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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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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.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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