Home » Broadband Speed »Competition »Data Caps »Editorial & Site News »Public Policy & Gov't »Rural Broadband »Wireless Broadband » Currently Reading:

A Year of Internet Overcharging Suits Some Wireless ISPs Just Fine

Their prices are sky high.

Back in May 2010, Stop the Cap! launched a debate with a few Wireless Internet Service Providers (WISPs) that provide largely rural America with wireless access to the Internet over long range Wi-Fi networks.  The debate got started when Matthew Larsen, who runs the Wireless Cowboys blog, announced the arrival of an Internet Overcharging scheme at his WISP — Vistabeam, which serves residents in rural Wyoming and Nebraska.

WISPs are being increasingly challenged by the changing tastes of Internet customers, who are gravitating towards broadband multimedia content, saturating limited capacity networks and forcing regular infrastructure upgrades to keep up with increasing usage demands.  Unlike larger providers, many WISPs are independent, family-run businesses that lack easy access to capital and resources to rapidly respond to demand, especially when most have a rural customer base that numbers in the hundreds or thousands.

That’s one of the reasons why Stop the Cap! has not been as harsh on these providers when they implement usage limit schemes on their customers.  Because WISPs provide service where cable and phone companies usually don’t bother to serve, these wireless providers are the only option beyond satellite Internet, which we regularly label “fraudband” for claims of broadband speeds that are rarely delivered.  Still, we were not impressed last year with some of Larsen’s language about what his usage caps were intended to do (underlining ours):

I feel that these caps are more than generous, and should have a minimal effect on the majority of our customers.   With our backbone consumption per customer increasing, implementing caps of some kind became a necessity.    I am not looking at the caps as a new “profit center” – they are a deterrent as much as anything.    It will provide an incentive for customers to upgrade to a faster plan with a higher cap, or take their download habits to a competitor and chew up someone else’s bandwidth.

Ouch.

It’s been over a year, and Larsen is back with an editorial patting himself on the back for an Internet Overcharging success story well-implemented:

We have never raised prices on our services.    We still have a customer note on the wall that reads “Your bill was the only one I got this month that DIDN’T go up.   Thank you!”     I would have a hard time raising prices on this person because of their neighbors that are downloading 20x as much.   Usage Based Billing is a much fairer way to go, especially when the provider faces so much reinvestment cost to accommodate the heavier users.   After the first year of implementation, I am very glad that we took the time to implement it and intend to use the revenue to build a better network for all of our customers.

Larsen is also upset with those who believe in the concept of unlimited Internet:

Operating a broadband network is not free, and it is not a low-maintenance business.   I have a group of dedicated employees and subcontractors that have spent a lot of late nights and early mornings away from their families to build and maintain our network.   Anyone who thinks that unlimited broadband is a God given right should be forced to spend a few days in my lead tech’s shoes, getting a good look at what a broadband provider has to do to build a network and keep it running.

Larsen, like other WISPs are confronting the reality that Internet usage is on the upswing, and while we sympathize with the challenges faced by Vistabeam and other WISPs, his statements do not apply to every broadband network around.  And frankly, an increasing number of customers simply aren’t interested in Larsen’s challenges, especially if another provider can deliver service more cheaply and efficiently.  Vistabeam better hope nobody does, because their prices are simply not competitive if just about any other provider manages to work their way into his territory.

Vistabeam prices start at $29.95 a month for 384kbps/128kbps service with a monthly usage limit of 10GB.  Exceed that and you will pay an additional $1 per gigabyte.  Customers who need more speed pay dearly for it.  A tier providing 4/2Mbps service will run you $99.95 a month with a 60GB monthly usage allowance.

As of late, Larsen has been railing against the U.S. Department of Agriculture over recent broadband stimulus awards designed to improve coverage of broadband Internet in the same rural regions of the country Vistabeam serves.  He’s upset the USDA has awarded a $10.2 million infrastructure loan to the Hemingford Cooperative Telephone Company, which provides service in western Nebraska under the name Mobius Communications.

Larsen speaks highly of the fact Vistabeam delivers service in the absence of government funding or stimulus. But average consumers are not likely to care when they compare prices and consider the fact Mobius doesn’t appear to limit customers’ usage.

Mobius DSL Prices:

  • 500kbps – $35.00
  • 1.5Mbps – $40.00
  • 3Mbps – $50.00
  • 5Mbps – $60.00 (Currently available in Alliance and Chadron.)

Mobius charges effectively half the price Vistabeam charges, and offers faster tiers of service in some areas, without fear of overlimit fees.  It’s also important to recognize the “award” was actually a “loan,” which must be repaid.  Larsen seems less upset with the fact there are broadband stimulus programs than with the reality industry lobbying has effectively cut out many Wireless ISPs from standing any chance of winning one.

I get especially frustrated by loan awards like this one because I have operated two ISPs that have had to compete directly with Mobius and did not have access to any federal grant or loan programs.   The USDA Broadband and Loan programs are essentially only available to [regional phone companies].   When I made inquiries into the programs several years ago, I found that they would only loan to a single recipient in a region so that they were not funding competing projects.

Phillip Dampier

For Stop the Cap!, our constituents are consumers interested in obtaining the best possible broadband service at the best price.  Larsen’s views, understandable from the perspective of a business owner, would leave a number of consumers paying effectively double the price for usage-limited broadband. That would, however, satisfy a business argument that self-funded private providers should not face competition from other providers that can extend faster, unlimited DSL, cable, or fiber service with low interest loans.

Wouldn’t a better solution be to form a coalition to force open the same beneficial loan programs to Wireless ISPs who can more readily and affordably build up their networks and ease the Internet Overcharging that too often comes along for the ride?  We’re not accusing Larsen of gouging his customers for fun and profit, but we would like to see WISPs like Vistabeam develop win-win strategies that deliver success for their innovative efforts and lower priced, faster service for their customers.

The alternative may be the eventual arrival of those rural phone companies, increasingly equipped to deliver faster and cheaper service to Vistabeam’s current customers, eventually spelling disaster to that company’s business plan.  It has happened before.  Anyone remember the “wireless cable” industry that delivered a few dozen cable channels over microwave signals?  That’s a service whose time came and went, largely replaced with satellite television and rural telephone cable TV, better equipped to provide the kind of service consumers actually wanted, but wireless cable was ill-equipped to provide.

0 0 votes
Article Rating
30 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Shane Mitchell
Shane Mitchell
12 years ago

I was going to respond, but decided your article was not worth my time.

Michael Erskine
12 years ago
Reply to  Shane Mitchell

I got your low interest loan right here, Mr. TaxPayer:
http://www.dslreports.com/shownews/Open-Range-Files-For-Chapter-11-116476

Williams Robards
Williams Robards
12 years ago

Wow are you ever the bitch of the telco’s. You really think telephone companies give a better deal? Promising fixed pricing then falling for the modem rental and fees that can only be invented by the telco’s? You can’t compare wireless to phone companies because the difference is wireless proivders SAY where limits are. Let me guess you’re an illegal video downloader who already found that cell wireless wont’ work, probably got a letter from your cable company, and are enjoying temporary free downloads from the telco that will likely slow you down in the very near future. You must… Read more »

Mike Hammett
12 years ago

Well, I wouldn’t exactly say he is pro-corporate with the other pages he calls “articles”.

He apparently doesn’t understand that if the government pays for his broadband, he’s still paying for it through his taxes. I’d rather just pay for it directly than to involve government overhead. I do realize these are loans vs. grants, but there is still a significant government cost to these programs.

Steve Barnes
12 years ago

This article is very good at stating what you think. But it is a really easy task to sit in a chair and write an article about a subject that you may be passionate about but have no real understanding of the inner workings or costs associated with running a Wireless ISP. Matt Larsen opperates a very good WISP that is managed very well. As Larsen states in his articles, Wisp’s do not want the governments money. What we want is a level playing field where our competition does not run on tax dollars. Why did you not quote that… Read more »

Mike Hammett
12 years ago

I wonder what Phil would think of an ISP that offers shared, over-subscribed services billing for usage over X GB AND dedicated, non-oversubscribed services with no usage billing. In my area, I’d estimate that a dedicated 1 megabit connection would cost $200/month (still less than T1 pricing), while I currently offer 5 megabit for $100 and am contemplating doubling that to 10 megabit.

Cameron Crum
Cameron Crum
12 years ago

If you are going to use out pieces of of someone’s blog out of context, you should do a better job of debating them. My read of this article puts Larson out on top and make your writing look like sour grapes.

Matt Larsen
12 years ago

I’m going to offer some constructive criticism to you Phil, with regard to taking the journalistic high road instead of stooping to the baiting and out-of-context propaganda that has replaced the majority of journalism today. First of all, I am going to politely point out a couple of inaccuracies in your reporting. You made the statement that “Mobius charges effectively half the price Vistabeam charges” which is not true. Vistabeam offers 640K for $34.95 (compared to Mobius 500K for $35) Vistabeam offers 1Meg for $39.95 (compared to Mobius 1.5M for $40) Vistabeam offers 3meg for $59.95 (compared to Mobius 3M… Read more »

Michael Erskine
12 years ago

4) The tired arguments about metering broadband usage don’t fly around here. Don’t even try the electric, gas, and water analogies. They have little resemblance to broadband delivery costs because those other utilities have exploration, generation, and ‘capture’ costs to deliver those often limited resources. Let’s stick with the technology that more closely resembles broadband — the one providers always avoid in these analogies: phone service — you know, the one that is moving towards flat rate unlimited calling and lower pricing. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The above is bull**** and ignorance. You know how to operate a blog and sell some adverts,… Read more »

Mike Hammett
12 years ago

The ARRA did provide funds to the satellite industry. Those funds are being used to provide subsidized installations to people that may be within the coverage area of a WISP that perhaps isn’t marketing itself well enough. Because the WISP isn’t marketing itself well enough doesn’t mean the government should be paying the satellite guys to install service. Hell, they shouldn’t be paying for installations-only at all. The satellite guys already had the birds in the air. They didn’t do anything to increase coverage. Most customers with excessive transfers (say over 100 GB) are not living within the law. I’m… Read more »

Mathew Howard
Mathew Howard
12 years ago

I’d like to point out that the cost to deliver broadband to rural areas is in fact far higher than in urban areas, actually a lot less so with wireless than with wired technologies, but the cost per customer is still far higher. Why should we expect others to pay for the extra expense of delivering service to us? the fact is the cost to get broadband to everyone is not equal, why is it fair for everyone to have to pay the same price? also, why should some old lady who does nothing but read emails from her grandkids… Read more »

Ron Dafoe
Ron Dafoe
12 years ago
Reply to  Mathew Howard

That is what speed tiers are for. Old ladies get the lowest speed, netflix users get a faster speed and therefore a more expensive package. How hard is that to figure out? Netflix is not going to be any good on a 384 line. An old ladies email is going to be fine. Speeds are natural limiting factors, without forcing some arbitrary usage allowance. Usage allowance is not a good way to manage your network. I think everyone understands the cost is greater. That does not mean that as consumers, they should not try and get the best deal they… Read more »

Mike Hammett
12 years ago
Reply to  Ron Dafoe

Then pay for dedicated access. In my area a 384 kilobit dedicated account would be $100/month. For the grandma that doesn’t have much usage, she could instead get a 5 megabit plan from me for $100. That would probably be a lot more handy than the 384 kilobit line that should could use to torrent all day. Just as some WISPs have an aversion to government money, some citizens have an aversion to understanding that government money doesn’t grow on a tree somewhere and just comes out of your taxes. Well, I guess with the way today’s government is ran,… Read more »

Mathew Howard
Mathew Howard
12 years ago
Reply to  Mike Hammett

Yes, speed tiers can be used to limit usage, but on a lot of today’s networks a usage cap is just as, or maybe more effective. I think most people would rather have a 5mb connection with a cap they’ll never hit than a 384k connection with no cap.

Ron Dafoe
Ron Dafoe
12 years ago
Reply to  Mathew Howard

I disagree. I don’t think most people want to try and keep track of their usage. I also do not think that most people actually know what happens when they are connected to the internet or what talks to the internet at this point.

Mathew Howard
Mathew Howard
12 years ago
Reply to  Ron Dafoe

I agree that that’s true, the majority will not want to track their usage – my point is that with reasonable caps most people don’t have to, it’s really only a small percentage that use vast amounts of bandwidth. very, very few people with a 384k connection will go over 10gb anyway, and 60gb is more than enough for the majority of users.

Ron Dafoe
Ron Dafoe
12 years ago
Reply to  Mathew Howard

You are correct. But again, those people who use alot of bandwidth, usually will naturally be on your most expensive plan becuase speed matters to them. If not, you can deal with those people in other ways besides billing them by going over some arbitrary limit or turning their internet off. I am not against network priortiziation at all as long as that priortization is upfront and still allows people to use those services. For instance, putting netflix traffic below usable limits. Limiting bit torrent to a slower rate is also fine by me as long as all bit torrent… Read more »

Ron Dafoe
Ron Dafoe
12 years ago
Reply to  Mike Hammett

Who said anything about a dedicated line? I was using your parameters of the little old lady subsidizing the big bad person that has the audactiy to use the internet connection that he has. And BTW, that big bad person is put into the bittorrenting, pirating, no good club to boot by default. Who cares if he is legally playing (and purcahsing) games through steam or xbox. He is a no good scum and deserves to be beaten down! If your selling a little old lady that only checks email a $100 a month 5 Mbit connection then there is… Read more »

Scott
Scott
12 years ago
Reply to  Mike Hammett

Very few customers actually understand caps let alone what a Megabyte or Gigabyte even is when translating that from any activity done on the internet and its potential cost in overages. Even today people are still in the “AOL” phase, the internet is either “Google” or “Internet Explorer”, they’re lucky to be able to just hit the power button on the computer and get around. Then you go slap overage fees on them for things they don’t understand and tell them they can’t use the service they’re paying for because they’re using it “too much” and need to pay 20-50%… Read more »

Mike Hammett
12 years ago

If you think paying 4x for the price of broadband is highway robbery, you should really go after those real estate moguls! I can buy 38,000 acres in Montana for $7.5M, but $6.5M only gets me a third of an acre in the Chicago loop. I should be able to buy a quarter of Chicago for that price! That is roughly 94M times the difference. I can buy a gig of capacity in a Chicago datacenter for about $1k. Using the real estate ratio, that gig in that same place in Montana should cost me $94B. I assure you it… Read more »

Steve Barnes
12 years ago

You know that your arguments sound logical from the consumer mindset. The issue with that line of thinking is that it is a big government mind set. That thinking says, “I want my government to put out money so I don’t have to pay as much and get as much as I can for as little as possible”. As an entrepreneur trying to help to bring High speed wireless internet to many rural communities who have had nothing, it is a hard pill to swallow when this big government takes my tax dollars and gives it to my competitor who… Read more »

Mike Hammett
12 years ago

Anyone that doesn’t want UBB or a cap (two different things) is expecting the usage of a dedicated line. You want that 5 megabit dedicated to you 24/7. If you want dedicated service, you pay for dedicated service. If you want to circle the Nurburgring in under 7 minutes, perhaps a Dakota pickup won’t get you there. I personally give pointers as to what plan I expect will fit their needs, but ultimately it is their decision. If I recommend the 384 kb plan and she wants 5 megabit, I sure as hell will sell it to her. My lowest… Read more »

Ron Dafoe
Ron Dafoe
12 years ago
Reply to  Mike Hammett

Persoanl attacks aside – My only issue with you is about your misguided little old lady scenario. Everyone here knows that it is not true and you propably do as well. I could care less what your reasons for not taking the loans are, but don’t expect all other businesses to feel the same as you do and then go cry that it is unfair competition. If the restrictions are too much for you then that is your business decision. They may not be for others. In the end, what the article is saying is that consumers do not care.… Read more »

Mike Hammett
12 years ago

I too believe that rural WISPs need to offer plans in excess of 3 megabits for $100 or less (and do so with my own WISP). Then again, I can cost effectively build wireless links into the Chicago suburbs and pull bandwidth out.

Search This Site:

Contributions:

Recent Comments:

Your Account:

Stop the Cap!