Thursday, June 14, 2012

Data Rate Shenanigans?

It's being reported that the U.S. Department of Justice (DOJ) is investigating allegations that some multichannel video programming distributors  (MVPDs - cable MSOs and DBS systems - who are also broadband data suppliers are discriminating against online video providers.
  The allegations are that the MVPDs are using data caps, data plan pricing, and artificially slowing data streaming rates that put online video providers - particularly movie and TV program HD streaming services like Netflix and Hulu+ at a competitive disadvantage.  Since these services can be considered substitutes for TV networks and pay channels that are the MVPDs primary business, any such actions may be considered to be anticompetitive and violations of antitrust law.  Justice is also said to be looking at the ownership relationship of some networks with some MVPDs and concerns that they might also lead to anticompetitive behaviors with respect to both data services, and other networks.

These actions follow on FCC concerns that MVPDs and other broadband data service operators are violating new Network Neutrality rules limiting practices that arguably discriminate among data sources and services.  Comcast, in particular, has put a cap on customers ability to download content through their broadband service, and has allegedly engaged in slowing data speeds to high-demand customers.  Two other recent Comcast moves have also caused some concerns - their decision that Video On Demand streaming through their newly-launched Streampix service would not count against the cap, while video streamed from competitors would, and Comcast's decision to deny customers the opportunity to get Netflix bundled with other OTT services.  Other major MSOs, like Charter, have been more open to integrating OTT video streamers Netflix, Hulu, and Amazon in their TV Everywhere service portals.

Comcast's attitude, while understandable from a short-term business perspective (sheltering it's start-up from competition and limiting broadband use to delay network upgrades) - but it does appear to be clearly anticompetitive and violations of the FCC's network neutrality rules.  I'd also suggest that it's not good long-term business strategy in a world where there are strongly competitive alternatives.  Comcast's moves would seem to make their service less valuable to customers who increasingly have alternatives for Comcast's MVPD and broadband services - their behavior here will push heavy video and data consumers to shift to some of those competitors.

Sources - Feds launch antitrust investigation into online video competitionFierceOnlineVideo
Netflix CEO: Comcast flouts 'net neutrality' principlesFierceCable

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