An End To Bandwidth Caps?
The Wall Street Journal is reporting tonight that the U.S. Justice Department is investigating whether cable companies are “acting improperly” by using bandwidth caps to “quash nascent competition from online video.”
Depending on how this plays out (and it will take several years to play out and likely require a Supreme Court decision) this could significantly change the industry: without some sort of government action there’s no way any virtual MSO could take off: the cable companies and telcos (e.g. Comcast, Time Warner, FIOS et. al.) provide internet service (and the wires that bring the internet) to a huge percentage of the US population – estimates are somewhere between 75 and 90%.
As we discussed here last week, the ability to impose bandwidth caps allows cable companies and telcos to effectively shut down any internet-based MSO by making it prohibitively expensive to watch online video from another provider. Especially since subscribers to their double and triple play packages (TV + Broadband + Telephone) are not subject to these caps.