Genachowski

This morning in Chicago, FCC Chairman Julius Genachowski congratulated the cable industry for their part in delivering broadband service to America.

Appearing at the cable industry’s trade show, Genachowski said the next problem to conquer is broadband adoption — reaching the 100 million Americans that either don’t want or can’t afford the service.

“As an industry, you’ve connected two-thirds of Americans to broadband – and I applaud you for that,” Genachowski said. “Now, let’s work together to connect the last third — nearly 100 million people — so all Americans can participate fully in our 21st century economy and society.”

To address the issue of broadband adoption, Genachowski plans to create a Broadband Adoption Task Force to be headed by his senior counselor, Josh Gottheimer.  The group will accept input from public and private sources to try and find ways to get broadband service into more homes.

The cable industry has recently argued that elimination of flat rate broadband service would allow the industry to create lower priced, lower usage tiers of service to reach customers.  But even existing “light usage” service plans that deliver lower speeds at lower prices have not made a major difference in convincing millions of potential customers to sign up.

Time Warner Cable will acquire cable systems in western Tennessee and Kentucky owned by NewWave Communications for $260 million in cash, the company announced this morning.

Some 70,000 subscribers are affected by the sale, expected to close in the fourth quarter of this year.  It marks Time Warner’s first entry into the state of Tennessee, currently dominated by Comcast and Charter Cable.  In Kentucky, Time Warner already serves around 100,000 customers.

The transaction will make NewWave Communications, already a tiny cable operator, even smaller as it plans to continue serving 80,000 customers in Arkansas, Illinois, Missouri, and South Carolina and those formerly served by Avenue Broadband in Indiana and Illinois.

Time Warner’s cash deal increases speculation the company also remains interested in acquiring Insight Communications, another cable operator up for sale with systems in the same region served by NewWave.  Time Warner Cable favors large regional operations serving contiguous territories.  But if a bidding war erupts, CEO Glenn Britt has warned the company won’t pay a premium price for mergers and acquisitions.

NewWave’s subscribers have been through a lot in the last decade.  Many were originally served by aging cable systems owned and operated by Charter Cable, who sold them to NewWave with mixed results.  NewWave’s public image is tarnished to some degree by some of its vocal, disaffected customers.  The company endures a “NewWave Communications Sucks” Facebook page and blog posts like, New Wave Communications: The Worst ISP in America.  The most frequent complaints: poor service and oversold broadband slowing down in the evenings.

Competition for NewWave is primarily from the phone companies, often AT&T and Frontier Communications.

Christopher Mitchell at Community Broadband Networks has been doing some excellent reporting on a story we covered earlier this year.  Where AT&T is concerned, there is never enough time for just one group to uncover all of their anti-consumer endeavors, so we appreciate Mitchell’s very detailed analysis of the latest ripoff in the making.

The Wisconsin state legislature, vying for most corrupt body this side of Huey Long’s Louisiana, is trying to kill WiscNet, the state’s public institutional broadband network.  In its place, they propose to pay AT&T more money to run a far inferior service.  Would you spend $13 million more in taxpayer dollars for a network that delivers less service than the existing network?  You do when the company behind the proposal hands out enormous campaign contributions.

The rhetoric from AT&T’s supporters borders on hysterical, with the usual memes about the government not being able to run anything correctly — despite the fact WiscNet delivers better service for less money than AT&T wants, and the claim that government shouldn’t be involved in broadband because it is the domain of the free market and private enterprise (free to charge top dollar).

Now, AT&T and their dollar-a-holler friends want Wisconsin Gov. Scott Walker to approve the budget-busting change, even though many of AT&T’s best friends in the legislature are the same ones screaming about the need to cut state spending.  It’s Big Telecom-sponsored corruption on the highest level, and Wisconsin taxpayers will pay the price.  If you live in Wisconsin, take a few minutes to read Mitchell’s stories and then get on the phone to Madison and let them know if they vote for this, they are next in line to be disconnected.

Coverage:

• AT&T Tells Wisconsin: All Your Tax Dollars Belong to Us
• Wisconsin Superintendent: No Really, Broadband is Essential for Education
• Resolution and Statement In Support of WiscNet
• Does AT&T Really Own the Wisconsin Legislature? Battle Over WiscNet Continues
• Access Wisconsin Supported Broadband Stimulus Before They Opposed It
• Internet2 President Says Wisconsin Legislation is an Unnecessary Disaster

The employees of Sonic.net, a California ISP that threatens to expose the chasm between the cost of providing broadband and the profits reaped from it.

It doesn’t take trillions of dollars to offer world class broadband service in America.  Companies large and small are building gigabit broadband networks to reach customers at prices your local phone or cable company would charge at least $1,000 a month or more to receive, if you consider many charge around $100 a month for 100Mbps.  Now, 700 families in California are going to be offered 1,000Mbps service for just $69.99 per month — including a phone line.

Sonic.net has been in the ISP business for more than 15 years, selling DSL service to California customers at prices that offer value for money.  Most recently, Sonic has been pitching bonded DSL service offering speeds upwards of 40Mbps for the same price it plans to sell its new Fusion gigabit fiber broadband.  For customers who don’t need that much speed, Sonic recently reduced the price for its 20Mbps service to $39.95 per month (including phone line.)

For those in the Sebastopol area lucky enough to qualify for fiber service, Sonic promises unlimited access and an exceptional online experience.

Sonic’s qualifications to run the project are not in question, considering Google selected the company to operate and support the trial fiber-to-the-home network the search giant is building at Stanford University.

Google itself is building an extensive fiber to the home network to serve Kansas City residents and businesses, and promises service at a profitable, but reasonable price.  So has Sonic.net CEO Dane Jasper, whose written views on the state of American broadband explains his personal drive to make Internet access better and faster, without ripping people off with Internet Overcharging schemes or unjustified high monthly prices.

Jasper recognizes much of North America is trapped in a broadband duopoly that delivers all of the benefits to investors, while leaving the continent saddled with slow and overpriced service.  Nine months ago Jasper explained the business model to Benoit Felten, a Yankee Group broadband analyst:

During the construction of this network we have given a lot of thought… to the business model in the US, and how we could do things in a different and more interesting way. The natural model when you have a simple duopoly capturing the majority of the market is segmentation: maximize ARPU [average revenue per user] by artificially limiting service in order to drive additional monthly spending. But fundamentally this is the wrong model for a service provider like us, and we have looked to Europe for inspiration. The model pioneered by Iliad under the Free brand is a better fit, both for us and for our customers.

As the marginal cost of providing more bandwidth or less, and providing [phone service] or not are both minimal, we have adopted a simple flat rate model instead of the more typical US model of “$5 more goes faster”… I believe that removing the artificial limits on speed, and including home phone with the product are both very exciting.

It’s exciting to customers as well, most who give the company nearly five star reviews for excellence, without five-star pricing.  An added bonus: Jasper occasionally responds to customer service inquiries himself.

Reviewing Sonic.net’s blogs and website shows off a company that loves the business it’s in.  If a switch 100 miles away has a problem that interferes with Sonic’s service, you will promptly read about it on the company’s technical blog.

There are houses for sale in Sebastopol, Calif., if you want affordable gigabit broadband.

Jasper’s frustration with the enormous corporate-owned ISPs that dominate the country (and Washington) was on full display in a blog entry in March, answering a question about why American broadband is lagging behind:

[...] In 2003 and 2004, the then Republican led FCC reversed course [on policies guaranteeing a level playing field for broadband], removing shared access to essential fiber infrastructure for competitive carriers and codifying instead a policy of exclusive use and “multi-modal competition”.

This concreted our unique US duopoly: cable versus telco, the two broadband choices that most Americans have today.

In exchange for a truly competitive market, the US received promises of widespread deployment. And, to some degree this has worked. Unfettered by significant competition or price pressure, broadband in at least in its most basic form can now be delivered to most homes in America, albeit at a comparatively high cost to the consumer.

What was given up in exchange for this far-reaching but mediocre pablum was true competition and innovation.

Elsewhere in the world, regulatory bodies followed the lead of the US Congress and separated essential copper and fiber infrastructure from the services and providers who used them, and the result has been amazing. In Asia and Europe, Gigabit services are becoming common, and the price paid by consumers per megabit is a tiny fraction of what we pay here at home.

I won’t deny the innovation that has occurred in the telco/cable duopoly. They’ve got TV, Internet and telephone bundles designed to serve up prime time network shows in over-saturated HD glory, with comparatively middling Internet speeds, all offered with teaser rates and terms that would baffle an economics professor. The clear value of the bundle is to baffle, and pity the consumer who wants to shed a component. At least during the intro periods, it’s often cheaper to take the whole package than just a component or two.

For cable companies, the entrenched interest in the television entertainment portion creates a clear conflict: why should they offer an uncapped broadband connection that can deliver enough video entertainment to allow consumers to cut the TV cord? And if you do drop the TV, up goes the price for even this slow and capped Internet connection, so you pay more either way. And now that telcos have gotten into the television business too, their interest in slowing the pace of increasing broadband speed is aligned as well.

This has yielded a competitive truce in America.

In a slow tide, back and forth, cable delivers a slightly better product, then telco slightly better again, all at the highest possible cost. It is iterative, not innovative, and Americans deserve more. After all, we invented the Internet, right?

Among the giant phone and cable companies providing broadband today are a growing number of innovation outliers — companies challenging the prevailing views that Americans don’t need or want fiber-fast speeds (not at the prices some providers charge), that there is no economic justification for the capital spending required to construct fiber networks when incremental upgrades can suffice (the Wall Street view), or that the best way to drive increased revenue from a maturing broadband market is to throw away today’s flat rate pricing model and establish a guaranteed growth fund collecting tolls on Internet traffic that is sure to rise in the days ahead (Time Warner Cable’s CEO).

Google cannot understand why 1Gbps broadband “doesn’t work” in the United States and intends to construct its own network to prove otherwise.  EPB, a municipal utility in Chattanooga, Tenn. sells gigabit broadband, in their words, because they can.  The concept of a provider offering the fruits of their innovation, even if they aren’t certain how to price or sell the service, is a remarkable and refreshing change from the usual obsession with nickle-and-dime “extras” for add-on features or not selling service that your marketing department does not understand or find useful.

It also exposes the indefensible gap between the cost of providing the service and the price paid to receive it.

Thanks to Stop the Cap! reader Mark for sharing news about Sonic.net’s fiber network.

Arris' C4 CMTS

In the broadband speed race, no technology can deliver consistently fast upload and download speeds and offer ease-of-upgrades like fiber optics, but most of us won’t have direct access to the technology for years to come.  This week, the cable industry will attempt to suggest fiber upgrades may be unnecessary as it shows off some of the latest broadband technology at the industry’s trade show in Chicago.

Arris, a cable broadband equipment manufacturer, plans to demonstrate just how many “cable channels” it can bond together to build an enormous broadband pipeline, which the company claims will achieve “proof of concept” speeds as high as 4.5Gbps downstream and 575Mbps upstream.

Such a demonstration is impractical for actual use with today’s cable systems, because they lack enough free channel space to construct a pipe that large.  But the cable industry is betting heavily on DOCSIS 3 technology to keep them in the game as other technology threatens to win future online speed races.

At the heart of Arris’ cable broadband platform is its C4 Cable Modem Termination System (CMTS). The latest iteration, called Release 7.4, increases support for bonded channels, allows cable operators to manage the IP video demands of their subscribers, and also includes additional “intelligent network” enhancements to manage different types of broadband traffic.

Cable modem broadband technology is based on a “shared network,” meaning every customer connected to an individual CMTS is sharing the same individual broadband pipeline.  Before DOCSIS 3 technology, the maximum “raw bitrate” of that pipe was generally fixed at around 40Mbps — speed/bandwidth shared with every customer wired into that equipment.  If just a handful of customers used their broadband connection at the same time, speeds were consistently fast and reliable.  But during peak usage, too many customers could place demands on that pipe it could not sustain, and speeds for everyone began to drop.

Since most customers didn’t come close to saturating their broadband connection, hundreds of families safely shared the same pipe without noticeable speed declines.  But as high bandwidth applications like online video and file sharing grew, network engineers had to plan on fewer customers sharing the same connection or regularly split some customers off an overworked CMTS.

DOCSIS 3 technology solves many of these problems by letting cable operators “bond” multiple cable channels together to create a much larger, although-still-shared, pipe.  Arris says design improvements in its latest c4 CMTS also help manage the traffic that crosses it in the most efficient way possible to maintain a consistent user experience.

Because fiber optic competitors routinely win the broadband speed race, cable operators have to counter aggressive marketing strategies they themselves have used against dial-up and DSL service from the telephone company.  Demonstrating high speed results, even when completely impractical to deploy, still helps the industry’s marketing efforts against the competition, and delivers fodder for industry lobbyists used to counter claims by broadband advocates that other countries are deploying more advanced broadband networks that allow North America to fall behind.

Vincent, one of our regular Stop the Cap! readers sent along a link to a story about the decrepit state of American broadband: it’s a real mess for those who can’t get it, can’t get enough of it, and compare it against what other people abroad are getting.

Cracked delivers the top five reasons why American broadband sucks.  Be sure and read their take (adult language), but we have some thoughts of our own to share:

#5 Some of Us Just Plain Can’t Get It

Large sections of the prairie states, the mountain states, and the desert states can’t get broadband no matter how much they want it.  That’s because they are a hundred miles or more from the nearest cable system and depend on the phone companies — especially AT&T, Frontier, CenturyLink, and Windstream to deliver basic DSL.  AT&T is trying as hard as possible to win the right to abandon rural America altogether with the elimination of their basic service obligation.  Verizon has sold off some of their most rural territories, including the entire states of Hawaii, New Hampshire, Maine, Vermont, and West Virginia.  CenturyLink has absorbed Qwest in the least populated part of America — the mountain and desert west.

Frontier and Windstream are betting their business models on rural DSL, and while some are grateful to have anything resembling broadband, neither company earns spectacular customer ratings.

So long as rural broadband is not an instant profit winner for the phone companies selling it, rural America will remain dependent on dial-up or [shudder] satellite fraudband.

#4 Often There are No Real Options for Service (and No Competition)

Cracked has discovered the wonderfully inaccurate world of broadband mapping, where the map shows you have plentiful broadband all around, but phone calls to the providers on the list bring nothing but gales of laughter.  As if you are getting service at your house.  Ever.  Stop the Cap! hears regularly from the broadband-deprived, some who have had to be more innovative than the local phone company ever was looking for ways to get service.  Some have paid to bury their own phone cable to get DSL the phone company was reluctant to install, others have created super-powered Wi-Fi networks to share a neighbor’s connection.  The rest live with broadband envy, watching for any glimpse of phone trucks running new wires up and down the road.

Competition is a concept foreign to most Americans confronted with one cable company and one phone company charging around the same price for service.  The most aggressive competition comes when a community broadband provider throws a monkey wrench into the duopoly.  Magically, rate hikes are few and fleeting and speeds are suddenly much better.  Hmmm.

#3 Those Who Have Access Still Lag Behind the Rest of the World

We're #35!

This is an unnerving problem, especially when countries like Lithuania are now kicking the United States into the broadband corner.  You wouldn’t believe we’re that bad off listening to providers, who talk about the innovative and robust broadband economy — the one that is independent of their lousy service.  In fact, the biggest impediment to more innovation may be those same providers.  Some have an insatiable appetite for money — money from you, money from content producers, money from taxpayers, more money from you, and by the way there better be a big fat check from Netflix in the mail this week for using our pipes!

Where is the real innovation?  Community providers like Greenlight, Fibrant, and EPB that deliver their respective communities kick-butt broadband — service other providers would like to shut down at all costs.  Not every commercial provider is an innovation vacuum.  Verizon FiOS and Google’s new Gigabit fiber network in Kansas City represent innovation through investment.  Unfortunately Wall Street doesn’t approve.

Still not convinced?  Visit Japan or Korea and then tell us how American broadband resembles NetZero or AOL dial-up in comparison.

#2 Bad Internet = Shi**y Economy

The demagoguery of corporate-financed dollar-a-holler groups like “FreedomWorks” and “Americans for Prosperity” is without bounds.  Whether it was attacking broadband stimulus funding, community broadband endeavors, or Net Neutrality, these provider shills turned broadband expansion into something as worthwhile as a welfare benefit for Cadillac drivers.  Why are we spending precious tax dollars on Internet access so people can steal movies and download porn they asked.  Why are we letting communities solve their own broadband problems building their own networks when it should be commercial providers being the final arbiter of who deserves access and who does not?  Net Neutrality?  Why that’s a socialist government takeover, it surely is.

It’s like watching railroad robber barons finance protest movements against public road construction.  We can’t have free roads paved by the government unfairly competing with monopoly railway companies, can we?  That’s anti-American!

The cost of inadequate broadband in an economy that has jettisoned manufacturing jobs to Mexico and the Far East is greater than we realize.  Will America sacrifice its leadership in the Internet economy to China the same way we did with our textile, electronics, appliances, furniture, and housewares industries?  China, Japan and Korea are building fiber optic broadband networks for their citizens and businesses.  We’re still trying to figure out how to wire West Virginia for 3Mbps DSL.

#1 At This Point, Internet Access is Kind of a Necessity

The United Nations this week declared the Internet to be a basic human right.  Conservatives scoffed at that, ridiculing the declaration for a variety of reasons ranging from disgust over any body that admits Hugo Chavez, to the lack of a similar declaration for gun ownership, and the usual interpretation of broadband as a high tech play-toy.  Some folks probably thought the same way about the telephone and electricity around 1911.

Yes, the Internet can be frivolous, but then so can a phone call.  Cursed by the U.S. Post Office for destroying their first class mail business, by telephone directory publishers, and those bill payment envelope manufacturers, the Internet does have its detractors.  But should we go back to picking out commemorative stamps at the post office?  Your local phone and cable company sure doesn’t think so.  We don’t either.

Anthony Lacavera

Large Canadian telecommunications companies like Rogers, Telus, and Bell are loudly protesting a proposal to cap the maximum number of wireless licenses they can beg, borrow, or buy.

The proposal, from Wind Mobile and Quebecor Inc.’s Vidéotron Ltée, would tell some of Canada’s largest telecom companies they cannot buy up every available wireless license that becomes available in the future in an effort to lock out would-be competitors.  Both companies fear that without such a license cap, the deep pockets of larger providers could sustain a wireless cartel to keep mobile competition at bay.

“Competition doesn’t just ‘happen’,” said Wind Mobile’s Anthony Lacavera. “True competition and the long term benefits of competition for Canadians will occur when, and if, our regulatory framework is improved, our access to foreign capital is unhindered and the playing field is leveled to the benefit of Canadians.”

Lacavera’s upstart Wind Mobile has faced incumbent provider-fueled scrutiny over claims of foreign ownership violations in an effort to keep Wind’s discount service out of Canada.  In addition to fending off regulatory challenges, Lacavera is wary of Conservative Party policy towards wireless competition, which he suspects is too shallow and lacks important protections against further marketplace concentration.

The idea of a license limit met with predictable hostility from the three larger incumbents.

On Wednesday, Telus’ chief financial officer rejected the idea out of hand, telling the government they should not be giving advantages to discount carriers and foreign entities over Telus, which he said was more focused on “innovation.”

Wind Mobile

Rogers called a license cap “a slap in the face” to millions of their customers, and Bell pulled an AT&T — without allowing companies like Bell to have the chance to outbid everyone else, Canada will run the “risk of lagging” behind the United States, harm innovation, and deprive the government of much needed auction revenue.

Bell CEO George Cope also warned letting foreign companies into the Canadian market could leave rural Canada with older technology.  At the risk of shooting down his own earlier argument, Cope specifically targeted his remarks at U.S. carriers, who presumably could be among Canada’s future wireless players.  In Cope’s mind, U.S. providers like AT&T would treat Canada as an afterthought.

“If you really believe that if a U.S. carrier had owned Bell at the time we launched HSPA+ (an advanced iteration of 3G), do you really believe Prince Edward Island, that province, would have had HSPA+ before Chicago?” Cope asked. “You’ve got to be kidding me.”

Large incumbent carriers also accused the smaller competing upstarts of simply trying to boost their own value before they sell out.  Telus and Rogers should know — they fought over buying that competition, like Microcell’s Fido, which Rogers eventually acquired in 2004.

Phillip Dampier

This week, the tech community has been buzzing over new entrants in the world of cloud computing.  Apple’s iCloud in particular has sparked enormous media coverage as the company plans to encourage customers to access all of their favorite content over their broadband connection.  Apple is also moving towards online distribution of many of its software products, including the forthcoming OS X Lion operating system, suggesting consumers can pass up traditional physical media like CD-ROMs or DVDs.

Cloud storage theoretically allows you to store your entire music, video and photo collection online for easy access from any device.  Watching the 20-somethings buzz about 100GB+ secure file lockers and the end of traditional file storage as we know it has been amusing, but these people need to get their heads out of the clouds.  Unless they become politically involved in America’s broadband debate, it is not going to happen the way they hope it will.

Tech entrepreneur?  Meet broadband provider reality check: the Internet Overcharging usage cap and “excessive use” pricing scheme.

While Steve Jobs was introducing iCloud, broadband providers and their industry friends have been ruminating over the impact all of this new traffic will have on their broadband networks.  In an homage to former AT&T CEO Ed Whitacre’s “you can’t use my pipes for free,” the drumbeat for implementing “control measures” for cloud computing and video traffic has been amplified several times over by certain providers, Wall Street analysts, and their trade press and equipment supplier lackeys.

One alarmed provider pondered the impact of iCloud in terms of their past experience with iTunes, which also spiked traffic when it was first released.  Others balk at the notion of consumers using broadband platforms to move entire libraries of content back and forth, especially on wireless networks.  The only sigh of relief detected?  Apple won’t start iCloud with video content — just music, at least at first.

The enemies list

The biggest targets — the companies that get a lot of pushback from providers for using “their networks” to earn millions for themselves are Google, Netflix, Amazon and Apple.  Each of them are rapidly moving into the online entertainment business, threatening to provoke more cable TV cord-cutting.  Netflix is now responsible for 30 percent of online traffic during primetime hours, a fact that some use as an accusation — as if Netflix should be held to account for its own success. Amazon has opened its own cloud based music storage and is also increasingly getting into online video content streaming.  Apple has a novel approach at handling its forthcoming iCloud music feature which should save hours in uploading, but the company is also moving towards online distribution of a growing proportion of its software, including the huge bug fixes and upgrades that will easily exceed a gigabyte if you own several Apple products.

Google is a frequent Washington target and honestly delivers the only truly effective corporate pushback to anti-consumer broadband pricing some providers have contemplated.  In fact, Google is putting its money where its mouth is building a gigabit network larger providers repeatedly scoff at as unnecessary, too costly, and too complicated.

While millions in venture capital funds new online innovations, only a miniscule amount of money is being spent to counter the lobbying major providers are doing in Washington to redefine the broadband revolution in their terms, complete with usage pricing that bears no relation to cost, arbitrary usage limits, and ongoing lack of true competition.

Online innovation is grand, but allowing providers to strangle it with Internet Overcharging schemes guarantees to end the party real fast.

Individually, none of the new cloud services are likely to blow out usage caps in excess of 100GB, but in combination they certainly could.  Anyone using online file backup, cloud storage of video and large music collections, uses Netflix or other online streaming services, and spends lots of time on the web will easily approach the limits some providers have established.  That doesn’t even include large software updates.  Unless you have an unlimited usage plan on the wireless side, don’t even think about using most of these services with AT&T’s 2GB monthly wireless usage cap.

Glenn Britt: The Internet is a utility which is why we can keep raising the price.

In the handful of countries with ubiquitous Internet Overcharging, little of this will pose a problem — companies won’t launch cloud computing services in markets where usage caps will effectively keep customers from using them.

That is why it is critical for some of America’s largest technology companies to get on board the fight against Internet Overcharging, and demand Washington recognize broadband as a utility service that should be wide open and usage cap free.  The evidence is right in front of you.  Time Warner Cable CEO Glenn Britt recognizes the fact broadband is an essential part of our lives today, which is why he is confident enough to keep raising the price and charging even more in the future.  It’s not about “network congestion,” “building the next generation of broadband,” or “pricing fairness.”  Stop the Cap! started at ground zero for Time Warner Cable’s 2009 version of “pricing fairness” — $150 a month for an unlimited use broadband account that likely cost major providers less than $10 a month to provide.  It’s about pure, naked profiteering, unchecked by free market competition in today’s broadband duopoly.

Unless a company like Google can vastly expand its own broadband rollouts, it is increasingly apparent to me (and many others), we may have to move towards an entirely different model for broadband in the United States — one built on the premise of the Interstate Highway System.  One advanced, publicly-owned fiber network open to all providers on which telecommunications services can travel to homes and businesses from coast to coast.

Nobody says private companies shouldn’t be able to compete, but every day more evidence arrives they will never be inclined to deliver the next generation of service that other countries around the world are starting to take for granted.  They will instead protect their current business models at all costs, even if that means throwing America’s broadband innovation revolution under the bus.

CNN takes a look at what makes Apple’s iCloud service different from competitors from Google and Amazon.  (5 minutes)

CNN talks with the folks at Dropbox about their cloud file storage system.  (3 minutes)

More than 200 Verizon customers in Pennsylvania found their checking accounts balance-challenged when Verizon accidentally withdrew as much as $400 from those already paid in full.

Stop the Cap! reader Chandalee in Pittsburgh sent word her family’s checking account saw a surprise withdrawal from Verizon amounting to hundreds of dollars which helpfully paid for another customer’s past due balance.

“I was outraged when I saw Verizon cleaned us out, and I only learned about it when my debit card was declined at the grocery store — an incredibly embarrassing situation,” Chandalee shares.  “If we didn’t have bank reform, our bank would have probably charged us another $300 in bounced debit transaction fees before we learned about what Verizon did.”

Chandalee logged into her bank’s website when she got home and discovered the surprise charge from Verizon.

“I called them on the phone, they hung up on me twice, then told me they didn’t know what I was talking about,” Chandalee says. “I told them I have nearly 400 reasons they were working my last nerve and if they didn’t want to see my face in theirs, they had better put back my money.”

Verizon accused Chandalee of being rude.

“They don’t know what rude is,” she retorts.  “I asked for a supervisor and the woman — Ms. Jefferson or something, tells me she is the supervisor, and I told her get someone who supervises her ass on the line real quick.”

Finally, someone noticed her account was already paid in full and they couldn’t find evidence of the extra withdrawal, leading to a new series of questions about whether she had a Verizon Wireless account and maybe she meant to call them instead.

“As if Verizon isn’t also Verizon Wireless… it sure looks like the same red “V” to me — besides I have Sprint,” Chandalee said.  “They don’t know who they are dealing with.”

After logging more than two hours on the phone with Verizon, the stalemate ended in a draw.  Verizon wanted copies of the bank statement showing the charges and Chandalee was speed dialing her bank to reverse them.

Last Thursday, the mystery was solved when WTAE-TV in Pittsburgh reported Chandalee wasn’t the only customer suffering from Verizon Empty Bank Account Syndrome.  It turned out a “system glitch” was responsible for payments being withdrawn from the “wrong accounts,” and Verizon promised a quick fix.  Chandalee wonders if the only way to get Verizon’s attention is to call the local TV station whenever the bill is wrong, because they sure didn’t listen to her when she called.  In the end, her bank reversed the charges and Chandalee told Verizon to delete all auto-debit information on her account.  “I will write these people my own check from now on,” she says.  “People need to watch their bank accounts so this doesn’t happen to them.”  (2 minutes)

[Updated 10:14pm -- We received word the 200+ impacted customers were from across the nation, not just in Pennsylvania.]

A consumer group has filed a complaint with the Federal Communications Commission alleging that Verizon Wireless is violating its agreement with federal authorities by attempting to restrict the use of third-party wireless tethering applications.

The basis of the complaint, filed by Free Press, is that Verizon agreed not to “deny, limit, or restrict” customers from accessing the applications of their choosing as part of Verizon’s LTE license spectrum agreement.

“Verizon’s conduct is bad for the public and bad for innovation. It also appears to be illegal under the FCC’s rules that govern Verizon’s LTE network. Users pay through the nose for Verizon’s LTE service, and having done so, they should be able to use their connections as they see fit. Instead, Verizon’s approach is to sell you broadband but then put up roadblocks to control your use of it,” said Free Press policy counsel Aparna Sridhar.  “In 2007, Verizon argued aggressively against the adoption of these basic openness protections. Having lost that policy battle but won the auction for the spectrum licenses, Verizon has adopted a new regulatory strategy: simply ignore the rules on the books. The Commission must move quickly to investigate and stop these harmful practices.”

As Stop the Cap! reported earlier, Verizon has taken measures to try and warn off customers using the third-party tethering apps instead of purchasing the company’s $20 tethering plan, which offers 2GB of data usage per month.  In addition to text warning messages, the company has asked Google to disable access to tethering software in the Android Market for Verizon customers.

From Free Press’ complaint:

Efforts to disable smartphone features and create barriers to this useful, productive, pro-innovation activity should cause concern no matter who initiates them; but when Verizon Wireless interferes with the use of third-party tethering applications, that conduct also violates the rules governing its LTE network. When Verizon purchased the licenses for the spectrum over which it has deployed LTE, it agreed to abide by a set of pro-consumer, pro-innovation openness
principles. In particular, Verizon promised that it would not “deny, limit, or restrict the ability of [its] customers to use the devices and applications of their choice.” Verizon’s recent move to limit and restrict access to tethering applications by actively requesting that Google make them unavailable in the Android Market (the Google market for mobile applications) deliberately and unequivocally violates this prohibition. The FCC should immediately open an investigation to assess Verizon’s practices and determine appropriate penalties for this clear breach of the Commission’s rules.

[...] When the FCC auctioned the C Block of the Upper 700 MHz spectrum — the spectrum on which Verizon has deployed its LTE offering — the Commission adopted important license conditions to protect the openness of broadband networks. It provided that licensees using that spectrum “shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice.” In the words of Chairman Kevin Martin, the Commission adopted the conditions to ensure that “[c]onsumers will be able to use the wireless device of their choice and download whatever software they want onto it.”