Don’t Let Cable Broadband Plans Undercut Streaming Services, House Panel Told

Netflix, Roku and consumer groups say federal regulators must ensure cable companies' broadband plans don't discriminate against video streaming firms

Last Updated: June 27, 2012 @ 4:27 PM

Federal lawmakers should ensure that new broadband pricing schemes being rolled out by the cable TV industry aren’t used to discriminate against video streaming services, critics said Wednesday.

“There’s only one way to get Internet video and that is over an Internet pipe, and there are very few carriers that provide Internet video in some areas,” said David Hyman, general counsel of Netflix, the streaming video giant, during a hearing before the House Communications and Technology subcommittee.

“In some places there is only one carrier, and the ability to have competition in the marketplace is something you guys should be mindful of,” Hyman told the lawmakers.

Also read: Watchdog Groups Love Justice Dept.'s Data-Cap Probe – Cable Industry, Not So Much

“The key here is competition,” added Jim Funk, a senior vice president for Roku, a manufacturer of boxes that enable consumers to access streaming video services on their TV sets.

But Michael Powell, president of the National Cable & Telecommunications Association, said the new pricing systems — which essentially allow cable subscribers to buy additional broadband bandwidth each month — were about fairness.

“You’re being allocated a portion of the costs consistent with your use,” Powell said of pricing models that Time Warner Cable and other operators have been rolling out recently. “And that is a very well established economic principle.”

Also during the hearing, Netflix’s Hyman made clear that the streaming video company remains particularly concerned by Comcast’s exemption of some of its own apps from data caps that apply to Netflix and other unaffiliated streaming companies.

“If you’re going to implement data caps . . . they should be applied equally or not at all, Hyman said.

“ISPs (Internet service providers) also own video services,” added Gigi Sohn, president of consumer watchdog group Public Knowledge. “There’s an incentive and an ability to discriminate against online video competitors.”

“I’m concerned about the potential impact of data caps on the growth the streaming video market,” added Rep. Anna Eshoo, D-Calif., noting that it has been widely reported that the Department of Justice is also looking into the issue. “While we don’t know the extent of this (DOJ) inquiry, it falls on this subcommittee to thoroughly examine the issue and ensure future innovation is not curtailed,” Eshoo said.

A Comcast spokeswoman declined comment. But David Cohen, Comcast executive vice president, has said that the company’s handling of its XfinityTV app is completely legal and appropriate.

During the hearing, NCTA’s Powell said the fact that Netflix has outstripped cable and satellite to become the nation’s largest provider of subscription video services offers proof that cable has not been keeping video streaming services down.

“Our policies, caps or pricing, have in no way thwarted the consumer’s ability to watch video stream content,” Powell said.

Under one of the new cable broadband pricing options, which Time Warner Cable is offering in Texas, consumers can save $5 a month for using less than 5 gigabytes a month, Alex Dudley, a TWC spokesman, told TheWrap.

Under this metered TWC option, customers who exceed the 5 gigabyte cap are billed an additional $1 a month for each extra gigabyte they use, Dudley said.

“Times are tough,” said Dudley, who also said TWC customers have the option of subscribing to more expensive monthly plans that give them unlimited bandwidth use. “Customers like options,” Dudley said.

Also during the hearings, which were called to assess whether the laws affecting the video industry need to be changed or scrapped, key Republican lawmakers made clear that they favored deregulating the video industry.

“I couldn’t tell you today what Roku is,” Rep. Joe Barton, R-Texas, during the hearing.
“In general, we’re better off having less regulation than more,” he added, however.

“Cable operators, satellite providers and broadcasters should be allowed just as much flexibility to respond to competition from the Internet players as we would like the Internet players to have to respond to competition from the traditional players,” added Rep. Greg Walden, R-Ore., the House telecommunications subcommittee’s chairman.