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Justice Investigating Cable Over Over-the-Top Video

6/13/2012 11:29 AM Eastern

A cable industry source familiar with the information requests confirms that the Justice Department has been contacting cable operators as part of an investigation into whether MSOs are trying to suppress over-the-top video competition through data caps, TV Everywhere "collusion," contract language -- most-favored nation clauses--and more.

According to a cable industry source familiar with the Department of Justice requests, Justice started out focused on TV Everywhere and alleged "collusion" and has extended the investigation to a range of topics. The source said the investigation has been going on for a couple of months.

The Wall Street Journal first reported Wednesday that Justice is conducting an antitrust investigation into cable data cap practices.  At least one cable data cap critic confirms it asked Justice for such an investigation.

A Justice Department spokesman had no comment -- it does not confirm or deny ongoing investigations. Justice can initiate an investigation on its own initiative, or in response to complaints from outside parties. In this case it was likely the latter. He said investigations do not necessarily mean the issue has met a threshold standard.

"Investigations are just that, investigations."

Netflix and some public activist groups have complained, for example, about Comcast's not counting the Xfinity video service it offers through Xbox against its broadband data caps, but doing so for other video services via Xbox. Comcast defended the practice, but also announced last month that it was shifting from broadband caps to usage-based pricing. Public Knowledge has twice asked the FCC to look into the issue .

Public Knowledge confirmed it had asked Justice to investigate as well, and expected it was not the only one.

"I can confirm that over the past six months or so we have been in to let Justice know of our concerns and we have heard that they are," said Public Knowledge spokesman Art Brodsky."The cable industry is doing all it can to try and squash competition. The only people who don't seem to realize it are the FCC."

The FCC is currently asking for help in determining what access and carriage rights over-the-top video providers should be entitled to vis a vis traditional MVPDs. That answer could help determining the future of online video delivery for both cable competitors and cable operators moving their content online. That is, unless DOJ gets there first via its investigation.

The Journal reported that Justice had talked to Comcast and Time Warner Cable. Neither MSO was commenting at press time.

 

"Consumers are the beneficiaries of tremendous choice, competition and innovation in the video marketplace with dozens of alternatives now available for viewing content on multiple devices through a variety of service options," said National Cable & Telecommunications Association spokesman Brian Dietz. "The innovative offerings by cable companies are positive developments for consumers and represent accepted and legitimate business practices as well as sound network management. All the industry's actions are intended solely to ensure consumers get the highest value for their subscription."

Free Press, another data cap critic, was pleased to hear Justice was looking into the practice. ""This Justice Department investigation is great news for consumers and cable's competitors alike," said Free Press Policy director Matt Wood in a statement. ""Cable operators can't justify data caps, no matter what shifting excuses they offer."

A Free Press spokeswoman confirmed the group had talked to Justice about the issue as well, but had not called for an investigation.

 

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April