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Cable Technology Feature Article

June 20, 2012

Watching Cable Companies for Corruption

By Julie Griffin, Contributing Writer

Recent events indicate that everybody is watching cable – but not necessarily in the way that Comcast and Time Warner (News - Alert) would prefer. 

Online video streaming companies like Netflix and Hulu have closely watched as major cable companies enlist new pricing systems and consumers watch TV and movies through whatever medium proves more cost efficient. Now the Department of Justice has stepped in to announce they, too, will be watching – for threats against the future market.

It seems that Comcast (News - Alert) and Time Warner have had a ready explanation for all questions stemming from suspicion that the companies were engaged in anticompetitive behavior. Comcast, in particular, had successfully garnered support from different communities.

Economist Dr. George Ford argued on behalf of Comcast, suggesting usage-based pricing is the most diplomatic approach to servicing a customer-centric society. And of course not too many consumers would argue with that. Even the FCC (News - Alert) seemed to favor Comcast in the majority of disputes, including regulations over Multi-channel Video Programming Distributors (MVPD).

When Comcast announced it would implement data caps back in May, charging data hogs extra for feeding its over-10-movies-a-day habit, it may have raised red flags, but the new pricing strategy seemed to be the most beneficial for the consumer. After all, why should everybody pay the same rates when not everybody uses the same amount of resources? 

Additionally, Comcast argued that the data caps were necessary in protecting themselves from an early Data Apocalypse. This answer seemed to satisfy even the FCC. But for Netflix and Hulu, Comcast’s data capping was another step toward monopolizing the market.

AT&T (News - Alert) and Time Warner faced opposition from politicians and other organizations for attempting to implement similar pricing systems in the past. Comcast’s successful implementation of data caps could have paved the way for more usage-based pricing opportunities.

Back in March, Comcast announced that subscribers who used its Xfinity App on Xbox would not be charged extra, as they would for using services by Netflix and Hulu. This again raised concerns, but the company argued that its video app traveled through its own network and not through the “public Internet,” according to the Associated Press.

Studies have shown that when cable providers like Comcast offer TV Everywhere Apps and over-the-top services in addition to fundamental Internet services, video-streaming service providers likd Netflix and Hulu become less relevant to consumers.

Whatever decision the Department of Justice reaches, people watching this event will never watch television and movies the same way again. 

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Edited by Braden Becker

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