Netflix honcho Reed Hastings became mighty upset when it was revealed that Comcast's Xfinity TV app for Xbox 360 doesn't count against subscribers' Internet bandwidth cap, and he took to the Net to voice his displeasure with a barrage of Tweets, comments, and diatribes. Apparently, someone listened to his ranting: a new report claims that the Justice Department is quizzing streaming media companies and cable providers alike to determine if the cable companies, who also control Internet access for many, are "acting improperly" to reduce the threat of Netflix and co. The Wall Street Journal's sources say that the DoJ has already spoken with Hulu, Netflix, Comcast and Time Warner about data caps imposed by cable providers. According to the sources, the DoJ is also asking whether or not requiring a user to be a paid cable subscriber in order to access streaming content -- such as the Xbox's ESPN app or Fox's streaming show delay -- is an acceptable practice, or an artificial, inappropriate barrier being put up by cable companies and content providers to bolster the lagging television business.
Apparently, several channels have "Most favored nation" clauses in their contracts with cable providers, which basically ensure they'll always be paid as much as the top-dollar contract in the industry. If another channel signs a bigger deal, channels with a MFN clause receive a similar pay bump. The Justice Department is said to be looking into these types of deals, as well; remember, MFN clauses are what landed Apple and the U.S. book publishers in legal hot waters a few months back.
Comcast itself is also reportedly under a direct microscope, as the DoJ is said to be pondering whether the company's no-limit Xfinity TV app is a violation of the agreement it made when merging with NBC Universal. As part of that deal, Comcast agreed not to give its Net traffic any special priority over other companies' traffic. For its part, Comcast says the Xfinity TV App traffic never touches the public web and instead travels solely on Comcast's private pipes.
For better or worse, it looks like the Justice Department is getting sick of old media flexing its muscle to keep new media down. Do you think cable ISPs are up to no-good, or is this much ado about nothing?