloomberg Businessweek's Joshua Brustein, weren't convinced:
The most vulnerable companies here aren’t the likes of Netflix, which is big enough to force Comcast to the table. If nothing else, Comcast couldn’t afford to anger regulators with a fight against such a household name right now. But smaller companies will have much less leverage and could get worse terms. Dan Rayburn, an analyst for market researcher Frost & Sullivan, says this is no different than bulk deals that any large customer enjoys. 'It’s a volume-based business with economics of scale,' he says. 'The more eyeballs you push, the better deal you’re going to get.'The idea is that Netflix is effectively paying for a direct on-ramp to Comcast's service, which would consequently improve its ability to deliver videos, even though the speed with which those videos are traveling between Comcast and consumers hasn't changed. It's like adding more direct routes to a highway instead of paying for the ability to ignore the speed limit.
Comcast's reported deal with Apple would be different. The company is said to be planning a deal that would allow its content to bypass Internet congestion on the "last mile," or the direct connection between Comcast and consumers. That last mile is what many people are referring to when they discuss net neutrality, and paying for speedier access to consumers is a direct threat in the way that Netflix's interconnection deal isn't. The Wall Street Journal reports that this would be accomplished through a separate "flow" that would allow Apple's content to be delivered faster than it otherwise would, not through preferential treatment of that content.
To continue the highway metaphor from above: Apple is hoping to pay for a lane that no-one else can drive in, Netflix is paying for quicker on-ramps to that highway, and other companies are going to be taking a twisted route to a highway that they have to share with everyone -- everyone, that is, except Apple and anyone else willing to pay for a separate "flow." But consumers aren't supposed to worry, because these companies aren't paying for preferential treatment, they're just paying for indirect benefits that would achieve a similar goal without all of the regulatory hurdles.
These deals might help Netflix and Apple, but they also represent a greater threat to the Internet that shouldn't be dismissed simply because they don't fall under the net neutrality umbrella. As the Verge's Ben Popper writes in a post about Netflix's "deal with the devil":
Hastings took a gamble. By agreeing to pay Comcast, he may have set a painful precedent. The Netflix deal allowed the ISPs to claim that fees for interconnection are good business. 'To me this shows you don't necessarily need a lot of regulation in a dynamic market here,' Verizon CEO Lowell McAdam told CNBC. 'By doing these commercial deals we'll get good investments and good returns for both parties.' A new report this morning shows that Comcast is pushing ahead with this model, conducting talks with Apple about providing a 'fast lane' for data to its new TV service that would avoid internet 'congestion.'Then there's the proposed merger with Time Warner Cable, which would give the combined company control of more than one-third of high-speed Internet connections in the US. That's the kind of merger that changes entire markets and affects tens of millions of consumers. As New York magazine's Kevin Roose writes:
Not all market consolidations are bad. But the Comcast-TWC tie-up would create a mega-empire in an industry that is already dominated by a few huge companies. For this reason alone – to say nothing of how long you'd have to stay on hold on a combined Comcast-TWC customer service line – the deal must be stopped.That might be easier said than done. Comcast hasn't only worked to make large technology companies pay for improved performance -- it has also donated to the campaign coffers of many of the lawmakers tasked with examining its proposed merger with Time Warner Cable. Politico reports that the company has made contributions to 32 of the 39 members of the House Judiciary Committee, which is holding a hearing on the merger, and to "all but three" members of the Senate Judiciary Committee.
Those contributions were made as an act of what the Sunlight Foundation's Ellen Miller described to Politico as "proactive giving" that made "so that when a corporation needs access in a time of trouble, investigation or oversight, they have already built the quote-unquote relationships they need to soften or make their arguments to a sympathetic audience."
Contrary to the narrative crafted by net neutrality activists, Comcast isn't dabbling in back room deals that subtly undermine the idea of a free Internet where all data is treated equally. It's created a system through which it is able to convince even net neutrality supporters like Netflix CEO Reed Hastings to pay for improved performance, to get Apple to pay for the ability to reach consumers at a decent speed, to become even larger in the ISP market, and to make donations to the lawmakers tasked with keeping it in check.
But let's go ahead and focus on the news that Apple is developing a streaming media service through which it could tighten its grip on the digital media market and, because this is Apple we're talking about, keep rumors of an aluminum-clad television set alive. Surely that's more important than the systematic destruction of the ideals on which the technologies that would enable that service were founded. Gotta watch those "Breaking Bad" reruns, after all.
[Image courtesy OAndrews]