The Justice Department is conducting an antitrust probe into whether cable companies are acting improperly toward potential competitors delivering video over the Internet, the Wall Street Journal is reporting.
Justice Department officials have spoken to online video providers including Netflix and Hulu as well as Comcast, Time Warner and other cable companies, said the report based on conversations with “people familiar with the matter.”
According to the report, Justice Department concerns include data caps and whether cable companies are acting anti-competitively by viewers to have a cable subscription before being able to access certain programming online.
Comcast’s Xfinity app for Microsoft’s Xbox is likely to come under scrutiny as part of the Justice Department investigation. Comcast in March said that videos viewed via the Xfinity Xbox app would not be counted against subscriber’s data caps, which do apply to over-the-top video content from companies such as Netflix and Hulu.
The Justice Department also is reportedly investigating the “most favored nation” clauses included in the distribution contracts that programmers sign with cable companies. Those clauses require programmers to give the cable companies the best pricing available to any other company distributing the programmer’s content.
The Wall Street Journal likens the Justice Department concerns to similar ones that the department raised in a lawsuit that it brought against Apple and publishers alleging that the companies colluded to fix prices. Apple’s contracts with some of those publishers also included “most favored nation” clauses, the WSJ said, also noting that several publishers settled the Justice Department charges but that other publishers and Apple continue to fight the suit.
If the Justice Department were to take action against cable company and programmer pricing practices, that could be good news for smaller cable companies and telcos that provide video services, who have long complained that pricing practices favor the largest cable operators. For example, programming costs were a key factor in Frontier’s decision to phase out the FiOS video service it acquired when it bought some of Verizon’s service territory.
