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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Comcast isn't the worst
6/14/2012 12:01:54 AM
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
6/14/2012 8:34:01 AM
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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