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Comcast has reportedly turned its back on promises not to data discriminate

Internet video has a problem.  Many of America's top cable providers -- such as Time Warner Cable, Inc. (TWC) and Comcast Corp. (CMCSA) -- also happen to be cable television providers.  The last thing they want is people ditching cable TV for cable internet video, which hits them with a double whammy of extra bandwidth demands and less subscriber revenue.

I. Are Cable Companies Violating Their Promises?

According to a report in The Wall Street Journal, the U.S. Department of Justice (DOJ) has initiated a probe into concerns that Comcast and others are working to quash internet video.  It's talked to Hulu and Netflix, Inc. (NFLX), leading net-video providers as well.

The DOJ probe could have major impact if the department decides that antitrust violations have occurred.  The government agency has made waves in recent months sinking AT&T, Inc.'s (T) acquisition bid of Deutsche Telekom's (ETR:DTE) T-Mobile USA and by suing Apple, Inc. (AAPL) and top e-book publishers for price fixing.

Among the decisions that triggered the new probe was Comcast's decision to offer free data to customers who use its Xfinity app on Microsoft Corp.'s (MSFT) Xbox 360 console.  Both Netflix and Hulu's apps count towards users' capped data limits, but the ISP's own app does not.

Comcast Xfinity
Comcast has been accused of data discrimination by rivals. [Image Source: Zachary Kaufman]

The issue is complicated by the fact that some major internet video providers are actually owned by the same companies looking to damage them.  For example, while Comcast's decision may damage Hulu, Comcast is also a major owner of Hulu, along with News Corp. (NWS).

Comcast is treading on thin ice as it promised in 2011 to treat competitors' data the same as its own, as part of its purchase settlement with the DOJ regarding its purchase of NBCUniversal.  Now it appears to be forgetting its promises.

II. Channel Providers Pressured Into Bundling

The DOJ is also examining the "fairness" of contracts that cable providers push channel providers into.  One practice under investigation is cable providers' efforts to block channel providers from individualling selling a channel, instead forcing them to opt into authentication schemes.

In other words, ESPN might want to offer to sell you its channel for $2.50 a month with open access, but cable companies have currently nixed that option.  The cable companies instead force you to buy their TV packages, which run $30 USD per month or more, in order to gain access.  Only customers who authenticate themselves as cable subscribers can then access ESPN on mobile devices.

ESPN app
Cable providers have fought to only allow mobile channel access to authenticated bundled cable subscribers. [Image Source: Howard Forums]

At a Tuesday Senate hearing, Attorney General Eric Holder let it be known where his sympathies lie.  When Sen. Al Franken (D., Minn.) suggested that some customers wanted to ditch cable and watch internet video instead, the Attorney General remarked, "I would be one of those consumers"

Source: WSJ

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By mcnabney on 6/13/2012 5:37:08 PM , Rating: 2
The government might actually stick up for the little guy. While the previous administration worked really hard on fining Janet Jackson and Howard Stern, the current occupants are forcing net neutrality and breaking up price-fixing schemes.

By Master Kenobi on 6/13/2012 7:05:38 PM , Rating: 2
Well the DoJ has little to do with who is in the white house, more like it's an election year so congress will be less likely to get in the way of what they are doing. This is normal.

By NellyFromMA on 6/14/2012 9:16:25 AM , Rating: 2
Sadly, the current state of affair over the past 8-12 years of congress is ANYTHING but normal, and its terrible when someone accepts it as such...

By Samus on 6/14/2012 12:56:04 AM , Rating: 2
I don't know why you got rated down. I completely agree with every point you made.

I had comcast for years and just recently moved into a building contracted to RCN cable, which sucks and costs more than Comcast, and when I called Comcast a few weeks after moving to cancel, they promptly canceled and back-dated my refund. I couldn't believe it, I almost felt bad leaving them just because they didn't put up a fight to cancel. I also went over my 250GB cap numerous times (way over 300GB one month because my torrent community had locked-ratios during XMAS) and I received no penalty, email, or phone call.

By Dr of crap on 6/14/2012 8:17:14 AM , Rating: 2
Really ?
I have Century Link DSL.
$25/month for 12mb on fiberoptic - NEVER charged extra for using to MUCH data!

By jRaskell on 6/14/2012 8:29:05 AM , Rating: 4
Comcast playing fair? Really?

Do you have any idea whatsoever what this DOJ investigation is all about?

You can watch all the Xfinity videos you want, hundreds of gigabytes worth if you so choose, with ZERO impact on your bandwidth usage, while other services all consume bandwidth.

I really cannot fathom how any reasonable person could consider that fair. I just can't.

Also, one of my co-workers lives in an area that has Verizon Fios available. Every 6 months, he calls Comcast, complains about the cost of his bill and says he's going to switch to Fios, and his bill gets cut almost in half. He's been doing that for 2 years now.

I don't have Fios available where I live. I've tried calling Comcast and complaining several times, to no avail. I pay over $60 more a month than my co-worker for similar service.

Any claim that Comcast is playing fair is completely and utterly absurd, or simply made in complete ignorance.

By theapparition on 6/14/2012 9:52:06 AM , Rating: 3
So you're happy that they haven't abused their monopoly status? You think they should be left alone because they didn't charge ridiculous over cap fees?

Talk about lowered expectations.

Throw the book at 'em
By inperfectdarkness on 6/14/2012 2:48:06 AM , Rating: 5
This has been a sticking point for me ever since Netflix started losing its licenses. Starz is in bed with Comcast--even if it's not openly publicized. Pulling their Netflix contract (or jacking up licensing fees to rediculous levels, which is the same thing) was all part of a grand scheme to artifically inflate prices by trying to desperately cling to a distribution model that's woefully outdated and overpriced.

It's not much different than the RIAA screaming bloody murder because consumers are pushing to obtain music in digital download format--and the corporate bigwigs want to keep selling at brick & mortar at nearly 200% the cost of digital distribution.

Although I'm not an Apple fan, I cannot deny that iTunes (and rhapsody, pandora, etc) saved the RIAA from total destruction. And now the MPAA wants to completely disregard the established precedent of history and fight tooth & nail against a digital distribution model that poses an attractive option to the customer that supplants the desire (or necessity) to pirate by 90% of the "target population". Consumers don't want to buy overpriced memberships at 6 different sites--just so they can watch each studio's libraries at liberty. Consumers want 1 membership, low-priced, and unlimited, unthrottled access. Netflix could be the flagship of a business model that saves the industry, but the MPAA and other "media-holders" refuse to cooperate and survive.

Additionally, the lack of ability for consumers to purchase ala-carte programming is KILLING the cable industry. The execs swear up and down that they have to sell "packages" or the costs will be too high for consumers to afford. I beg to differ. People who want ESPN will pay for ESPN--no matter if they have to buy a package or if they can buy ala-carte. The cost of each individual channel bears a price commensurate with whatever that channel provider wants to charge. Price yourself out of the range of most consumers, and demand for your product dries up. If some channels can't be sold at $.01 per month, then that's a big indicator that people aren't interested in that channel--and by rights, said channel should cease to exist.

Again though, this is simply a different take on the same idea--cable companies want to control public access to their products via underhanded price-fixing. The market should be allowed to self-regulate via consumer demand.

RE: Throw the book at 'em
By Dr of crap on 6/14/2012 8:21:40 AM , Rating: 2
Amen brother!

And one channel I HOPE would go first in your model - Bravo.
What a load of crap!

I've been hoping for years since they first said you could get video on demand, why I can't just buy one or two channels I want and screw the rest!??! And by the way video on demand - yea right. That hasn't happened yet.

RE: Throw the book at 'em
By FITCamaro on 6/15/2012 9:11:18 AM , Rating: 1
I do agree that ala-carte programming should exist. I don't agree in forcing it. It's their media and they can do whatever they want with it. Either vote with your wallet and your eyes, or stop complaining. And pirating the material doesn't help the cause. It shows the company you want their material and would prefer to steal it.

RE: Throw the book at 'em
By WalksTheWalk on 6/15/2012 11:19:36 AM , Rating: 2
The problem with letting the markets decide is that government already has their hands in this pie. Local governments grant local cable monopolies to distribute content via cable for a healthy I mean fee.

Government first needs to break the local cable monopolies like they did telephone service and require cable companies to lease their lines at a fair market price or remove the ability to grant the local monopoly.

Once the playing field is level then market forces can work to pull or push ala-carte or other models.

RE: Throw the book at 'em
By sorry dog on 6/15/2012 12:45:49 PM , Rating: 2
Additionally, the lack of ability for consumers to purchase ala-carte programming is KILLING the cable industry. The execs swear up and down that they have to sell "packages" or the costs will be too high for consumers to afford. I beg to differ. People who want ESPN will pay for ESPN--no matter if they have to buy a package or if they can buy ala-carte. The cost of each individual channel bears a price commensurate with whatever that channel provider wants to charge. Price yourself out of the range of most consumers, and demand for your product dries up. If some channels can't be sold at $.01 per month, then that's a big indicator that people aren't interested in that channel--and by rights, said channel should cease to exist.

I think Mick gets this part of the article wrong at least makes it confusing. The FCC is actually talking about a different issue with additional programming being only available to subscribers of higher than basic tiers of service such as having to have Expanded Basic or higher to view ESPN360 over the internet. Channels supplied through IP are specifically exempted from normal cable regulation, and is only starting to become address through net neutrality regs.

This is an entirely separate issue from bundling, and saying the cable co's are the primary one's forcing the bundling has it backwards. Most channels are owned by media groups with several channels. For example Viacom has Nickelodeon's, BET's, MTV's, Spike, TVland, CMT, etc. When Cable co. is negotiating prices is it not like it's newegg's shopping cart and you take this and that and cable co can bundle how they please. It's viacom saying you take it all at whatever price and we want the following channels to be in your basic expanded tier. Sometimes these negotiations get hard ball and turn ugly and that's when you hear stuff like last fall DirectTV may lose FX, Speed, NGC, etc. That is these media companies playing their trump card by scaring customers that they might lose their favorite channel (even if it's queer bait Bravo) and then Sat/Cable company better come to a deal fast before their competitors sales people can take advantage by saying "my competitor doesn't even carry Speed channel and I have it on Channel 42 in my basic package for $30...." ("for year and then it goes to $65 according the contract that you verbally agree to and I'm not really going to explain to you but it will cost you $300 to get out of when your pissed because you can only talk to Indians or their below IQ american managers).

Anyway, just look at who has been the bigger contributor to Congress lately. Media producers or Cable Sat companies?

I'm guessing media, for other reason than they have more disposable cash as sat/cable companies are usually and should be using their extra cash to upgrade networks, buy competitors, or servicing debt incurred from the first two. Only exception might be Comcast because they are so much larger than everyone else and they have bought some media assets lately.

However, I work in the industry and customer choice in my areas has been growing and competition has become much more fierce and prices have been falling for customers. There has been a lot of belt tightening industry wide as revenue per customer per line of business (big 3 lines of business are cable, internet, and phone) has been going all media/ISP providers are looking for ways to gain that revenue back such as on demand offering that are more competitive with Netflix or more bundling to steal other lines of business away from competitors.

This whole article strikes me as odd considering it's really media companies in driver's seat on the bundling issue and anybody in the industry knows that... so this article is highlighting Congress is mainly blaming TV providers. Either congress is highly mis-informed, bought off, or this article is completely missing the issue in it's coverage.

...Sorry for the super long post but there is a lot more to this issue than big bad cable co squeezing customers.

Not a free society as folks cliam now is it
By KOOLTIME on 6/13/2012 8:55:56 PM , Rating: 1
In the big picture retail brick and mortar businesses are failing slowly witch also provided 95% or better the work force in the world to some extent, retail needs alot of services to stay going, and cant compete so layoffs by the bulk is our ecco trend only gets worse as the next few years go forward.

Online trend is bad for workers and dont need a worker to sell stuff in an automated online system vs a sales person in the store earning real pay.

physical stores provide economy for jobs, 10 fold jobs vs online stores, which is why unemployment will only go up as more close over the next years.

By elderwilson on 6/14/2012 8:26:58 AM , Rating: 2
That is the same argument that has been used for the past two centuries every time some form of cheap automation is developed. It has been proven false every single time. When more efficient cost saving automation is implemented there is a short lag phase where people may be laid off, but the market quickly adjusts. As prices go down due to the automation more and more people can afford the product and demand increases. As demand increases more employees are required to keep up. So, yes some jobs may be lost in the beginning, but improved efficiency will always result in overall job growth.

By WalksTheWalk on 6/15/2012 11:31:15 AM , Rating: 2
Hanging onto an old economic model won't prevent the new model from taking over. As the new model takes over, job roles will change and people will adapt. Those that don't adapt are pushed out and those that do adapt thrive.

It's an occasion, that doesn't happen very often, where everything is up for grabs and there is opportunity for many people to make significant economic gains in the new model.

By 91TTZ on 6/15/2012 11:59:10 AM , Rating: 1
Hanging onto an old economic model won't prevent the new model from taking over. As the new model takes over, job roles will change and people will adapt. Those that don't adapt are pushed out and those that do adapt would thrive but they're left paying for those who were pushed out.

Fixed to reflect the sad reality of this country.

Your forgetting why they do this.
By dryloch on 6/13/2012 9:03:38 PM , Rating: 2
Comcast is using what is basically a LAN to send you xfinity programs. Netflix etc are not stored on Comcasts servers so they have to use the Internet to stream that stuff.

RE: Your forgetting why they do this.
By Etsp on 6/14/2012 9:42:34 AM , Rating: 2
It's not the backbone that's getting saturated, and it's not the backbone that is expensive to upgrade and maintain, it's the localized last mile.

Using this already saturated portion of the link as a LAN only makes the problems worse.

By sorry dog on 6/15/2012 11:25:59 AM , Rating: 2
Don't know about VDSL (Uverse) but at least in Cable most often the bottleneck is either the about of fiber "backhaul" from the neighborhood coax node is insufficient or there is not enough "blades" in cable modem terminal server and the server being the link between the fiber and coax is bottle neck for having too many customers.
The coax ring at last mile can handle alot of traffic, but more and more devices with their own MAC's are being added as cable transitions from analog to digital and the servers get bogged down from having too many clients on them...and usually not from the actually traffic itself.

Of course, this is the more expensive part to upgrade with each docsis 3 CMTS costing 50,000 before you pull any fiber or coax to put it in.

streaming protocol
By Mike Acker on 6/14/2012 8:42:20 AM , Rating: 2
streaming protocol should be restricted to CATV it does not belong on the 'Net

RE: streaming protocol
By NicodemusMM on 6/14/2012 2:45:27 PM , Rating: 1
I don't know what made me laugh harder. The complete absurdity of your statement or the idea that you expect people to take you seriously while being unable to capitalize and punctuate two sentences. At least I assume it's supposed to be two separate sentences....

Anyway... you can cling to your CED VideoDisc collection. The rest of us appreciate the convenience associated with streaming video and other digital distribution services.

RE: streaming protocol
By WalksTheWalk on 6/15/2012 11:34:00 AM , Rating: 2
Streaming offers a way to dis-intermediate and unseat the old video delivery model with a new, cheaper model that does it better. Why should it be restricted?

Yay DoJ!
By Mr Perfect on 6/13/2012 6:10:33 PM , Rating: 2
Hopefully this really goes somewhere, rather than getting dismissed or settled.

RE: Yay DoJ!
By 91TTZ on 6/15/2012 12:03:59 PM , Rating: 2
Here's how it will be settled: The cable companies will give the government some of the money that they stole from the people. The government, happy that they've been paid off, will drop the case.

It's like if a big bully saw a smaller bully mugging you. The big bully sees what's going on and tells the small bully to stop, but when the small bully offers the big bully some of the loot, the big bully agrees not to tell anyone.

Interesting but there are bigger fish to fry....
By Adam M on 6/13/2012 6:18:46 PM , Rating: 2
When it comes to TV Everywhere offerings not all companies are the same. Some have innovated while others stalled out; in the end customers will pick winners and losers so there isn't any need for government intervention. They could look at retransmission agreements between the networks and TV providers because customers always end up paying more after those deals. When it comes to bandwidth and internet service I would like to see a probe in to cell phone providers first. They market and sell these miracle devices that do everything and then cry about the data that everyone uses. The customer gets squeezed for using the data they were sold in the first place.

By Yeah on 6/15/2012 11:36:05 AM , Rating: 2
Well theres where I think your wrong. The govt. does need to step in when the people are being ' oppressed ' so to speak. Do you remember a few years back when dish network had that big law suit against the cable companies for squelching them out of business? This is the same kind of thing. I have Cox cable and they just upped the prices in our area for internet I now play 54.00 for 12down 3up (used to be 50.00) When I called them and asked don't you have to inform me when your raising my rates? They just basically said you can always cancel.

I dont pay for their TV services instead I use my PS3 to stream Netflix and Hulu which combined is less than paying for internet AND cable tv with Cox.

The cable companies have been sucking us dry for years now and I certainly think its time someone steps in checks the pricing.

Time Warner/Road Runner definately guilty
By Mitch101 on 6/13/2012 9:55:27 PM , Rating: 2
I can only hope the fines are significant as I pay plenty for TW/RR and every now and then they are defiantly throttling me. I pay for a 30meg connection and sometimes have problems getting good quality from Netflix which shouldn't be a problem. I can prove they do it because I can access a friends WiFi on a different provider at half the speed and get a better video quality. If I call to complain to a high end tech it magically works for a few months without any problems then it starts up again.

By tayb on 6/14/2012 2:41:20 PM , Rating: 2
No fines, because those fines will just get passed along to the consumers. What the outcome really needs to be is strong and rock solid net neutrality rules that if broken you lose your right to provide broadband.

Comcast isn't the worst
By rgreen83 on 6/14/2012 12:01:54 AM , Rating: 2
This is a very real problem for my household and any others at least in our area. In Joplin we have only one cable provider (Cableone) available and while they have improved their speeds finally in recent years now offering a 50 Mbps down connection for a reasonable (compared to the past offerings at least) $60. The problem is this is their highest end package and yet is only offered with a 50 GB cap! At 50 Mbps I could use my entire months allotment in a little over 2 hours!

We literally have to keep the laptop open to their bandwidth tracking page while watching Netflix so we can keep track of our data usage. I have also had to cut back to only downloading a couple game demos a month on the Xbox due to most of them being 1-2 GB each.

I haven't bought Diablo 3 yet because I don't want to spare the close to 10 GB to download the game and then use even more to play it since it is always connected and using lots of data since much of the game is server side.

So in short, I envy those worried about only having 250 GB per month, and yes, the cable companies caps are most definitely affecting customers ability to legitimately use the internet openly.

RE: Comcast isn't the worst
By elderwilson on 6/14/2012 8:34:01 AM , Rating: 2
I have the same service from Cableone. At least in my area from 12am to 8am any data usage doesn't count against the 50GB allotment. When I need to download a large file (like a game) I set my computer or Xbox to do the download between those hours. I agree that the 50GB max is ridiculous, and when I asked them about it they claim it is so people don’t share connections.

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