Cable Companies Facing Antitrust Investigation Of Video Streaming Limits

The U.S. Department of Justice (“DOJ”) is conducting an investigation to determine whether or not Internet usage caps and subscription perks offered by large cable and Internet providers violate antitrust laws by unreasonably restraining streaming video.

The Wall Street Journal has reported that the DOJ’s Antitrust Division has spoken about Internet data caps with Comcast, Time Warner Cable, and other cable companies, as well as Netflix and Hulu, two online video streaming services.

Both Netflix and Hulu argue that Internet data caps on cable company service plans limit the amount of video that can be streamed, and ultimately deter consumers from ditching the traditional channel bundle and switching to online video.

The DOJ will also examine services offered only to subscribers.  For example, Comcast offers unlimited data usage when a viewer is using the company’s own video streaming app, Xfinity for Xbox or iPad.  Some television programmers offer online video, which Comcast has also made available only to subscribers.

Comcast and Time Warner have said the limits on data and the subscription perks are in response to consumers’ use of multiple devices.  The data limits are necessary to keep their broadband networks from being too inundated, and the apps and special access allow consumers to view television programming on a game system, tablet or computer.

Research indicates that consumers are ready to embrace online video.  According to a recent comScore study, 17 percent of the 10,000 participants viewed television programs solely through online platforms.

A separate study conducted by Nielsen indicates that the largest group of Americans watching online video is between the ages of 18 and 34.  However, with one third of Hulu’s consumers over the age of 50, even older generations have embraced the new technology.

Government officials have also recognized the change.  This week, Attorney General Eric Holder identified himself as a digital consumer during a committee hearing after Senator Al Franken argued that “consumers want to be able to cut the cord and watch television shows and movies online rather than paying over $100 per month to their cable companies.”