A coalition of public interest groups sent a letter to lawmakers this week asking them to explore whether broadband caps could stifle online video by discouraging consumers from watching TV shows and movies through the Web.
Today, IAC/InterActive Corp Chairman Barry Diller repeated those concerns to members of the Senate Commerce Committee. Specifically, Diller called on lawmakers to explore whether Internet service providers are using bandwidth caps to prevent new players from distributing video online.
"Cable and telecom companies are experimenting with forms of economic discrimination at the margins of current law," he said in his written testimony. "For example, broadband providers that also provide video programming could implement broadband caps in a way that favors their own content."
He asked lawmakers to stop ISPs "from leveraging their dominance in existing markets for video delivery to control emerging markets."
Some say that ISPs are already doing so. Comcast, for instance, allows people who subscribe to both Xfinity Internet and Xfinity Digital Video to watch TV on demand on their Xbox 360 consoles -- and doesn't count any data streamed through this program toward users' 250 GB monthly cap.
Netflix CEO Reed Hastings recently chided Comcast for the policy, asking how the company can claim to follow neutrality principles -- which require ISPs to treat all traffic equally -- when it gives preferential treatment to Xfinity app users. (Comcast contends that the traffic doesn't travel over the "public" Internet, and that the Xbox "essentially acts as an additional cable box.")
Diller was among the witnesses to testify this morning at a two-hour hearing about online video. The media mogul, who is backing the controversial online video distributor Aereo, also touted net neutrality -- or the principle that ISPs should treat all traffic equally. He says that without net neutrality, the cable companies and telecoms can prevent new players from competing to offer online video.
Numerous consumer advocates and Web companies have made the same argument. Two years ago, the Federal Communications Commission passed open Internet regulations that prohibit wireline providers from discriminating when transmitting traffic over the Internet. But Verizon and MetroPCS filed a challenge to those rules, and an appellate court is currently considering the matter. While no one can predict how courts will rule, observers are laying odds against the FCC, given that the same court already ruled in a separate case that the FCC lacks authority over broadband.