Comcast's XBox Streaming App Raises Netflix's Hackles

Comcast recently unveiled a new service that allows people who subscribe to both Xfinity Internet and Xfinity Digital Video to watch TV on demand on their Xbox 360 consoles.

Not only is the feature free for subscribers, but any data streamed to the Xbox through this program won't count against users' 250 GB monthly data cap.

Obviously, this feature sounds good for subscribers -- at least in the short-term. But it could place Netflix, Hulu and other streaming video providers at a disadvantage. After all, if people have a choice, there's no reason to stream video through a service that will eat up their monthly broadband allotment when they can instead watch the same shows without doing so.

Last night, Netflix CEO Reed Hastings made that point himself. "I spent the weekend enjoying four good internet video apps on my Xbox: Netflix, HBO GO, Xfinity, and Hulu," he wrote. "When I watch video on my Xbox from three of these four apps, it counts against my Comcast internet cap. When I watch through Comcast’s Xfinity app, however, it does not count against my Comcast internet cap."



He added: "The same device, the same IP address, the same wifi, the same internet connection, but totally different cap treatment. In what way is this neutral?"

Clearly it's not "neutral" by the word's normal definition. But that doesn't mean it violates the Federal Communications Commission's net neutrality rules. Those regulations prohibit companies like Comcast from discriminating when transmitting traffic over the Internet.

When Comcast launched the service, it pointed out that the XFinity App for XBox streamed programs "over our private IP network and not the public Internet.” The company later added that Xbox 360 running the XFinity TV app "essentially acts as an additional cable box for your existing cable service."

Both explanations are true, and both might well give the company a defense to accusations that it violated the neutrality rules -- though whether the company violates the spirit of neutrality is another matter.

On top of the neutrality issues, Comcast's offering is renewing questions about how data caps will affect people's Web use. The current cap of 250 GB appeared generous a few years ago, when people tended to stream short YouTube clips.

But that limit will inevitably seem low in the future, especially given the increased availability of streaming video -- and of devices that can be used to watch Webcasts. These days, a broad array of movies, TV shows and live events -- ranging from congressional hearings to judicial proceedings to the Super Bowl -- are Webcast. On top of that, people can now use devices like Roku, iPads and smartphones to stream video via WiFi.

Given that data caps are per household, not per user, it seems likely that more and more users will run up against bandwidth limits. And that bodes ominously for users as well as for the growing number of companies that are creating content and services for the Web.

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