The Wall Street Journal reported that the U.S. Justice Department has launched an investigation into cable television company practices, especially as they relate to streaming online video from sources such as Netflix and Hulu. One focus of the agency’s concerns is the fact that some cable companies are imposing data caps on subscriber usage of broadband network connections. In particular, the Justice Department is probing Comcast’s preferential treatment of its own Xfinity content streamed over a Microsoft XBox. The company contends that it treats all Internet data equally, but does not count the Xfinity content towards a subscriber’s data usage because the data is streamed just within Comcast’s own private network.
The Justice Department is concerned that this practice violates Comcast’s agreement that it would not “unreasonably discriminate” against streaming data from other companies.
According to the WSJ article, Justice is also looking into the emerging practice of authentication as part of the “TV Everywhere” initiatives by cable and satellite services. The idea is that viewers who subscribe to a package of channels using these services would then be able to access some of that content over the Internet using a computer or mobile device. The Justice Department is concerned that this may be an anti-competitive practice because it requires the user to subscribe to a bundle of products in order to access the online content. This prevents users from subscribing to just an online version of the available content.
Both avenues of investigation have important implications for the future of subscription television services. If the cable companies are allowed to selectively apply data caps to content delivered by competitors — such as Hulu and Netflix — it could make it much more difficult for those online outlets to succeed. On the other hand, if the agency decides that subscription television services have to open up their online streaming content to viewers who do not subscribe to their cable or satellite plans, this could hasten a la carte pricing and result in drastic changes in the market for these companies.
Here’s a video on this story from the WSJ site: