The Department of Justice has opened an investigation into alleged anti-competitive actions by Comcast and Time Warner Cable, two large cable and internet providers. The companies allegedly put data caps in place to limit customers watching Hulu, Netflix and similar online video services.
Nothing certain but death, taxes and commercials
Television networks make money by selling commercials. The shows they show are funded by selling time to companies and airing their commercials. However, a number of people find commercials annoying and subscribe to companies such as Netflix and Hulu, which stream content over the internet sans commercials.
Cable companies thus have it in their self interest to keep people from subscribing to such services. Many cable companies also offer internet connection to customers. It would, though, be anti-competitive, not to mention illegal, for cable and internet providers to do anything to prevent customers from partaking of competitor’s offerings. For instance, if a cable company capped internet data usage to keep people from streaming movies over Netflix or Hulu, that would be illegal.
However, Comcast and Time Warner Cable, it is being claimed, are doing just that, according to the Wall Street Journal.
Something rotten in the state of cable
Comcast, according to Time magazine, recently announced that it was trialing a data cap, which would charge customers $10 for every 50 gigabytes of data used over a monthly allotment of 330 GB.
To hit 330 GB of data, one would have to watch 10 hours of Netflix per day. Netflix, according to the Washington Post, accounts for roughly 30 percent of all streaming content viewed in the average home.
However, what partially irked authorities is that Comcast considered it’s own, proprietary Xfinity streaming service, a bespoke application for the Xbox 360 game console, was exempt from counting towards a person’s data limit.
Leading the charge is Senator Al Franken of Minnesota, who began urging the Federal Communications Commission and the Department of Justice to investigate the matter after hearing of the Xfinity exemption, according to CNET. Comcast has since canceled the trial cap, according to the Chicago Tribune.
Only a probe
At the moment, the Department of Justice is only investigating the matter, to see if anti-competitive practices have gone on and if any anti-trust laws have been broken. The agency is looking into data cap policy at Comcast, Time Warner Cable and other cable providers, as well as seeking comments from streaming services such as Netflix, Hulu, Amazon and similar services, according to the Wall Street Journal.
Comcast is, in particular, being looked at, as the company signed an agreement in 2011 to not discriminate unreasonably against any “lawful network traffic” from any online video provider. Comcast agreed to that provision to gain anti-trust approval to acquire NBC Universal.
Washington Post: http://www.washingtonpost.com/business/economy/justice-department-probing-cable-companies-internet-data-limits/2012/06/13/gJQAZRn6aV_story.html