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Timothy B. Lee

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Posted at 10:20 AM ET, 06/14/2012

DOJ video probe highlights more telecom, cable deals ahead


(Gene J. Puskar - Associated Press)
A key part of the Justice Department’s investigation into competition in the online video space is what kinds of content cable Internet service providers decide to count against monthly caps and what they do not.

Here is our story on Justice’s investigation in Thursday’s paper.

Known by many terms — most favored nation agreements or managed services — cable and telecom firms are expected to roll out a dizzying array of these options for consumers that do not count against data caps.

Indeed, AT&T CEO Randall Stephenson telegraphed more of these options to come.

“Customers are beginning to understand that as you use more, you pay for more,” Stephenson said last month at the Sanford C. Bernstein investors conference in New York. “If the customer is now apprehensive, you can envision where that content provider may want to come to a carrier and say, look, we’d like to engage in a model where ... the customers isn’t willing to pay, but we are willing to pay for it.”

Translation: ABC paying AT&T for a free channel for consumers on mobile devices?

Such options pose new competitive concerns for Silicon Valley Web firms, who will find themselves competing against streaming video services offered by cable and media firms at much more attractive prices, analysts say.

“Media and telecommunications giants, which can be one and the same, should not be able to take advantage of their size and reach to eliminate competition and to harm consumers through data caps which favor some content over other based on business relationships, through contract terms that could restrict where programming can be shown, or other means,” said Harold Feld, a vice president at public interest group Public Knowledge.

Such practices have angered Netflix, which says Comcast’s streaming XFinity service for the XBox gaming console doesn’t count against data caps so it makes it harder for Netflix to compete.

That practice is being reviewed, according to several people familiar with Justice’s investigation. Comcast has said its free XFinity XBox service isn’t anticompetition. It is for its cable customers and that those videos don’t ride over the public Internet in the same way Netflix’s videos do.

Related:

Justice Department sues Apple, publishers over e-books

Verizon to offer free texts and voice services, boosts data prices

By  |  10:20 AM ET, 06/14/2012

 
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