Big Things Stand in the Way of Apple's Comcast Cable Box

Apple seems set on expanding its presence in television, with a report on the company’s talks with Comcast in the Wall Street Journal serving as the latest evidence that Apple TV isn’t the end of the company’s ambitions. But the thing to take away from the story is that the major stumbling blocks remain in place.

Apple wants to build a set-top box that would stream live and on-demand television to customers over Comcast’s private network, avoiding performance problems generally associated with Internet video. The two companies are not close to a deal, according to the Journal, nor is it particularly surprising that they’re talking. Last month my colleagues at Bloomberg News reported that Apple was pursuing similar arrangements with several pay-television companies, including Time Warner Cable, Comcast, and DirecTV. (Apple declined to comment on the latest report, and Comcast didn’t immediately respond to requests for comment on Monday.)

Back in February it seemed both Comcast and DirecTV were reluctant to allow Apple to develop a system where customers logged in using their Apple credentials instead of their pay-TV accounts. The fundamental question of who gets to have the primary relationship with the customer has played prominently in Apple’s negotiations with magazine and newspaper publishers in the past, so it makes sense that the issue would pop up again in a different medium. Given that Comcast has been investing in its own advanced set-top boxes, the cable giant is probably not ready to cede too much ground too quickly.

Apple also has to work out deals with the companies that own the content people might watch using its Internet TV devices. Media companies have proven consistently uncomfortable in striking such deals. Given Apple’s history of undermining the economics of major media industries, it’s not hard to see why.

News of the talks could be uncomfortable for Comcast by once again bringing up the idea of the country’s largest cable company offering special treatment to business partners. Just as in Comcast’s much-discussed deal with Netflix to improve video quality, however, the deal laid out in the Journal wouldn’t be a technical violation of net neutrality.

While the Federal Communication Commission’s net neutrality rules were struck down earlier this year, Comcast agreed to abide by them as part of its acquisition of NBC. But Comcast is now bringing another proposed deal—its purchase of Time Warner Cable—to the federal regulators likely to be skeptical about its intentions. Some consumer groups hate the idea (and are already jumping on the Apple reports), a number of states have said they will investigate the proposed acquisition, and Netflix suddenly turned against Comcast when it said that the cable company was interested in weakening net neutrality.

Comcast may reach a deal with Apple, but it’s probably not thrilled to have to talk about it right now.