Over the weekend, the WSJ reported that Apple and Comcast are working on a deal to streamline the use of Apple TV to Comcast users, where Comcast would provide the bandwidth to the device via a different ‘channel’, allowing the Apple TV content to be protected from the buffering and quality issues that plague other video services relying on the public internet. This is in sharp contrast to the recent Netflix-Comcast deal, whereby Netflix is directly paying Comcast for bandwidth to Comcast’s customer base.

There are three fundamental issues that come into play with delivering cable television to the home, and this type of arrangement between Apple and Comcast could end up being mutually beneficial in each of these areas.

‘The Pipe’

The capabilities and options to deliver TV to the home depend largely on the infrastructure in place. The historical approach to video was to deliver an analog ‘broadband’ connection, where all TV channels are simultaneously transmitted to every home. The intelligence of which channel to display from that stream of all channels was left to the STB – set top box – that connects the TV to the cable network. In order for advanced services like time-shifting or pay-per-view to function in this type of environment, the majority of the intelligence was sitting on top of the customer television set.

As digital cable has expanded and become ubiquitous, the supporting infrastructure has evolved. In systems like AT&T’s U-Verse, the ‘full stream’ of cable channels are no longer sent to the home simultaneously. Instead, only the channels being watched or recorded are sent, down the same pipe that the home internet uses. The difference is that a portion of this bandwidth is reserved for the ‘TV’ portion of the traffic, and is protected from bittorrent, Netflix, and other internet traffic.

With Netflix using approximately 1/3 of all internet traffic, this becomes a huge sticking point for them to grow. A single Netflix HD stream uses approximately 7 Mb/s of bandwidth, and this bandwidth comes out of the customer’s ‘pool’ of bandwidth. Assuming Apple delivers similar quality, Comcast could colocate the servers delivering this content directly on their network and provide this bandwidth over their reserved ‘TV’ bandwidth, guaranteeing this bandwidth available to their customers regardless of whether or not everyone else in the neighbourhood is streaming Netflix or going crazy on bittorrent.

In order for Netflix to deliver a consistent and high-quality experience to their customers, they have decided to compensate Comcast directly for their bandwidth usage, and provide direct connections from their servers into the Comcast network, but their bandwidth is in no way guaranteed, and can and will be impacted by the number of simultaneous users and what they are doing.

This does bring up some interesting questions around net neutrality. However, it is not unreasonable to think that Comcast has an obligation to their customers to deliver a quality television experience, and providing reserved bandwidth is likely the only way to accomplish this. As long as the rest of their internet traffic isn’t filtered or prioritized in a way that unfairly punishes or rewards competitors, they may be able to steer clear of these issues since their customers are paying for television service as a separate, although bundled, service.

 ‘The Smarts’

With the cable companies acting like the slow-moving behemothly monopolistic utilities they are, companies like TiVo came to help give the end user a more intelligent and capable experience. This was a requirement in the old days of analog cable and over-the-air television, and has largely remained in place today. Even in the case of smarter television systems, the hard drive storing the buffered television usually sits in the STB. Really advanced systems can share this hard drive between different receivers, but the intelligence is still contained in the home.

This is not an ideal situation for anyone for many, many reasons. Hard drives fail, people don’t provide a clean, temperature-stable environment for the hardware, and the traditional vendors haven’t always prioritized end-user experience, or even been able to spell end-user experience, leading to a very frustrating customer experience.

For Comcast, the concept of having their end-user experience defined by Apple may be appealing. Apple has created a device that is inexpensive at $99, and that could conceivably provide a much better user experience than what exists today. The biggest problem with the Apple model is that it relies on a very intelligent cloud to deliver the content, and the cable companies have historically operated on the exact opposite of this model.

For Comcast to replace their user experience with Apple TV, they would have to create a very significant internal server infrastructure to deliver live content to millions of users. Luckily, the migration to digital and intelligent television has already accomplished a significant amount of this upgrade, but the DVR/time-shifting capabilities still primarily exist in the home today, and this capability would have to be moved to Comcast’s data centers.

When looking at the infrastructure Apple has been investing in for their content delivery networks, a reasonable theory to consider is that they may be preparing either a reference infrastructure for the cable companies or even preparing to host a significant amount of the infrastructure themselves, and just put in a pipe to the cable providers’ networks.

‘The Content’

Most of the recent rumors and discussions on Apple’s difficulties in entering the home TV market have centered around content contractual issues, and with good reason. The cable companies have used every legal option at their disposal to maintain their stranglehold monopoly over their users. One of the most effective ways of doing this is to “own” the content and channel broadcast rights for their user base. These contractual ties are so tight that as many content providers have created iOS, Apple TV, and Android apps, they are only available with full functionality to cable subscribers.

While this is likely not a viable long-term strategy to stop the ‘cord-cutters’, it certainly is a significant impediment to going cable-free in the short term. If you enjoy broadcast television, premium cable, or nearly any sporting events, you must have a subscription to cable TV to legally view the content through the network’s own applications.

By partnering with the cable companies, Apple sidesteps this issue for the time being. If Comcast is ‘just another app’ on the Apple TV, THEY are responsible for the contractual obligations, and they already likely have all of the necessary rights. Nothing in the Apple TV ecosystem is fundamentally that different from how cable content is delivered today, and will likely fall within the current contracts or require minimal changes.

Long-term, it is likely the content providers will move more ‘upstream’ and the premium channels will market directly to their consumers like Netflix does today, but that is many years and many contract renegotiations away. Today, cable is the in the driver’s seat.

The Biggest Winner: Everyone

Comcast wins because their customers get a better user experience, and they are paid whether the user is watching their cable content, a movie on Netflix, or buying a movie on iTunes.

Apple wins because they own the living room, which is all they really want in the first place.

Netflix wins because every home with an Apple TV installed, they have another device with their app available.

This may be the wave of the future, and the biggest losers would be the current STB providers. Based on how terrible their products are, will anyone care?

Also read:

• Will Apple TV 4 come with Comcast subscriptions?
• Opinion: How Apple can improve the TV experience without the “TV”
• Opinion: Where is Apple taking the TV in 2014?

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The Beatles have been all over the news last week, thanks to the 50 year milestone (Feb 9) of the iconic pop band’s first performance in The Ed Sullivan Show. Looks like Apple is celebrating and they’re doing it in a big, never-before way. They have launched a new channel on the Apple TV simply named, The Beatles.

The icon of the Fab Four gives way to a short profile of Beatles in The Ed Sullivan Show and a free-to-stream video of their historic debut show. The show is about 14 minutes in duration and of course, black & white and boxed in (winking)! In addition, the channel gives links to all US albums of  The Beatles which are available digitally for the first time ever. Users confirm that all the content is available on Mac, PC and iOS devices also via iTunes.

Apple has always had a soft corner towards The Beatles may be because it was Jobs’ favorite band. He mentioned them to be his role models in working as a team and frequently featured their iTunes content. Apple even indulged in negotiations for over a decade to get the rights to their content. But our friends at Facebook seem to think that the company is too much biased to a single band which is not healthy for one like Apple. Non-fans of the genre as well as other reputed bands may be a little offended too.

Keeping that aside and looking into Apple TV, we see that a new trend is developing in the channels. The profile mentions that the debut performance will be available only for a limited time. What happens after that? Will it remain as a channel promoting iTunes links only or vanish like the Keynote videos? We’ve never seen Apple doing either of these, just for promoting or featuring content. So are they introducing new temporary featured iTunes content on Apple TV, in addition to subscription-based/pay-per-view channels? Only time will tell.

And on the boiling pan, we already have the recent rumors of new iOS based Apple TV and in-built Apple TV App Store. Apple’s new Content Delivery Network and the ever-rising plea of users for a less cluttered interface are also among the ingredients.

We’re sure Apple is cooking something special and we can’t wait to see if that’d be delicious. While we look forward to the imminent release of Apple TV 4, you can check out our awesome article on Where is Apple taking the TV in 2014?

Stick around here at Apple TV Hacks (Facebook, Twitter, Google+) for more coverage on the new Apple TV.

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The Wall Street Journal reports that Apple has been building out an extensive network of data centers and connections as groundwork for moving deeper into television. Today, Apple uses a mix of content that is hosted in Apple-owned data centers and content distribution from Level 3 and Akamai, which is a good strategy for more “static” content like what is currently available in the iTunes store. Essentially, Apple can push a copy of “Thor: The Dark World” to Akamai and let them provide the servers and bandwidth to all of the users who purchase the movie.

Where this model fails is when more interactive or real-time content is being viewed. If Apple is truly going to compete for living room space as the primary set-top device, the “Live TV” problem must be tackled. Verizon did a reasonably good job of this with the Super Bowl, streaming it live to a peak of 1.1 million viewers. Yet this was a paltry 1% of the total TV audience, and those viewers were often watching the game with a 20-30 second delay. This is problematic for almost any live event, and a deal-breaker when it comes to sporting events.

The fundamental problem is one of fairly simple math. Using the new “Thor” movie as an example, the bandwidth required for a single viewer of the 1080P stream is 4.5Mb/s, well within the realm of most broadband users in the U.S. Unlike “Thor”, however, Apple can’t ship a copy of the Super Bowl video to Akamai and let them handle streaming that 4.5Mb/s out to millions of users. The streaming needs to occur in as close to real-time as possible.

Apple approaches services like this from an evolutionary perspective. Downloading of music content was the first offering, and the infrastructure was scaled up, broke, fixed, and scaled some more. Then, standard definition video downloads were added. Scale, break, fix, scale. High definition video downloads. Scale, break, fix, scale. Then streaming of static content, both music and video. In this process, they have undoubtably learned many lessons about how to build and manage the infrastructure required to support large-bandwidth events, whether it’s a new movie or the release of iOS 7. And they have learned is what they can use partners like Akamai and Level 3 for, and what they cannot.

Being the control freaks they are, it would be surprising if they continued to rely on Akamai for such a large portion of their user experience, and even more surprising if they believed that a 20-30 second delay for something like the Super Bowl would be acceptable to their users. The only solution to this is to build out the infrastructure themselves, allowing them to produce and deliver the content with as little latency as possible to as many users as possible, while still meeting their goals for quality and performance.

The WSJ article certainly lends credence to this. Apple has 20 million Apple TV’s sold to date, and another 700 million iOS devices. Whatever they build has to support this volume of users. For Apple to handle just 10% of the Super Bowl viewers via Apple TV would require a staggering 45 Terabits of data per second, all of that delivered in a manner that is at least comparable in quality and latency to what users receive today from their cable provider. From the sounds if it, they are preparing to do just that.

Related articles:

• New rumors on Apple TV 4 surface as Apple TV gains special profile at Apple official website
• Opinion: Where is Apple taking the TV in 2014?
• Native gaming on Apple TV could soon become a reality as a new Apple TV with its own App Store is on the way, sources say

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