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DOJ investigates data caps

Wed, 06/13/2012 - 2:15pm
Brian Santo

The U.S. Department of Justice is conducting an antitrust investigation into whether traditional pay-TV companies are acting improperly in their competition with online video companies, according to The Wall Street Journal.

The DOJ is focusing on data caps, according to the report. Many of the dominant multichannel video programming distributors (MVPDs) such as AT&T, Comcast and Time Warner Cable are also the dominant ISPs in their respective markets. Netflix, Hulu and other online video companies have complained that the data caps that MVPDs have been implementing on their broadband services appear to be aimed at limiting competitive online video traffic from companies such as themselves.

The charges are not new, and the response of MVPDs/ISPs all along has been that the caps they impose have been set at such a high level that only a very, very small percentage of subscribers ever get anywhere near the limit.

Comcast recently revised its bandwidth policy in an attempt to change the discussion. It no longer has a cap (250 GB) that cannot be exceeded; it has a threshold (now 300 GB) after which it will charge for excess use. When it announced the change, company execs reported that even the heaviest Netflix users rarely get anywhere near the threshold.

Comcast has aggravated the issue, however, by adopting a particular bandwidth policy that seems to many to be blatantly discriminatory. It announced that Xfinity on the Xbox would not count against its data cap, though other content (including video from Netflix, Hulu and others) streamed to the Xbox and other devices would.

Comcast has explained that Xfinity traffic to the Xbox originates on, and travels entirely in, its own network, while traffic to other devices runs on the open Internet. And Comcast reminds that it has an established right to manage traffic on its own network.

The WSJ reports that federal investigators are also looking into authentication. The question is whether the process is designed to help MVPDs keep content from major programming sources away from their competitors.

The WSJ reported an exchange from a congressional hearing on Tuesday featuring Attorney General Eric Holder. Sen. Al Franken (D-Minn.) noted cable bills are "out of control," and consumers want to watch TV and movies online. Holder responded, "I would be one of those consumers."

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