updated 06:59 pm EDT, Wed June 13, 2012
iTunes, Hulu, Netflix traffic allegedly discriminated against
The Justice Department is allegedly in the midst of a large-scale antitrust investigation focusing on potentially anticompetitive practices by cable companies that compete with online video purveyors such as Apple's iTunes store, Hulu, or Netflix. Regulators are said to be attempting to determine if Comcast violated a net-neutrality agreement to not discriminate against competitors that send data through its Internet service to reach customers, though the broad probe is claimed to involve other cable companies.
The US cable industry is reliant on distribution of broadcast content for the majority of profits, and billions of dollars have been spent on building out networks to this end. Amplifying this, major entertainment producers have an interest in not altering the status quo because bundles of channels are more profitable, rather than cable subscribers picking them a'la carte.
The advent of digital distribution has generated a "cable-cutting" movement, in which Internet subscribers are canceling cable television subscriptions and replacing them with video-on-demand or purchase services.
According to the Wall Street Journal, Justice Department investigators are examining cable companies' exceptions to data caps when Internet connections are used to download or stream content from their own services. Comcast's Xfinity service has come under fire for not counting video transmitted to the Xfinity Xbox 360 application towards users' data cap, though the company argues that the data only travels over its private network and not over the Internet at large.
The practice of requiring a cable subscription before allowing Internet viewers to access online programming is also being examined. Mobile apps from ESPN, HBO, and Cinemax all require legitimate login information to verify cable subscriptions before enabling users to access content. HBO refuses to allow individual subscriptions to its video service, even when presented with a petition from individuals willing to pay an average of $12.30 per month to receive the channel online only.
Attorney General Eric holder and Senator Al Franken (D-MN) side with users in this regard. Holder said that he was among the online video watchers, and Franken has said that the "rising cable, wireless, and Internet rates in this country is unacceptable."