June 14, 2012
Antitrust Probe Of National Cable Companies
Lee Rannals for redOrbit.com
The Justice Department is probing the cable industry for their latest policy of imposing Internet data limits on consumers, according to media reports.
The Wall Street Journal and Bloomberg News reported on Wednesday, citing people familiar with the situation, that the probe is an antitrust investigation to determine whether Comcast and other cable television companies are illegally stifling competition from online video providers like Netflix and Hulu.
Comcast and Time Warner, the nation's largest cable companies, limit the amount of data their customers can view from online video services, and charge extra when customers exceed their limit.
“Antitrust officials are taking on the massive transition of hard media to digital media, and in some cases there are whole new questions in antitrust analysis,” Andy Gavil, a law professor at Howard University, told the Washington Post. “And the trick is to figure this out while being sensitive to how fast things are changing.”
The Justice Department is also questioning cable and satellite providers' own streaming video services, which they do not count against monthly data limits, according to a report by the Post.
Craig Moffett, an analyst at Sanford C. Bernstein, told the news agency that the proceeding could slow the pace of innovation and reinforce the nature of the cable infrastructure.
Netflix says data limits encourage consumers to stop using streaming video services, and its chief executive, Reed Hastings, specifically points to Comcast. The online video streaming company says cable companies are concerned of the competition companies like Netflix offer, because instead of having to pay for a bundle of channels, users can watch just one television show.
Comcast, and other Internet service providers, say that limits are needed in order to stop heavy users from overwhelming their networks.
Comcast is also under criticism because it said in March that videos viewed on its own Xfinity app on Microsoft's Xbox would not be counted against subscriber's data caps in the same way video viewed using Netflix, Hulu or other apps.
The Wall Street Journal reported that the Justice Department is examining whether Comcast's Xbox policy violates legal commitments made by the company in 2011 to secure antitrust approval for its takeover of NBC Universal.
Comcast agreed in the legal commitments in 2011 that it would not "unreasonably discriminate" against other companies transmitting data over its network, or treat its own content different.
Comcast said it is complying with the terms of the settlement, and its Xfinity streaming service is unlike Internet video services because it travels over Comcast's own private network and not the public Internet.
"We have consistently treated all video carried over the public Internet the same whether it comes from our sites or anywhere else on the public Internet," the company said in a statement back in May.
According to the Wall Street Journal, the Justice Department is also looking into contracts programmers sign in order to be distributed on cable systems. The report said the department is questioning whether there are legitimate business reasons to include so-called most-favored nation clauses, which make programmers give the biggest cable companies the best price, or whether they are intended to stop programmers from experimenting with online distribution.