U.S. Probing If Cable Operators Hamper Netflix, Online Video (Report)

The Justice Department is conducting an antitrust probe into whether cable companies are improperly trying to hamper emerging online video competition from the likes of Netflix, the Wall Street Journal reported.

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Among the issues investigators are looking at are monthly Internet usage limits that pay TV companies have set amid increasing broadband traffic and most-favored nation clauses in carriage deals between TV networks and distribution companies. The probe is also looking into whether cable firms are acting anticompetitively by requiring that viewers have a pay TV subscription to access some online programming.

As part of the investigation that it described as wide-ranging, Justice Department officials have spoken to such online video providers as Netflix and Hulu, according to the Journal. They have also questioned cable TV giants, including Comcast and Time Warner Cable.

Company representatives and Justice Department spokespeople declined to comment, the Journal said.

On the topic of monthly data usage caps, cable companies have said they are necessary to avoid that heavy Web users overwhelm their broadband networks.
But Netflix and others see that practice as a way to stop consumers from cutting the cable cord and relying on online video providers.

A related concern is that cable giants could give priority to their own online video offerings. Comcast, for example, earlier this year said that videos viewed on its own Xfinity app on Microsoft's Xbox wouldn't be counted as part of subscribers' Internet usage limits.

The Journal quoted sources as saying that the Justice Department is studying if Comcast's Xbox policy violates commitments the company made as part of its acquisition of a majority stake in NBCUniversal.

Meanwhile, most-favored nation clauses in carriage agreements are in focus, because they mean that content companies give the biggest cable companies the best price. The Journal said that the Justice Department is examining if there are legitimate business reasons for that or if these clauses hurt competition.

Email: Georg.Szalai@thr.com

Twitter: georgszalai