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Apple and Comcast reportedly teaming for streaming

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Apple and Comcast are talking about joining forces to offer a new streaming TV service, the Wall Street Journal reports.

The service would be delivered to customers with an Apple set-top box over a low-traffic portion of Comcast’s cables to ensure a viewing experience comparable to watching regular TV i.e. no waiting around while the video is “buffering.”

The benefit for Apple is that its service would be given priority treatment. The TV service’s traffic would be separated from public internet traffic over the “last mile” – the portion of a cable company’s pipes that connect to customers’ homes – to avoid congestion that can slow down video streaming.

That guarantee of network quality would give Apple a leg up over its competitors like Roku and Chromecast.

For Comcast, the deal would be a way to hang on to cord-cutting customers. Fewer people, young people especially, are shelling out for cable service these days, choosing instead to pay for streaming services like Netflix or Hulu that can be viewed on a computer or on TV with a streaming box.

The two companies aren’t close to an agreement yet, the Journal said. People familiar with the matter told the Journal the world’s most valuable company and the nation’s largest broadband provider don’t agree on who would control customer data and what share of Comcast’s monthly subscription fees Apple would get.

The deal would be different from the one Comcast recently struck with Netflix – Netflix begrudgingly agreed to pay Comcast for direct access to its network, cutting out a third party middleman, to make its streaming service faster.  Comcast is separating Apple’s streaming traffic from public internet traffic over the last mile of broadband pipe.

But the moral of both stories is the same: if you want your content delivered faster than the next guy’s, you better strike a deal with Comcast. It illustrates how much power the broadband provider has as a gatekeeper.

If it passes muster with regulators, Comcast’s $45 billion deal to acquire Time Warner, the nation’s third largest broadband provider, will only increase the company’s leverage.

Gail Sullivan covers business for the Morning Mix blog.
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