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Netflix, Amazon Hope to Bury Cable Companies in DC

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Politicians are used to lobbyists bending their ear about whatever and whoever they represent. But, lobbyists didn’t have the power to interrupt a Senator’s Breaking Bad marathon until now.

Video streaming companies Amazon (AMZN) and Netflix (NFLX) are drastically increasing their investment in lobbyists. It’s a smart move considering the streamers are contending with telecommunication companies and cable providers, like Comcast (CMCSA) and Time Warner Cable (TWC).

Amazon dished out $2.2 million for lobbying in 2011, making it through the first quarter of 2012 with $650,000. Netflix spent $500,000 on lobbying Washington last year, and $260,000 in the first quarter of 2012.

Currently, the one internet company that can truly compete for influence against entrenched telecommunication giants is Google (GOOG). The search engine company spent $9.7 million on lobbying in 2011 and has so far spent $5 million this year.

As more customers move away from cable, the streaming companies will stand to profit where their cable competitors are bleeding money. There's no question that the technology forged by Netflix, Roku, and Apple TV (AAPL) will eventually win out over archaic cable companies. But first, they need to cut the cable to legislators favoring old school telecoms. (Among other things.)

The Wall Street Journal is reporting that the Justice Department is currently investigating claims that companies like Comcast and Time Warner Cable are implementing “data caps” on customer’s service. Amazon and Netflix are also putting pressure on lawmakers to do something about internet service providers placing limits on how much data customers can download. The providers themselves argue that videos are drains on data and can stifle a network if caps aren’t placed on those who use the most.

Netflix in particular wants the FCC to look into whether or not Comcast is violating net neutrality, favoring specific content over others on the internet. CEO Reed Hastings points out Comcast’s Xfinity app for the Xbox 360, which doesn’t count against a subscriber’s bandwidth cap.

Comcast doesn’t think the app breaches net neutrality rules. Its content moves through a Comcast owned private network while everything else moves on the public internet, thus the data costs.

The Journal also says that Comcast spent almost $20 million on lobbying in 2011, and $4.5 million in the first quarter of this year.

So far, the probe into big cable companies hasn’t produced any charges.

(See also: What Smart TVs and Media Centers Still Can't Get Right)
POSITION:  No positions in stocks mentioned.