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Posted at 11:09 AM ET, 06/13/2012

DOJ probes cable companies for allegations of quashing Netflix, Hulu


The offices and studios of Comcast Entertainment Group is pictured in Los Angeles, Nov. 12, 2009. (Fred Prouser - Reuters)
The Justice Department has been investigating cable firms’ limits for streaming Internet video for months, people familiar with the matter said Wednesday, in a wide-ranging probe that could shape the way consumers view videos.

The DOJ’s probe is focused on whether it is anticompetitive for Comcast and other cable providers to stream their own Internet video services and not count those applications against monthly data caps for users, according to people familiar with the matter who spoke on the condition of anonymity because the investigation is private.

The investigation underscores the federal government’s desire to ensure competition amid massive shift in businesses — from books to television — to the Internet. Justice has already charged Apple and publishers with unfairly colluding over e-books pricing. Its probe into cable firms could determine the fate of Web firms who are trying to offer competing services to cable and other paid television services.

Competition concerns have been raised by some Web firms because cable firms, that also provide Internet access, appear to be giving preference to their own services over those of rivals such as Netflix and Hulu. Netflix, which drives 30 percent of broadband traffic in peak hours, could be harmed by data caps and free online streaming services by cable providers, analysts say.

The Wall Street Journal first reported on the probe, which it said is broad ranging and includes practices by Comcast, Time Warner and other cable providers.

Netflix and Hulu have been interviewed by federal enforcement officials investigating if the practices of cable companies unfairly disadvantage their services. Netflix has complained that Comcast’s XFinity XBox streaming service isn’t counted against the company’s data caps of 250 gigabytes, but competing services like its own is.

“Anyone with a competing video service app on the XBox is concerned and potentially part of the review,” said a person familiar with the probe.

Comcast has defended its practices saying it does count some of its Internet streaming services against data caps. But its XFinity XBox application isn’t streamed over the public Internet, the company says.

If it were unfairly giving preference to its own Internet services over competitors, Comcast would be in violation of an order attached to its joint venture with NBC Universal in late 2011. Federal regulators and lawmakers expressed concern that the merger would create too much power into one company that would own a vast library of movies and television shows and be the leading provider of broadband Internet access to homes.

Related:

Senator Franken questions Comcast on antitrust concerns with XBox streaming app

Netflix CEO wades into net neutrality debates

FCC Chair blesses data usage-based pricing

By  |  11:09 AM ET, 06/13/2012

 
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