Justice Department probes Internet video data caps

Antitrust investigation is looking into whether cable company data limits unfairly quash online video competition, sources tell The Wall Street Journal.

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Recent accusations that cable companies are giving preferential treatment to online video streamed on their own apps and services have apparently attracted the attention of antitrust regulators.

The Justice Department has opened an investigation into whether cable companies are acting improperly to suppress online video competition, people familiar with the matter tell The Wall Street Journal. Investigators have spoken with several major players in the sector, including Netflix, Hulu, Comcast, and Time Warner Cable about the monthly caps placed on the amount of data subscribers can download, the Journal reported.

CNET has contacted the companies mentioned above, as well as the Justice Department, for comment and will update this report when we learn more. Time Warner Cable declined to comment.

The probe comes as TV viewers' consumption habits shift from traditional cable bundles to video services like Netflix, Hulu, and Amazon. With that shift, cable companies that have spent billions of dollars building their networks are seeing an uptick in consumer's "cutting the cord" -- essentially making the cable companies a conduit to other content providers.

The Justice Department is focusing its investigation on the data caps cable companies have employed to deal with the explosion in video traffic on the Internet. However, Internet video providers such as Netflix say the caps are designed to prevent customers from defecting to online video services for their programming.

When Comcast announced earlier this year that content streamed directly to the Xbox console via its Xfinity app would not be counted against subscribers' total bandwidth usage caps, critics accused the company of giving its Xfinity app an unfair advantage over competitors. Comcast denied those charges, saying its traffic policies are in compliance with the FCC's Open Internet rules.

"It's really important to us that we make crystal clear that, in contrast to some other providers, we are not prioritizing our transmission of Xfinity TV content to the Xbox (as some have speculated)," Comcast Chief Technology Officer Tony Werner wrote in a blog post.

Netflix CEO Reed Hastings has been a particularly outspoken critic of the Xfinity exemption, saying in a Facebook post in April that, "Comcast should apply caps equally, or not at all."

Consumer advocates also say the bandwidth cap exemption violates the Net neutrality rules that Comcast had to agree to as part of the conditions for its merger with NBCUniversal. Those rules prohibit broadband providers from favoring their own content on the open Internet over that of their competitors.

The issue has also attracted the attention of Sen. Al Franken (D-Minn.), who has sent letters to the FCC and Justice Department expressing concern that the Xfinity exemption violates Net neutrality rules and urging the agencies to take a closer look at the arrangement.