• by Ross Fadner , June 13, 2012

The Department of Justice is investigating cable companies for possible antitrust practices, particularly with respect to the threat posed to their businesses by online video companies like Netflix. Any decision taken in Washington would likely have far-reaching implications for online video and cable companies alike.

 According to The Wall Street Journal, which broke the story, DOJ officials have spoken with streaming companies like Netflix and Hulu as well as cable giants like Comcast Corp. and Time Warner Cable, Inc., although none of the companies in question would comment on the investigation.

Among other cable company business practices, the DOJ is looking into how cable companies set and impose limits on subscribers’ monthly online data consumption, as well as TV Everywhere services that require a cable subscription to access certain online programming.

Cable companies say the data caps they impose on subscribers’ Internet consumption are necessary to stop heavy users from overwhelming their networks, but streaming providers like Netflix claim the limits are aimed at stopping consumers from dropping their cable TV subscriptions in favor of online video providers.

Another worry is that cable companies would give priority to their own video services on their networks. Comcast, for example, said in March that videos viewed through its Xfinity app on the Xbox 360 would not count against subscribers’ monthly cap, while use of other video apps, like Netflix, would. According to the Journal, the DOJ is now examining whether Comcast’s Xbox policy violates legal commitments the company made in 2011 when it acquired NBCUniversal. Under those terms, Comcast said it would not "unreasonably discriminate" against other companies transmitting data through its network, or treat its own content more favorably.

Regarding the TV Everywhere probe, cable companies have said they are benefiting consumers by letting them watch their programming on any device, but public interest groups claim that paywalls discourage people from ditching their cable subscriptions in favor of online video providers.