NEW YORK (CNNMoney) -- After seeing how Apple upended the music and wireless industries over the past decade, cable operators want to make sure that their industry isn't next in line to get an Apple makeover.
Apple (AAPL, Fortune 500) is widely reported to be in negotiations with cable companies to add live television access to a future Apple TV device -- perhaps an actual TV, but possibly something else. A Wall Street Journal report this week cited sources who claimed knowledge of Apple's attempts to get cable companies on board with an Apple-designed set-top box.
The device would be sold to consumers directly by Apple, and the tech giant would like to take a 30% cut of movies and apps that customers purchase on the box. The cable companies would be in charge of ensuring the viability of the service, including fixing malfunctioning devices.
In other words, Apple wants to be the shiny, user-friendly face of the device and let the cable companies do the dirty, unappreciated work. The industry term for this is a "dumb pipe": a company that is responsible for delivering a service but has no say in what flows through its network and no direct control over the customer experience.
That's exactly what happened to the wireless and music industries when Apple introduced iTunes and the iPhone.
The music industry lost much of its control over how music is sold and marketed to consumers, which contributed to a decade of declines in overall music revenues. With the iPhone, wireless companies like AT&T and Verizon lost the ability to make money on or control app sales, text messages and, increasingly, even phone calls. (If you're using Skype on your smartphone, you're not using voice minutes.) The carriers were forced to build out and support wildly expensive data networks and change their business model to make money on metered data services.
"The iPhone came along and radically changed the industry," AT&T CEO Randall Stephenson said last month at Fortune's Brainstorm Tech conference. "The industry has grappled with getting the pricing model turned."
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Comcast (CMCSA), Time Warner Cable (TWC, Fortune 500), and the rest of the nation's cable companies want to avoid a similar fate, industry experts say.
"History is a wonderful teacher," says Steve Beck, managing partner ofcg42, a boutique consulting firm with expertise in the telecommunications and cable sectors. "Cable companies look at the music industry pre- and post-iTunes and the wireless industry pre- and post-iPhone and the control Apple exerted, and they want no part of that."
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