[opendtv] Re: Apple in Talks with Comcast About Streaming-TV Service - WSJ.com
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 27 Mar 2014 08:47:33 -0400
> On Mar 25, 2014, at 6:26 PM, "Manfredi, Albert E"
> <albert.e.manfredi@xxxxxxxxxx> wrote:
> It's not the technical solution. For the most part, Apple wants Comcast to
> provide the technical solution. It's just that Apple wants to have exclusive
> rights to those Comcast servers, plus a piece of the subscription fee, plus
> access to whatever data about the subscribers. Funny that you missed all of
> that.
You are overstating the case. All we know is that Apple and Comcast are
talking, and a bit about a few of the issues they are discussing. We also know
a fair amount about the technical issues and the legal issues related to
opening the cable networks to competition.
Clearly, there are three parties at the negotiating table:
1. Comcast - they own the last mile network, and use it to provide both MVPD
and ISP services.
2. Apple - they desire to use that network to deliver IP based services via a
new device that would attach to the Comcast network; the unbundling of this
type of device has been mandated since 1995, but the actual implementation has
eluded the FCC as it relates to the MVPD service; cable modem attachment has
been unbundled and there is a thriving third party market for modems, routers
etc.
3 The government - the FCC and FTC are evaluating the proposed Comcast/TWC
merger, and looking at conditions of such a merger, including those already
imposed on Comcast as part of the NBC merger.
This all adds up to a potentially historic moment, that may define new rules
for all stakeholders, including the content owners, who are negotiating with
both Comcast and Apple to define the role of rights holders, who are doing
business with the MVPDs AND would be competitors.
The biggest issue here is how the cable companies manage the migration of MVPD
streams from portions of their "spectrum" - These live streams include the
analog service and the MPEG 2-TS service. The rest of the bandwidth is used for
ISP service that often suffers from congestion issues.
They can't just replace the legacy streams with IP equivalents without
deploying new STBs and servers. They can migrate by deploying new STBs like the
X-1 that work with both the MPEG-2 TS and broadband services. We know that
Comcast offers a wide range of content to these boxes via Regional Internet
servers ; we do not know if they are already doing what Apple is asking for,
i.e. creating a managed service for their own streams.
I'm assuming that is exactly what they have done.
If they open up their network to third party STBs (or are forced to do so), can
these boxes also use the streams delivered via the managed service? In other
words, can the cable owner allow access to these live IP streams by third party
devices ala cable card. Or does each third party that seeks to deliver these
streams need to obtain rights from the content owners, install edge servers at
the cable head ends, and lease bandwidth on the cable?
If competing services such as the one Apple is proposing, must duplicate
existing services, can the cable handle the duplicated traffic and the crunch
of unicast streams for VOD from Apple cloud servers connected via the Internet
backbone?
And if these boxes bring in new subscribers, should they share customer data
and the revenues generated?
Logic suggests that the cable owner should manage the traditional MVPD streams
and insert local commercials as they do today. Thus it would make sense for
Comcast to provision the edge servers and other back office equipment needed to
manage the IP equivalent of their existing streaming services. And it would
also make sense that they should make this new service available to third
parties, including Apple, Sony, Microsoft, et al. The third parties could sell
the local streaming service as part of the larger service they create for their
devices - it's not just the STB, but any device that can access this content
via the Internet using authentication.
Brings to mind the old meme - "Oh what an evil web we weave..."
> "Delivering the service quality Apple envisions would require Comcast to make
> significant investments in network equipment and other back-office
> technology, according to people familiar with Comcast's thinking."
Yup. An investment they would need to make anyway to offer the IP equivalent of
existing MVPD services. An investment they may already be making.
>
> This is because Apple wants to have exclusive right to edge servers they
> expect Comcast to install. Ideally, from a customer's standpoint, the content
> OWNERS would install whatever edge servers they deem necessary, in agreement
> with the ISP, and the equipment manufacturers would build standards-based
> boxes that anyone can use over any ISP net.
We don't know what Apple is proposing other than asking for managed bandwidth.
They may be asking to install their own edge servers to handle VOD services,
such as those the provide via iTunes and iCloud today.
Perhaps Apple is asking for exclusivity; it is certainly the best way to
leverage what they bring to the table. Call it a bargaining tactic. As you will
see in a moment, I have some recent experience with how this game is played...
>
> Another paragraph:
>
> "The companies also differ on how deep a relationship Apple should have with
> Comcast's customers. Apple has proposed that users would sign on to the new
> device using Apple login IDs, and it is interested in controlling customer
> data, the people familiar with the matter said. Apple also has asked for a
> cut of the monthly subscription fees paid by customers, these people said."
>
> Can you spell "walled garden"?
The Apple ID is the owners key to everything in the iOS ecosystem. It links
more than 600,000,000 accounts to the owners credit cards. The real issue here
is who gets paid, and the checks they must write for content rights, managed
services, etc.
Whatever emerges, authentication will be a major issue. Cable card did not
work, and is useless in this discussion - it was physical DRM for every
device. This new service must work with software based DRM that works with
every device across the entire Internet.
>
> Also this, where Apple expects IP bandwidth to its boxes to be given
> privileged treatment by Comcast, again wanting to depend on the walled garden
> model that Comcast would extend to them exclusively:
>
> "Under the plan Apple proposed to Comcast, Apple's video streams would be
> treated as a 'managed service' traveling in Internet protocol format-similar
> to cable video-on-demand or phone service. Those services travel on a special
> portion of the cable pipe that is separate from the more congested portion
> reserved for public Internet access."
Netflix just entered into a peering agreement with Comcast. They are paying for
better access to Comcast ISP subscribers. Apple seeks to go a step further with
the managed service proposal. Is this the issue that Jobs finally "cracked?"
If we fast forward to the day when the cable company can turn off the analog
tier and reclaim that spectrum, should they be allowed to offer this bandwidth
for managed services to Netflix, Apple, Amazon, Microsoft, Google, et al?
> So, when we're hoping that the Internet TV breaks down the old-school walls
> of MVPD nets, e.g. by allowing content owners and ISPs to agree to distribute
> servers throughout edges of ISP nets, to achieve exactly what Apple wants,
> Apple is instead taking the approach of retrenching to the old model, for
> Apple's benefit. Read that paragraph. It seems pretty clear that Apple
> expects all other TV sources to NOT have edge servers.
Clear to you perhaps...
There are many parties at the table, and we are beginning to hear their
negotiating positions...
>
> Can Apple TV go to wwitv.com? Or cbs.com? Besides which, even if it could
> (which it can't), what they want here is an exclusive walled garden
> treatment, only to themselves, provided at Comcast's expense. And why would
> you expect this to cause the "unbundling" of anything at all? Didn't you read
> the part about Apple getting a piece of subscriber fees?
So yesterday I went to Tallahassee to testify at a Florida Senate Regulatory
Affairs committee on a bill being pushed by the Beer Distributor oligopoly -
the middle tier of the three tier system set up after prohibition to prevent
"Tied Houses." If you are not familiar with the term, in many parts of the
world the big breweries own their distribution networks, including the bars
that sell to the public; these establishments only serve beers produced by the
breweries that own them. Imagine if you will an InBev or Molson/Coors pub on
every street corner...
As in most states, breweries have an exemption to operate a tasting room where
they can sample and sell beer directly to the consumer. The improved margins in
these tasting rooms are critical to the growth of the Craft Beer industry
around the country. The monopoly distributors want us to buy our beer from them
so they can get their 30% cut.
This bill even eliminates an existing "come to rest" regulation that requires
distributors to take our beer to their bonded warehouse, document receipt and
pay the State excuse tax of 48 cents per gallon. In other words, they would now
be able to come to the brewery and buy a case of our beer, then sell it back to
us for resale after marking it up 30%. They would not need to do a thing other
than collect the check.
What's this got to do with your assertions about Apple TV you ask?
When I got home last night I started this response and decided to see if I
could watch CBS.com and wwitv.com on the big screen using my Apple TV. The
Apple TV, with its app driven interface and tiny remote does not currently
support web surfing. But it does support Airplay, the mirroring of content
accessed via a local computer, iPad, or iPhone - this is analogous to how
Google's Chromecast works with assistance from a device running the Chrome web
browser.
I accessed CBS.com on my iPad and was able to mirror most of their content to
the TV. Looks like they are still trying to block access to some full episodes,
but not all. Then I went to wwitv.com - loaded a channel from Argentina - it
just worked. And then I watched my testimony at the Senate hearing from the
Senate video server, and answered a few e-maIls from friends who watched the
hearing live via the same server.
Walled garden my ass...
Regards
Craig
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