DOJ investigating cable companies for stifling competing video services

Does the battle between Comcast and Netflix relate to net neutrality?

DOJ investigation

The US Department of Justice has begun investigating whether cable companies, such as Comcast and Time Warner, are using their dual clout as providers of both cable content and internet service to stifle competing services like Netflix and Hulu.

Despite recent reports that Comcast is moving away from data caps in favor of usage-based billing, other reports indicate that the company is planning to charge customers $10 for every 50GB over a monthly allotment of 300GB that they use.

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The data cap applies to all internet usage, excluding Comcast's own Xfinity streaming service, which can be accessed through devices like Microsoft's Xbox 360 game console.

To reach the 300GB limit, estimates say, a user would need to watch 10 hours of Netflix a day, assuming they didn't use any other internet services.

Regardless, Netflix CEO Reed Hastings accused Comcast of using data caps to stifle companies Netflix-like that offer competition for traditional cable services.

Hastings claims that Comcast's selective data cap violates a "non-discrimination" pledge Comcast made to persuade the DOJ to approve its purchase of NBC Universal in 2011.

Is this a question of net neutrality?

The FCC's "Open Internet" laws of net neutrality dictate that internet service providers cannot discriminate against certain sites, even those of competitors.

But Comcast contends that their Xfinity service is exempt from the internet data cap because the service is included as part of customers' cable packages, despite being streamed over the internet, not to give it a boost over competitors.

Experts disagree on what this investigation could mean for consumers.

"This Justice Department investigation is great news for consumers and cable's competitors alike," said Matt Wood, policy director at digital rights group Free Press.

"For too long, cable operators have used their dominant positions in both the television and Internet service provider markets to kill off innovation, cut off customer choice and keep prices high," Wood continued.

But Bernstein Research analyst Craig Moffett cautioned that the investigation could have unintended consequences, noting that cable providers could act like frightened groundhogs who've seen their own growing shadows.

"Perhaps counter-intuitively, we would expect the investigation to accelerate the industry's shift to usage based pricing for broadband, and perhaps precipitously so," Moffett wrote in a note to clients.

"Secondarily, the proceeding is likely to slow the pace of innovation and reinforce the closed nature of the cable infrastructure, reducing the opportunity for outsiders - say, Apple or Google, for example - to get access to cable video feeds."

"Both would be bad news for online video providers," he concluded.

Via Time Business