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DoJ Investigating Cable Companies over Data Caps

The Wall Street Journal reports that the Department of Justice is conducting a "wide-ranging" antitrust investigation into whether cable companies like Comcast and Time Warner Cable are purposely setting data caps to prevent customers from using rival online video services.

According to unnamed sources, the Department of Justice has already spoken with Netflix and Hulu. Netflix has been the most outspoken of the two, complaining that cable companies are setting data caps on purpose to prevent competition from steering traffic away from their own streaming video services. Just last month Netflix said Comcast discriminates against the streaming giant, referring to Comcast's exemption of its XfinityTV app on Xbox from the bandwidth cap.

Unnamed sources also stated that Comcast, Time Warner Cable and other providers have been questioned by investigators over issues regarding data caps, or rather limits to the amount of data a subscriber can download each month. The pay-TV companies claim that the limits are needed to stop heavy users from overwhelming their networks, yet it doesn't seem to be coincidence that they're also now offering rival streaming services.

The Justice Department probe reportedly highlights how the shifts in decades-old patterns of television viewing are "shaking the tightly regulated industry." Prior to Netflix, pay-TV companies had invested billions of dollars building their networks and cramming television channels into bulk packages. They're reluctant to become conduits for other companies' data, and reluctant in allowing customers to "cherry pick" their favorite channels.

However the decisions made in Washington over the investigation could determine how quickly new video services will spread, and what form they will actually take, the Wall Street Journal reports. Currently the Department of Justice is specifically looking into whether Comcast's Xbox policy -- which claims data used by streaming video through the Xfinity app doesn't count towards the customer's monthly usage -- violated legal commitments made by the company in 2011 to secure antitrust approval for its takeover of NBCUniversal.

"We have consistently treated all video carried over the public Internet the same whether it comes from our sites or anywhere else on the public Internet," the company said in May.

The Department of Justice is also looking into whether cable companies are acting anti-competitively by making viewers have a cable subscription before being able to access certain online programming. It's also investigating the contracts that programmers sign in order to be distributed on cable systems, some of which include "most-favored nation" clauses. These make programmers give the biggest cable companies the best price they are offering anywhere, among other conditions.

The Wall Street Journal's full report can be read here.