Report: DOJ Opens Probe Into Cable Companies' Discrimination of Net Video
June 13, 2012 5:05 PM
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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. (
) and Comcast Corp. (
) -- 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
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
AT&T, Inc.'s (
of Deutsche Telekom's (
) T-Mobile USA and by
, Inc. (
) 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 (
) Xbox 360 console. Both Netflix and Hulu's apps count towards users'
capped data limits
, but the ISP's own app does not.
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
. For example, while Comcast's decision may damage Hulu, Comcast is also a major owner of Hulu, along with News Corp. (
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.
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"
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Interesting but there are bigger fish to fry....
6/13/2012 6:18:46 PM
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.
RE: Interesting but there are bigger fish to fry....
6/15/2012 11:36:05 AM
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.
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