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Tuesday, March 25, 2014, 08:52 am PT (11:52 am ET)

Bandwidth deal between Apple & Comcast would likely draw federal scrutiny

Though the U.S. government wouldn't need to approve a deal between Apple and Comcast for faster and more reliable streaming video, such an alignment would likely draw regulatory scrutiny, in particular with respect to its effects on net neutrality.

Apple TV


Analysts and experts who spoke with The Wall Street Journal feel confident that any such deal between Apple and Comcast would "draw close regulatory scrutiny." While the deal wouldn't require federal approval, it would raise questions about net neutrality, which is a belief that all content should be treated equally on the Internet, rather than preferential advantages given to those who are willing to pay.

But while experts believe the terms of a potential Apple-Comcast deal would draw eyes from federal investigators, they also believe that such an arrangement would likely be accepted. Guggenheim Securities telecom policy analyst Paul Gallant said he expects the U.S. Federal Communications Commission would be OK with the rumored deal as long as it were nonexclusive and didn't degrade traditional broadband service.

The FCC has a particular interest in preserving net neutrality, and is planning to issue new rules that would prevent service providers, such as Comcast, from charging content providers, like Apple, to reach consumers at faster Internet speeds. But the rumored negotiations between Apple and Comcast are unique, in that they do not actually involve the open Internet.

Instead, it was claimed this week that Apple is in talks with Comcast about a deal that would bypass congestion on the "last mile" of connectivity, which represents the connection between Comcast and the end user's home. During peak usage hours, those pipes can become heavily trafficked, which affects Internet connections, and Apple seeks to have its own dedicated connection to ensure quality streaming video transmission.

Market watchers believe any talks that may be taking place between Apple and Comcast do not likely go far beyond the alleged topics, and it's unlikely that Comcast would completely hand over its customers' user experience to Apple. Instead, it's believed that something like a dedicated Comcast application for a device like the Apple TV could provide live and on-demand content to Comcast subscribers.

Further complicating matters is the fact that Comcast is already expected to face significant scrutiny from the government as it attempts to buy rival company Time Warner Cable. In hopes of pushing that acquisition through, Comcast has pledged to expand its support for net neutrality.