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Apple-Comcast Talks over “Special Treatment” for Set-Top Streaming Raise Net Neutrality Concerns

By Kim Meyer – Edited by Andrew Spore [caption id="attachment_4276" align="alignleft" width="150"] Photo By: Rob Boudon - CC BY 2.0[/caption] Apple is in talks with Comcast to enter an agreement that would allow Apple’s set-top television streaming boxes to bypass congestion on the Internet, the Wall Street Journal reports. The agreement, which is presently only in its early stages, would grant Apple “special treatment on Comcast’s cables” and has raised net neutrality concerns. Apple has been developing the next generation of its set-top box with an eye toward integrating gaming capabilities, a router, and a “TV tuner component” that will allow users to control their existing cable boxes and TV stations through their Apple TV boxes, The Verge reported in January. The boxes would effectively replace the traditional cable set-top box, allowing users to stream live and on-demand programming. The potential agreement between Apple and Comcast would separate traffic to and from Apple’s set-top boxes from public Internet traffic on the “last mile” — those cables that connect to customers’ homes. This would allow users to avoid the “clogging” problem “that occurs when too many users in the same area try to access too much bandwidth at the same time,” the Wall Street Journal explains. The Verge reports that Apple was engaged in similar talks with Time Warner Cable before Time Warner agreed to merge with Comcast. Generally, preferential treatment over the “last mile” would violate Comcast’s net neutrality obligations, but the Apple-Comcast plan would avoid such a violation by classifying Apple’s streams as a “managed” or “specialized” service similar to video-on-demand or phone service, Ars Technica explains. The Federal Communications Commission's net neutrality rules were vacated by the D.C. Circuit Court of Appeals in January. Verizon v. Federal Communications Commission, No. 11-1355 (D.C. Cir. Jan. 14, 2014). Comcast is still obligated to follow the rules until 2018 because of settlement commitments it made in exchange for gaining approval of its acquisition of NBCUniversal in 2011. United States v. Comcast Corp., 1:11-CV-00106, 2011 WL 5402137 (D.D.C. Sept. 1, 2011). However, under the settlement, “specialized services” are exempt from the net neutrality rules and are loosely defined as any service provided over last-mile facilities other than Internet access services, regulated telecommunications services, or existing Voice over Internet Protocol telephone services. Id. at *4. Under this expansive definition, Internet service providers may be authorized to treat any third party’s service as an exempt “managed service.” Apple claims such an arrangement would merely give the company a separate “flow” of traffic, rather than any preferential treatment. Nevertheless, commentators have expressed concern that the agreement could mark a shift that threatens net neutrality. Matt Wood, policy director of the consumer advocacy group Free Press, told Ars Technica, "I don't see how striking a special deal to provide a separate path for some video services — with the express purpose of avoiding the congestion that other content and services might experience during peak traffic times — could be seen as anything other than a way of prioritizing the favored video, evading the rules, and deterring the investments necessary to make the last-mile Internet connection less congested in the first place.” Similarly, Public Knowledge’s senior staff attorney John Bergmayer describes the specialized service classification as a “loophole.” The Wall Street Journal reports that Apple and Comcast are still far from striking a deal, with significant disagreements about investment in network equipment, control of consumer data, and apportionment of subscription fees. Reports of the Apple-Comcast talks come less than a month after Netflix negotiated a deal with Comcast which allows Netflix to pay Comcast for faster streaming speeds. According to Ars Technica, the Netflix-Comcast deal did not violate Comcast’s net neutrality obligations because it did not implicate the “last mile.” In response to net neutrality concerns, Netflix Chief Executive Reed Hastings assured customers on the Netflix blog that this plan was only for “the near term.” Meanwhile, the Federal Communications Commission is in the process of drafting a new net neutrality bill to replace the rules struck down in January. The new rules “would ensure that network operators disclose exactly how they manage Internet traffic and that they do not restrict consumers' ability to surf the Web or use applications,” says the Huffington Post. Kim Meyer is a 2L at Harvard Law School.