Anonymous sources tell the Wall Street Journal
that the Department of Justice is investigating whether cable companies (and telcoTV companies) have been engaging in anti-competitive behavior when it comes to the Internet video content traveling over their networks. The investigation appears to be motivated by a recent debate over whether Comcast should be allowed to exempt their own content on the Xbox 360 from their usage caps
. Investigators have spoken to both Netflix and Hulu, and have also spoken to Comcast and Time Warner Cable about caps and overage fees:
In its cable TV probe, Justice Department investigators are taking a particularly close look at the data caps that pay-TV providers like Comcast and AT&T Inc. T +1.11% have used to deal with surging video traffic on the Internet. The companies say the limits are needed to stop heavy users from overwhelming their networks. Internet video providers like Netflix have expressed concern that the limits are aimed at stopping consumers from dropping cable television and switching to online video providers. They also worry that cable companies will give priority to their own online video offerings on their networks to stop subscribers from leaving.
As we've long noted, caps and overages on landline networks are largely aimed at protecting traditional television revenues from Internet video, with congestion usually used solely as a bogeyman -- since these days it's rarely an issue on well-managed networks. Incumbent ISPs always make these claims of congestion, but never provide hard, raw data -- because it doesn't exist. It should be interesting to see what kind of answers the DOJ gets, and whether they're made public.
FCC boss Julius Genachowski recently gave the cap and overage model significant praise
, being rather oblivious to the pricing system's anti-competitive impact -- despite recent warnings from Netflix
about how the caps are being abused.