The U.S. Justice Department has launched an investigation to see whether cable companies are intentionally try to hurt the growth of Internet-based TV providers in order to preserve their own monopolies.
In the past several years, as web-based video companies like YouTube, Hulu, Netflix (NFLX), Yahoo (YHOO), and others have proliferated, consumers have begun consuming video without the help of cable companies and other traditional TV distributors.
Specifically, consumers have begun watching TV programming over the Internet and file-sharing services, often via cable modems provided by the same cable and telephone companies that offer traditional TV solutions.
And the suspicion of many consumers--including, now, the Justice Department--is that the cable companies are intentionally "throttling" the amount of Internet traffic its modem customers can consume, with the aim of protecting their TV revenue.
This investigation will no doubt be cheered by average Americans, who are tired of having their cable bills march higher every year.
This relentless increase of these bills is all the more annoying in light of the many alternative TV solutions out there.
So far, the TV industry has done very well in the face of the Internet onslaught--especially relative to newspapers, which have collapsed. But, recently, ratings for some key networks have begun to drop, leading some analysts to conclude that the end may finally be near.
If the cable companies are found to be intentionally restricting the usefulness of Internet-TV companies, the pressure on the traditional TV business would only increase.
In the cable companies' defense, they're the ones that pay billions of dollars to install and maintain the physical "pipes" that deliver not only traditional TV but broadband Internet access. And the idea that consumers should have a legal right to pay the same price regardless of whether they only use the service to send a few emails every month or download HD movies is ridiculous.
The cable companies should absolutely be able to charge consumers for the amount of bandwidth they consume. And that may ultimately be the TV industry's savior: A shift in cable company revenue and profit from the "TV box" to the modem.
Capitalizing on the convergence of the Internet and TV, Yahoo today announced a big partnership with CNBC in which the companies will co-produce web shows and syndicate content. Expect to see more of these partnerships as the industries converge.
In the meantime, the investigation goes on...