* Eshoo, Waxman call for examination of data caps
* Say concerned could be stifling innovation, consumer
* Cable group says data caps, usage-based pricing about
By Jasmin Melvin
WASHINGTON, June 27 Two Democratic lawmakers
said Congress should examine whether major wireless carriers and
cable companies are stifling the growth of online video services
like Netflix Inc and Hulu by limiting the amount of
content Internet subscribers can download each month.
Online video providers have argued that data caps are
keeping more Americans from accessing their programming as they
worry bandwidth-heavy shows and movies could interrupt their
"When you couple limited broadband competition with a strong
desire to protect a legacy video distribution business, you have
both the means and motivation to engage in anticompetitive
behavior," David Hyman, Netflix's general counsel, told the
House Commerce subcommittee on communications and technology on
W e dnesday.
The Justice Department is investigating whether cable
operators are improperly suppressing competition from Internet
companies and online video services, according to two people
with direct knowledge of the probe. [ID :nL1E8HDHAO]
"While we don't know the extent of this inquiry, it falls on
this subcommittee to thoroughly examine the issue and ensure
future innovation is not curtailed," said Anna E s hoo, the top
Democrat on the panel.
She noted carriers like Verizon Wireless, a joint venture of
Verizon Communications Inc and Vodafone Group Plc
, and AT&T Inc are eliminating unlimited data
plans, and reports that broadband providers like Time Warner
Cable are also moving toward tiers of pricing.
Henry Waxman, ranking member of the full House Energy and
Commerce Committee, said he was concerned about potentially
anticompetitive practices that could be restricting consumer
choice. He also called for a careful examination of data caps.
Cable operators are also the leading Internet service
providers, prompting worry that they could be trying to
discourage their video product subscribers from jumping ship for
cheaper, Internet-based viewing options.
Michael Powell, head of the National Cable and
Telecommunications Association, argued that data caps and
tiered, usage-based pricing were simply about fairness.
He likened usage-based pricing to consumers' summer air
conditioning bills, where those who keep the cool air blasting
all day will pay more than those that choose to open the window
"This is about how do you fairly allocate the cost of the
network among users that have different uses," Powell said.
"How to do that fairly is the question cable companies are
experimenting with," he added.
Comcast Corp, the largest U.S. cable company and
the top broadband provider, said last month it would experiment
with usage-based billing in some of its markets and suspend
enforcement of its data caps.
Earlier this year, Netflix Chief Executive Reed Hastings
complained in a Facebook post that Comcast was favoring its own
Xfinity TV app on the Xbox because watching TV through the app
did not contribute to a user's cap.
Gigi Sohn, president of consumer advocacy group Public
Knowledge, acknowledged that data caps are not inherently bad,
but could be used in an anticompetitive manner. Thus, Congress
and the Federal Communications Commission should review how data
caps are set, evaluated and changed over time to prevent abuses,