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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RE: Throw the book at 'em
6/15/2012 9:11:18 AM
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
6/15/2012 11:19:36 AM
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 bribe...er 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.
"The whole principle [of censorship] is wrong. It's like demanding that grown men live on skim milk because the baby can't have steak." -- Robert Heinlein
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