Beaumont & Golden Triangle, Texas residents were the first to face Time Warner Cable Internet Overcharging experiments.

For awhile there, it seemed like nobody in the Golden Triangle on the Gulf Coast of Texas was paying attention to the fact their region was the nation’s guinea pig for Internet Overcharging schemes.  How wrong we were.

Stop the Cap! reader Mark, who lives just north of Beaumont in the city of Silsbee, had been fighting a one man battle against not one, but two providers serving his community of 7,400 — Time Warner Cable and AT&T.  Mark may exemplify the average consumer in the Golden Triangle, unaware that their broadband service had been subjected to Internet Overcharging experiments until the bill arrived in the mail.  Both providers have a track record of not always disclosing such schemes to their customers when trying to sign them up for service in southeastern Texas.

Both providers have used the area for pricing experiments, providing paltry usage allowances and charging steep overlimit fees for exceeding them.

Mark’s problems began when he unknowingly set himself up to be overcharged later.  Originally a Time Warner Cable customer, Mark decided to give AT&T’s Elite DSL package a try, primarily because it was less expensive than Road Runner service and supposedly faster as well.  AT&T claims their Elite DSL service in Silsbee provides up to 6Mbps down/768kbps up speed for $35 a month, compared with Time Warner Cable’s Golden Triangle Road Runner, providing (at the time) 5Mbps down/384kbps up speed for $44.95 a month.

“After DSL was installed, we discovered we were too far from the [phone company facilities] to get Elite speed, and instead of informing us about the problem, they switched us to Basic service speed, which is up to 768kbps down/384kbps up, and never bothered to tell us,” Mark writes.

The bill Stop the Cap! reader Mark received showing $73 in Internet Overcharging penalties (click to enlarge)

After Mark’s family felt AT&T was too slow to meet their needs, they ventured back to Time Warner Cable for Road Runner service.  The salesperson offered a “welcome back” discount, and mentioned nothing about the fact Time Warner Cable had implemented an Internet Overcharging scheme on the residents of the Golden Triangle region.  Instead of his old service priced at $44.95 a month for unlimited use, his new standard service was priced at $54.95 a month, and was limited to 20GB of usage per month before a $1/GB overlimit penalty kicked in.

When the first bill arrived showing his family exceeded that amount, it was quite a shock.  In addition to the $54.95 charge for “Roadrunner Residential”, there was a $73.00 fee entitled, “Road Runner Select Plan Additional Usage.”  (They also nickle and dimed him $0.99 for a “Paper Invoice Fee.”)

This was the first time Mark had encountered an “additional usage” overlimit fee, so he called Time Warner Cable to investigate.  Despite what the salesperson had sold him on, and online promotions were still selling to attract new customers, Mark learned for the first time Time Warner Cable changed pricing.  The Golden Triangle Division of Time Warner Cable implemented an Internet Overcharging scheme in June 2008, but only applied it to new customers.  Had Mark never left Time Warner Cable for AT&T, he would have never been an unwilling participant in the experiment to extract an extra $73 from his wallet.

Because he returned to Time Warner Cable after the “experiment” commenced, he was stuck.

Mark was angry.  He contacted the Better Business Bureau (BBB), the Federal Trade Commission, and the Federal Communications Commission to complain about unfair business practices, improper disclosure of the Internet Overcharging scheme, and abusive pricing.

Time Warner Cable's 4/7/09 letter in response to a Better Business Bureau complaint regarding Internet Overcharging schemes implemented in the Golden Triangle, Texas (click to enlarge)

The most productive response came from Time Warner Cable, responding to the BBB complaint Mark had filed.  In addition to giving the standard talking points about Internet Overcharging schemes, Alberto Morales, Southwest Division Customer Advocate for Time Warner Cable, suggested the company would do a better job of training salespeople to disclose “the disclaimer regarding the consumption based billing when processing a new Roadrunner order.”  Morales also issued a one time credit for the $73 in overlimit fees charged to Mark’s account.

Mark recognized the language of the letter for what it was — propaganda from a cable broadband provider looking to cash in at the expense of their customers.  Among the dubious reasons given in the letter:

It’s also recognized that the Internet was not designed to handle the mass amounts of video that are now being consumed, therefore there is a risk that service speeds could slow down dramatically.  Video over the internet is an interesting and growing phenomenon.

So are Internet Overcharging schemes, but few would call them “interesting.”  Using the company’s own logic, Time Warner Cable should not be placing video on their own customer website, much less embark on a grand experiment called TV Everywhere to stream enormous amounts of video at broadband speeds to their customers.  Now that is interesting.  The “Internet brownout” theory of slowdowns and outages can occur when a provider chooses to pocket profits instead of keeping up with required investments to maintain their broadband network.  Time Warner Cable CEO Glenn Britt disputes there is a problem with Time Warner Cable’s network as-is, telling a conference sponsored by Sanford Bernstein in May that, “I’m very comfortable with our plant… I don’t see a need for a massive upgrade.”

By implementing the Roadrunner Select Plan (where a customer can choose the level of speed they desire for their internet use), each level has its own cap of bandwidth consumption allowance per month.

Of course, customers cannot choose the one plan that has been an outstanding success for Time Warner Cable since its inception – the one they have right now (or had in the Golden Triangle prior to the “experiment”), unless they were willing to pony up 300% more for the same level of service, based on the last proposal Time Warner Cable introduced before temporarily “shelving the plan” due to customer outrage.

In the Golden Triangle, the maximum amount of usage was 40GB per month, followed by “the sky is the limit” $1/GB overlimit penalties.

Morales claimed that only “5% of users actually exceed their limit.”  But 100% of the Golden Triangle’s customers were left waiting for the arrival of a “gas gauge” measuring their usage, something they would now be required to check daily if they wanted to be sure not to exceed the paltry level of “bandwidth allowance” they were granted.

Time Warner Cable's follow-up letter of 4/29/09, in response to Mark's complaints that he was never told about the Internet Overcharging plan which subjected him to a 20GB monthly limit and $73 in overlimit penalties. (We assume the June 6, 2009 reference is a typo and should have read 2008) (click to enlarge)

Mark wasn’t sold by any of the arguments Morales was making.  That’s because he read Time Warner Cable’s own shareholder documents, as he had been accustomed to doing since he bought shares himself.  They told a very different story — one he shared in a letter to Morales:

“In 2007, Time Warner made $3,730 million dollars on high speed data alone, and then had to turn around and spend $164 million to support the cost of the network,” Mark writes. “In 2007, total profit on high speed data was $3.566 BILLION dollars.”

He adds, “in 2008, Time Warner made $4,159 million dollars on high speed data alone, and then spent just $146 million to support the cost of the network, a decline from the year past.  Total profit in 2008 on high speed data: $4.013 BILLION dollars.”

Mark realized “it cost Time Warner 11% less money to keep their network running in 2008 than in 2007.”

He also knew Time Warner Cable’s experiment in his city was done where the only alternative was his AT&T DSL service, which hardly offered comparable competition.

In a follow-up letter responding to Mark in late April (after the four city experiment was shelved), Time Warner Cable made it very clear their position was firmly planted in the ground:

“There are no plans to deviate from the consumption based billing plan.”

The company also elected to blame the customer for not understanding that an Internet Overcharging scheme had been introduced in the first place.

“When a customer goes online at www.roadrunneroffers.com, a disclaimer appears on the page with the first sentence including the following, “Subject to change without notice.  Some restrictions may apply.  Installation fees may apply.” This information is in view for anyone to read before proceeding with an order entry.

The fact this kind of disclaimer is, in the company’s view, sufficient notice for implementing Internet Overcharging schemes, is hardly adequate.

“We eventually dropped them again,” Mark writes. “We thought a usable slower Internet was better than a faster one we were not going to use.”

Mark realized Time Warner Cable’s business practices and models aren’t a good fit for the way he feels companies should treat their customers, and he dumped his Time Warner Cable stock and did what so many customers have also chosen to do: use the one word Time Warner Cable did seem to understand during their Internet Overcharging experiment:  C A N C E L.

As long as broadband providers continue to believe that Internet Overcharging schemes are the best way to protect their business models and leverage even more profits from their broadband division, action on every front, from legislative to direct consumer protest and refusal to do business with such companies remain the best course of action.

Stop the Cap! will continue to help deliver that action, along with a consumer education campaign that doesn’t require focus group testing to sell, because it’s based on common sense and not dollars.

Still to Come: Mark takes his battle to AT&T and gets an upper level AT&T retention agent to mark his account “exempt” from Internet Overcharging fees and penalties.  Perhaps you can, too!

In this wrap-up report on the saga of FairPoint, it's not hard to see a risk for establishing "telecommunications backwaters" in states where major phone companies exit for "greener pastures." The companies taking over service must be held to high standards, even if it means rejecting the deal. (Image courtesy: pfly)

Unlucky part thirteen is especially appropriate.  Is this the final chapter?  Hardly, as the telephone company’s endless problems perpetuate a never-ending saga of bad service, woefully inadequate planning, and unprepared regulators.  It’s an illustration of the future telecommunications backwaters that many communities will cope with as major providers leave for richer returns elsewhere.

However, we have reached the end of the beginning — the review of the entire sordid history of Verizon-FairPoint transaction from its beginning in 2007 until June 2009.

In this wrap-up, the states of Maine, New Hampshire, and Vermont are coping with ongoing delays in service requests, major billing problems from FairPoint, and company requests to begin enforcing collection action against those with past due accounts.

We begin with a friendly interview, from FairPoint’s perspective, with WMUR’s New Hampshire Business.  Host Fred Kocher is one of the few people we’ve seen speak in positive terms about FairPoint.  FairPoint spokesperson Jill Wurm didn’t exactly need to squirm in her seat in this interview on May 22nd.

Billing issues have been part of the long lasting problems customers have faced with the switch from Verizon to FairPoint, with wrong amounts, payments going unapplied, and new charges for disconnected lines driving customers crazy.  FairPoint sought approval to begin collection activity on past due accounts, and as WMUR reports on June 3rd, state regulators wanted to monitor the process to make sure a new nightmare wouldn’t begin:

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The Pacific Technology Alliance claims to be a "grassroots" organization representing consumer interests.

From time to time, Stop the Cap! readers send us news tips based on things they find in their local newspaper or online.  Shaffa in Seattle sent us a link to a letter to the editor in the Seattle Times which seemed to be right up our alley.  The writer, Tom Gurr, executive director of something called the Pacific Technology Alliance, wrote the newspaper advocating the redefining of broadband as “a necessary, transformative element to modern life.”  Gurr advocates widespread deployment of broadband service to all Americans.  So far so good.

We cannot overstate the economic impact, to both the individual and the nation, of building out broadband infrastructure and making it available and accessible to all. But not all Americans have access to broadband, and not all Americans who have access are able to use broadband. Price or concerns about privacy and data security are barriers for some. For these individuals and communities, the degree of “openness” or “neutrality” of the network is irrelevant.

America can universally reap the rewards of broadband through its infrastructure deployment, removal of barriers to adoption and investment in more efficient and cost-effective smart networks needed for tomorrow’s dynamic and ever-evolving applications and content.

Whoops… what was that part about “openness” or “neutrality” of the network being “irrelevant?”

As Stop the Cap! readers already know, Net Neutrality issues can go hand in hand with availability and price, and I have yet to meet anyone who hasn’t pondered how private their information is kept (particularly their credit card numbers used online) and how secure their computers are from external attack from viruses and spyware.

In communities with little competition, speed can fall behind more competitive cities nearby.  Prices are almost always lower when providers do battle to secure and keep customers.  Interfering with a consumer’s broadband service to maximize revenue or protect existing business models is a risky proposition if your biggest competitor doesn’t.  Customers will flee across town to “the other guy” for service.

It seemed odd to advocate for widespread broadband deployment while taking time out to swipe at Net Neutrality.  The closing line of the letter seemed slightly vague as well, so it was time to bring out The Google and figure out where this organization is coming from.

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Despite the economic downturn, broadband providers continue to achieve healthy growth in the number of new subscribers, with five million new customers signing up for service across the United States in 2009.  Although this does not represent the double digit percent increases operators have achieved in prior years, considering the anemic sales of subscriptions for telephone and television service, broadband’s anticipated seven percent growth this year is a bright spot in an otherwise challenged telecommunications industry.

Healthy profits continue to be reported by most broadband providers, with growing revenue coming at the same time bandwidth costs continue to decline, and some providers decrease the percentage of revenue invested in their networks.

Operators proposing Internet Overcharging schemes don’t have much of a leg to stand on, when consumers learn of the healthy profits earned by the industry and their reluctance to invest in expanding their networks at the same rate year after year to keep up with subscriber growth and demand.

By 2013, fiber to the home will reach an estimated 13% of U.S. households, with more than 80% subscribing to a broadband service package.

Comcast introduces the nation's capital to 50Mbps "wideband" service

Back in the 1980s, cable television systems in suburban Washington, DC and northern Virginia often showcased all that was possible for that era of cable operators.  When legislators and other movers and shakers were done for the day, they found some amazing cable services waiting for them when they got home.  Media General’s cable system in Fairfax County had an unprecented two coaxial cables going into each home, with up to 60 channels on each cable, and this was in the early 1980s, when most cable systems provided no more than 40 channels.  Up to 120 channels at prices often cheaper than cable systems with 30 channels, Media General received a lot of praise.

Providing a high level of service with robust competition in the nation’s capital is a great way to diffuse complaints about poor quality monopoly service at high prices reaching members of Congress from constituents back home.  More than a few elected officials opposing pro-consumer legislation in the 1980s and early 1990s used to rave about cable service they received in Washington, forgetting things were hardly as rosy back home.

Now Comcast, which provides cable service through large parts of the metro Washington, DC area, has announced the arrival of 50Mbps cable modem service, made possible with DOCSIS 3 upgrades.  Comcast will reap the profit potential of offering consumers and businesses higher tiers of broadband speed, making customers happy and reporting higher broadband revenue, which will also keep investors pleased.

Unlike Time Warner Cable, Comcast is bullish on deploying DOCSIS upgrades across all of their cable systems.  Comcast COO Steve Burke said, “We are hardcore on DOCSIS 3.0. We want to have two-thirds of our footprint by end of year.”

Comcast is also positioning itself to compete with Verizon FiOS, now being wired in parts of DC, Maryland, and Virginia.

The company announced the new “wideband” service was now available in the Anacostia area east of the river.  Over the course of the summer into fall, it will become available in parts of Arlington County, the City of Alexandria, Montgomery County and Prince George’s County.

Comcast promises to have 100% coverage by the end of the year.

New Speed Tier Pricing (assumes customer has at least one other Comcast service)

Extreme 50 — 50 Mbps down/10 Mbps up — $99.95 per month
Ultra — 22 Mbps down/5 Mbps up — $62.95 per month.
Deluxe (Business Class) — 50 Mbps down/10 Mbps up — $189.95/month (includes business class extra features)

Existing broadband services at slower speeds will also remain available at current prices, but customers may find reduced congestion made possible by DOCSIS 3 upgrades.

Where is the downside?  Comcast is keeping a strict limit of 250GB of consumption on these new residential tiers, which reduces their value, particularly on the higher priced plans.

When otherwise intelligent writers get sucked into industry propaganda and advocate against their own readers’ best interests, the blowback can become substantial.

VentureBeat is about to learn that principle firsthand as it bungled a piece about wireless carrier mobile data growth into a confusing article claiming “Net Neutrality” will be used by AT&T and Verizon to “drive Sprint and T-Mobile into the ground.”

What?

Authors Tim Chang and Matt Marshall then journey across the landscape of mobile data networks in the United States, regularly stopping to hammer home the requirement for limits on usage, blaming it mostly on online video.  The factual potholes litter the landscape, unfortunately:

What that means is the country’s major wireless carriers — Verizon, AT&T, Sprint and T-Mobile — are going to have to abort the all-you-can-eat mobile data plans most of us take for granted. It’s just getting too costly for them to give us the service on their networks for the pricing they offer today.

Video 'is the big problem' justifying Internet Overcharging for wireless mobile data, yet one of the nation's largest providers sees no problem providing its own video service on its network.

Actually, none of these carriers provide unlimited all-you-can-eat mobile data plans.  They either explicitly or implicitly (buried in the fine print) limit consumption, usually to 5GB of usage per month.  What happens beyond that does vary by carrier.  The big four impose overlimit penalties at punishing prices.  Some smaller carriers, like Cricket, simply throttle your connection or suspend service on a case-by-case basis.

The reasons for these limits:

• Limited spectrum (the frequencies the provider operates on) may not sustain demand using currently available technology and network design. Could additional spectrum, new technology standards, and more localized delivery of data reduce network congestion?
• Lack of competition.  The two primary carriers, AT&T and Verizon, have essentially provided nearly-equivalent pricing.  Their robust coverage areas make either a natural choice for most users who travel.  Sprint and T-Mobile have larger gaps in coverage.  Spectrum auctions, which is how carriers obtain new blocks of frequencies, raise huge sums for the government, but those costs inevitably do get passed down to customers.
• Psychological: Consumers accustomed to limited wireless broadband from the outset are less likely to complain if it is taken away later.
• Economical: Data packages with low limits produce profitable results, with the future possibility of earning even higher profits from subscribers who routinely exceed them and pay penalties and fees, or for carriers to create and market “additional usage packs.”

Jon Metzler, an industry consultant who has conducted research for the CTIA, says he’s heard estimates that a YouTube video of 3-5 minutes costs $1 for a carrier to handle. At this rate, a carrier would be killed when a typical user streams a mere two videos a day. That day is coming soon, because of the race by the smartphones to offer these cool video services.

Of course Metzler works for the CTIA-The Wireless Association, an industry trade and lobbying group.  They have a vested interest in pushing the “bandwidth flood” theory to preserve carrier pricing models.  The factual basis for this YouTube assertion has been challenged as well, once even by a VentureBeat reader.

Verizon doesn’t see wireless mobile video as the harbinger of doom — it sees it as a feature it can rake profits from, charging $13-25 a month extra for access to VCAST Mobile TV, a Verizon Wireless portal filled with video clips and streams.

It’s always ironic when carriers complain about the impact of services like video, while also heavily marketing their own services that, by their nature, impact their network.  YouTube bad, VCAST good.

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From $199 to much more, Apple & AT&T expect premium prices for iPhone addicts.

High demand for a product often carries a premium price to acquire and use it.  The Apple iPhone, one of those few mobile products that can generate lines extending out the door of a retailer, is one such product.  AT&T Mobility, which still holds an exclusive contract with Apple for iPhones in the United States, has made it clear it will not be making any price changes to its wireless data plans with the introduction of the Apple 3G S on June 19.  Speculation about lower pricing started with AT&T Mobility CEO Ralph de le Vega, who spoke at a conference last month indicating he was amenable to “limited data plans for lower fees.”  That message was soon modified into a more generic ‘price cut’ as the story traveled.

“We’ve been very happy with our pricing,” AT&T spokesman Mark Siegel told Dow Jones Newswires.

AT&T already charges a pretty penny for iPhone users on their network.  Customers signing up for service face a minimum voice plan of 450 minutes for $39.99.  An “unlimited” data plan, required for the iPhone, adds $30 per month.  AT&T claims the average iPhone customer spends about $90 per month for voice and data.  The company also reserves the right to crack down on excessive data usage and limits some applications.

Should de le Vega’s tolerance of limited data plans become reality, plans with more specific usage limits may be forthcoming, at a moderately discounted price.

AT&T has had a bad week in the public relations arena, as current iPhone owners continue to object to the full-price upgrade price they may have to pay if they are in a two year contract.  Thousands have signed a Twitter petition and have filled AT&T’s online support forums with complaints about AT&T “price gouging” loyal customers.

AT&T has enjoyed significant revenue from their exclusive arrangement with Apple.  But iPhone users are dedicated to their combination phone and data device, and try to get their money’s worth.  That has put pressure on AT&T’s network, and despite the company’s revenue from its premium priced plans, has been criticized for not keeping up with that demand.

Verizon Wireless, AT&T’s biggest competitor, trashed AT&T’s proposed upgrades as inadequate:

Verizon Wireless CEO Lowell McAdam characterized AT&T’s promises as “too little too late”. He said that AT&T’s “ceiling for their network will be the floor for our network.” McAdam called AT&T’s announcement on its network upgrade old news—about a year old. He also noted AT&T’s promises to upgrade speed are spin.

Grande Communications serves 148,000 and 147,000 Texas residential and business customers, respectively.

Grande Communications, the San Marcos, Texas company competing against Time Warner Cable and AT&T, will effectively be sold to ABRY Partners, an investment banking firm based in Boston, for an undisclosed sum.

Grande, familiar to Stop the Cap! readers in Austin, ran advertisements back in April and May against Time Warner Cable and AT&T touting their broadband service as being free from Internet Overcharging schemes.  The company has managed to build its fiber optic network to reach approximately 20% of homes in the Austin area, mostly in the northeast and eastern areas, as well as Tarrytown.

Growth had been slow for the “overbuilder” due to financing difficulties.  Investors feared a three-way competition between cable, telephone, and fiber-based Grande, because heavy competition usually results in lower prices and profits, decreasing their potential return.

With ABRY effectively helping refill Grande’s bank accounts to allow them to accelerate the building of their network, Grande hopes to achieve one million homes passed by their network in a few short years.

ABRY has experience in the broadband market with their ownership of Atlantic Broadband, the nation’s 15th largest cable operator serving customers in Florida, Maryland, Delaware, South Carolina and central Pennsylvania.

The deal requires internal review from Grande’s board of directors and external review by the Federal Communications Commission, the Texas Public Utilities Commission, and others.

March ended with yet another public hearing on the seemingly endless series of problems customers in New Hampshire were experiencing from FairPoint.  The Public Utilities Commission sent FairPoint a letter in April laying out benchmarks it expected the company to comply with to address the problems once and for all.

Meanwhile, a FairPoint spokesperson pushed the goal post even further away, now claiming the company’s “plan all along” was to resolve problems by June 30, 2009.  WMUR summed up the problems, and what New Hampshire regulators hoped would finally be the solution.

By May of this year, FairPoint finally started putting a dent in the number of customer complaints filed with Public Utilities regulators in Maine, Vermont, and New Hampshire.  Billing problems were now the biggest challenge for the company.  Customers receiving incorrect bills (or not receiving them at all) started refusing to pay until an accurate bill could be sent.  Many others found they were still being billed for lines disconnected weeks or even months earlier.

Wall Street, and credit rating agencies were following the chaos in New England, and didn’t like what they saw.  Customers were fleeing to the competition in high numbers.  The company cannot pay its debt without paying  customers.  The stock price had been declining as well.  Considering all of those factors, along with FairPoint’s quarterly earnings report, a range of rating services downgraded FairPoint’s credit rating, with one openly speculating FairPoint could face bankruptcy.

WCSH in Portland, Maine picks up the story on May 8th:

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We are still tracking down some nuisance bugs, and have had a report of at least one browser crash when trying to visit our site.

The bug we are currently aware of, particularly for those running Mac OS 10.5 and Safari 4 is:

Error #2044: Unhandled IOErrorEvent:. text=Error #2124: Loaded file is an unknown type.

We *think* that is related to one of the video players (the one that shows a blank screen before starting a video).

If you are experiencing that error, let me know if you can clear it and still access video, or if it completely disrupts your visits here.

Any other error reports should include:

• Your operating system (XP, Vista, OS10, etc.)
• Your browser & version
• If the error occurs only in one browser, some, or all browsers.
• If you are disabling Macromedia Flash (if you know)
• The exact error message you see, if you see one.
• If there is a specific action you take which routinely causes the error problem.

Because some errors might impact your ability to use our contact form, you can e-mail me directly at:  bugswat (-at-) phillipdampier.com or reply as a comment here.

You should replace the (-at-) with @ like you would with any e-mail address (example@mailaddress.com).   I use this format to keep those spam e-mail address harvesters from picking up my e-mail address and blitzing me.

When we are confident the bug(s) are gone, this message will disappear.

Thanks for your help.