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The Apple Smart TV Report: A Serious Problem the Media Ignores

There is a growing amount of speculation that a third generation Apple TV will make its debut during this week’s rollout of the next iPad. A key clue is the fact that stocks of Apple’s “hobby” set top box are drying up, at least at third-party resellers. You can still get them from Apple’s online storefront.

The revision is expected to add a more powerful chip (an A5, A5x or A6), which will allow for 1080p high definition video streaming, the same as Blu-ray. That also means, I suppose, that Apple will begin to offer better quality movies over time, perhaps at a slightly higher price. Compare to DirecTV and other services, which typically offer the higher resolution video-on-demand selections for $1.00 extra. I would expect the movie industry to approve a similar deal with Apple.

But the larger question is whether Apple is, as has been predicted for months, really working on their own answer to the “smart TV” question, as if anyone has really asked. That Steve Jobs has, according to biographer Walter Isaacson, found the secret doesn’t mean that that solution will appear in a TV set. It may just be an updated interface for Apple TV, along with more content offerings.

There’s are also published reports that Apple VP Eddy Cue has been busy negotiating agreements with the entertainment companies, so Apple will be able to offer a subscription service. This will mean that your favorite TV channels will appear as apps on an Apple device, and the content will be streamed to your home.

If you can believe those stories, the media companies are demanding proper respect, and the promise of a lot of money from Apple. In turn, Apple is doing their best to roll such deals into their existing structure, keeping the price to end users as low as possible. Now doubt there will be a compromise, eventually, particularly if the entertainment industry expects huge profits from such a service.

As to the presumed Apple TV set itself, you wonder whether Apple will break the mold of those anonymous thin block boxes that make one TV almost indistinguishable from the next. Some suggest a nearly end-to-end screen, with a very thin form factor. But such a set would still have to offer the same lineup of side or rear hookup possibilities as existing sets, including several HDMI ports, an optical sound port, and all the rest. No doubt there will be built-in Wi-Fi as well, since more and more sets offer that feature. So far, however, such a product doesn’t seem all that unique.

Another way to differentiate itself from the pack would be for Apple to deliver some sort of tricked out surround sound audio system, so you wouldn’t need a separate home theater configuration of separate speakers, or an ugly soundbar with a subwoofer. Bose has already tried this scheme, but the price of their VideoVision is just shy of five thousand dollars. This overpriced set may indeed offer, as The Wall Street Journal says, “…fully convincing surround sound,” but I don’t think there are many takers at that price. If Apple were to offer a similar approach, they wouldn’t get away with charging more than a few hundred dollars over existing sets. The market is too saturated.

But the biggest obstacle to such a product wouldn’t be the technology or the user interface. I’m sure Apple can do a great job with both. I also expect Apple to be able to make deals with the media companies.

Unfortunately, the news media is largely ignoring the biggest obstacle to such a product’s success, particularly a possible streaming TV subscription service. As smartphone customers, and more and more broadband Internet customers have come to realize, the biggest obstacle to 24/7 video streaming to your home is bandwidth.

Claims of unlimited bandwidth have been shown largely to be myths. Deep in the fine print of your ISP’s service agreement will probably be something that addresses excessive consumption. You may even see monthly limits of 200GB or 400GB; the latter represents the limits Cox Communications imposes on my account.

If you come close to their limits, your ISP may, as AT&T does with unlimited customers who use more than 3GB of bandwidth, throttle speed. You may have a package that’s more than sufficient for streaming HD video, but it won’t be sufficient if your ISP deems you’re using too much. If you continue to exceed their limits, they also reserve the right to cut off your service until the next billing period, or give you the heave ho. So much for unlimited streaming video all the time.

And remember that Apple isn’t the only tech company seeking to set up video streaming services.

You may think that a 2o0GB cap is more than sufficient for your needs. But imagine watching HD TV for six or eight hours a day, as many of you do. Imagine, further, that you have a large family, all of whom are spending untold hours a day consuming online content from Apple. The roadblocks will be reached very quickly with that level of use and abuse.

Now I suppose it’s always possible that Apple will seek special deals with ISPs to reimburse them for the excessive use of their pipes. That, of course, would raise the specter of Internet neutrality, and whether an ISP has the right to demand payments from both customer and content provider for unfettered access.

These issues are highly complicated. They need to be discussed, but most members of the media are falling down on the job by ignoring the question entirely.