Better late than never. The US Justice Department has opened anti-trust wide-ranging investigation of big cable companies, according to the Wall St. Journal, which sited sources familiar with the matter.
There have been concerns that big cable companies are using their dominance to suppress online video service, discouraging subscribers from cutting the cable cord and switching to cheaper digitally streamed video.
The DOJ has interviewed a number of online video providers, including Hulu and Netflix, as well as a string of cable companies that include Comcast and Time Warner Cable. Specifically, the cable companies have been questioned about data caps, or monthly limits to the amount of data subscribers can download, throttling connection speeds, and requiring cable subscriber authentication to watch certain online content, all of which affects a user’s inclination to switch to online video.
Some companies that offer both cable TV and Internet have branched their TV services out onto the web in order to prevent subscription cancellations. Comcast’s Xfinity TV service provides an On Demand movie library, essentially like Netflix, but the service doesn’t count against the company’s data cap, prompting criticisms of unfairness from a number of online video heads, including Netflix CEO Reed Hastings.
Comcast argues that its Xfinity TV service is delivered over a “private” network that isn’t subject to the same data capping.
The Justice Department is specifically investigating whether Comcast’s Xfinity policy violates legal commitments made by the company in 2011 as it secured antitrust approval for its acquisition of NBCUniversal, sources familiar with the matter told the WSJ. Comcast had promised not to treat its own content differently from competitors, and that is would not “unreasonably discriminate” against other companies transmitting data over its infrastructure.
Comcast agreed to halt its data caps in May, with plans to implement a system that would enable heavy data users to pay for extra capacity.
The government is also investigating whether subscriber access walls present an unfair competitive advantage by requiring viewers to have a cable subscription to view certain content. Cable companies have argued that the access walls allow their subscribers to access the paid content from any device such as a tablet or mobile phone.
Also being investigated are most favored nation clauses included in some cable programming contracts, which makes programmers give the largest cable companies the best price anywhere. The DOJ is deciding if such contracts are meant to stop programmers moving their content to other online means of distribution. Favored nation clauses were a sticking point in the Justice Departments investigation of ebooks, where Apple attempted to have publishers give its online book store the lowest price available.
Though it will take a while for the Justice Department hammer to swing, the decision could force cable companies to change their gaming approach when it comes to online video. Either way, people are increasingly ditching their cable for online access, and it’s only a matter of time before the cable companies evolve or give up the ghost of the dinosaur.