Ann Burr, chairman and general manager of the Rochester division of Frontier Corporation, wrote a Letter to the Editor in this morning’s Democrat & Chronicle, claiming the company’s usage caps and limits were “rumors” and untrue.

Broadband usage won’t be limited

The popularity of the Internet continues to grow. Today, the average residential customer on Frontier’s network uses 1.5 gigabytes of bandwidth each month. A smaller percentage of heavy users may consume as much as 1,000 times that amount. All customers, urban and rural, should have choices based on their individual use. Beginning next year, Frontier will provide customers with tools to measure their bandwidth usage. We believe customers should be in control and pay only for the bandwidth they need. If a customer needs capacity for streaming video or simple e-mails, customers will have a choice of plans.

There are rumors that Frontier plans to limit bandwidth usage. That is not true. We do not limit or control bandwidth consumption. We believe in providing the best Internet experience with a dedicated line to each customer. Frontier customers want reliability, choice, and most of all, value for all of their Internet needs, large and small. We strive to bring innovative solutions to our customers every day.

ANN BURR
ROCHESTER

The writer is chairman and general manager, Frontier Communications of Rochester.

Burr should fully be aware her company is not the victim of some Internet rumor and smear campaign.  As StoptheCap! has documented since this summer, Frontier’s public relations crisis is one of their own making, starting with the company’s unreasonable definition of reasonable use at just 5GB per month, comparable to most mobile telephone data plans.  The company’s own acceptable use policies gave them the right to terminate accounts that exceeded their definition of reasonable use, not to mention what other costs may eventually be imposed for those that exceed that definition.

We will be publishing an expanded rebuttal to this letter here shortly.  A much more limited response may be published in the Democrat & Chronicle.  Eager readers who don’t want to wait can simply click the Frontier category and review our entire collection of reports on Frontier’s debacle and see the ever-evolving positions of this company and decide for themselves whether Frontier is the victim, or their customers are.

Comcast Implements 250GB Usage Cap Effective October 1, 2008.

Comcast CEO Brian Roberts likes his new high-tech toys, even if using them on his own cable system is now pointless.  At the January Consumer Electronics Show, Roberts demonstrated the next generation of broadband Comcast is poised to begin rolling out to consumers in the next several months.

Dubbed “wideband,” Roberts downloaded a High Definition copy of Batman Begins in less than four minutes.  Comcast’s DOCSIS 3.0 upgrade, which bonds multiple channels together to deliver broadband speeds up to 160 Megabits per second, will be able to bring Comcast customers the latest high bandwidth applications, particularly including very high quality video, in just a matter of minutes.

Designed to compete with Verizon’s FIOS fiber to the home network, Comcast’s “wideband” service will create a new paradigm for high quality video services entering the home.

Except for one thing.

A 250GB monthly usage cap.

Using Comcast’s wideband service, customers downloading movies could easily exceed the 250GB cap in less than five hours.

Even the cable industry’s trade publications like Multichannel News are now posing questions about how exactly Comcast can promote customers upgrading to wideband service when a cap of 250GB stops the fun in a matter of hours.  What MN didn’t add to the equation is the fact Verizon FIOS does not have a usage cap and has no current plans to implement one.

So exactly why would any consumer choose Comcast wideband, with a usage cap over Verizon FIOS, which leaves you alone and doesn’t threaten to terminate your service if you use more than the cable company deems appropriate?

Another issue MN touched on, but didn’t bother extending to the real issue - stifling competition:

Imagine if all your TV were delivered via the Internet. High-quality 1080i HD video at (conservatively) an average of 5 Mbps would chew up plenty of bandwidth: roughly 286 Gigabytes in a 30-day period, given that Americans watch an average of 127 hours and 15 minutes of TV per month, according to Nielsen. Cap busted!

Imagine indeed.  Imagine virtual “cable companies” delivering cable networks and broadcast TV over the Internet.  Pay your monthly bill for data from the cable company, but watch your video programming from another provider.  A 250GB cap puts an end to that business plan quite nicely, thank you.

Comcast CEO Demonstrates Wideband At Cable Show In May

By the way, a quick note to Frontier, which still thinks 5GB a month is just plenty. Pay attention to the file sizes in this video and then get back to us about why you think your customers will never come close to using 5GB a month in the coming year or two.

BREAKING NEWS: Frontier Communications has modified their position on the 5GB usage cap yet again.  Your pushback on this unjustified 5GB monthly usage cap has continued to make a real difference in getting company officials to listen to reason.

Frontier’s website has been changed again, now deleting the portions of their DSL sales pitch which used to reference “5GB” of included access per month.  Additional changes have been made to their terms and conditions pages.  Still present in Frontier’s Residential Acceptable Use Policy is the language which defines their usage cap at 5GB per month, although they don’t formally call it that.  Instead, they consider 5GB to be a “reasonable” amount of usage, and reserve the right to terminate accounts that exceed it.  However, some other language has been introduced as Frontier backs off from implementing their cap formally:

The Company has made no decision about potential charges for monthly usage in excess of 5GB.

Company officials have repeatedly said they will not penalize customers who exceed the 5GB “reasonable” level they define in their Acceptable Use Policy, which is to be commended.  But as Frontier Communications has been continually modifying their position on the cap issue in general, both in comments to reporters and on their website, customers have no guarantees what they insist today won’t be much different tomorrow.

StopTheCap! calls on Frontier to do the right thing and remove this entire “5GB” section of their Residential Acceptable Use Policy altogether.  It is this language upon which the entire 5GB usage cap debacle was built, and Frontier can show its good faith by eliminating it from their website if they truly want to put customers at ease.

We have also learned that Frontier has taken another piece of our advice: to launch a campaign to better educate and inform their customers about how bandwidth is utilized, and ways they can reduce their usage voluntarily.

StopTheCap! strongly believes that consumers are willing to review what they are doing with their Internet connections and will reduce usage voluntarily if they understood how certain applications can consume bandwidth even if they don’t seem to be running.  And it’s a win-win for customers who wonder why their Internet connection seems so slow without realizing someone in the house is running a torrent server 24/7, or has a computer infected with a virus that is churning out millions of spam e-mails without the owner even realizing it.

Treating your customers right means allowing them to take advantage of the myriad of new applications and features a broadband experience can provide, without a draconian limit on that usage.  And customers have a responsibility to better understand what they are running on their computers.

There are several additional developments about Frontier’s 5GB usage cap, and we’ll be publishing a roundup of the latest news, including your comments and what company representatives have been telling you, shortly.

This remains a developing story.

Comcast’s announcement that it would implement a usage cap of 250GB per month comes on the heels of the company’s entanglements with the Federal Communications Commission, who spanked the nation’s largest cable operator for purposely interfering with Internet traffic Comcast felt constituted a problem on its network - namely torrent traffic.

Cable operators face the evolution of cable modem service from something primarily valued by a minority of Internet enthusiasts into a “must-have” product for more and more Americans.  And with the spectacular growth of the Internet, new applications are being introduced daily that are specifically designed to take advantage of the speeds that broadband promises to provide.

Unparalleled greed means not being able to fit all of the cash we're going to make off you into just one briefcase!

Just 24 months ago, the “problem” was peer-to-peer traffic, such as file sharing networks and torrent applications.  Customers fired up their trading software and often let it run for hours on end as they attempted to grab the latest software, TV show, or movie.  File sharing software can consume an enormous amount of bandwidth, as users share files with one another, uploading and downloading pieces of a favorite TV show or movie until a complete file is assembled.  Good etiquette dictates leaving the software running even longer to help make sure everyone else in the queue can complete their download as well.

The result was a lot of traffic going in both directions.  Most networks in the United States are designed to handle people receiving more files than sending them, and file sharing software began to challenge that paradigm.

Soon enough, broadband providers began complaining that this kind of traffic was tying up their networks, designed for what company officials thought average customers would do with their Internet connection.  People consuming a lot of bandwidth downloading music or movies required operators to spend more money to expand and enhance their networks.

Ironically, the same companies complaining about file sharing created their own “problem” by marketing cable modem service as the fastest way to… download movies and music!  DSL, they said, kept you waiting for your favorite show while cable modem service guarantees your show will be ready the moment the popcorn is popped.

The earliest theories of the artificial “bandwidth crisis” offered by companies annoyed with having to keep up with the demands of their customers, suggested that file sharing traffic would be the death of the Internet as we know it, as torrent traffic completely clogged the network, consuming any and all available bandwidth.  Godzilla’s destructive powers had nothing on file sharing, which could literally create a global Internet crisis.

Comcast decided it could address the torrent traffic problem by inspecting the bits and bytes of traffic running across its network and, at certain peak times, substantially slow down the delivery of that traffic.  Their theory suggested that this would protect other customers from the neighbors eating up more than their fair share of bandwidth.  In practice, it essentially crippled the usefulness of running any torrent application.

Comcast paid people off the street to fill one FCC hearing room, keeping conscious members of the public out. (Courtesy: Free Press)

The FCC would have none of it, telling Comcast it cannot discriminate against the traffic being carried over its network.  The answer to the traffic problem was to build better roads to manage the traffic.

Instead of simply agreeing to keep up with demand, Comcast has now approached this “bandwidth crisis” from a different angle.  It has simply put a limit on the amount of traffic each subscriber can utilize on its network during a 30 day period, regardless of what that traffic represents.

Comcast’s suggested limits on bandwidth gave a number of broadband providers the idea that they, too, could slap caps on their customers.  And since the usage cap question was first raised nationally earlier this year, the suggested caps have gotten lower and lower from each subsequent company testing or implementing them.

Cox has “informal” caps of up to 75GB per month in some areas.  Time-Warner began testing caps of up to 40GB per month in Beaumont, Texas.  Frontier announced a forthcoming 5GB usage cap, which is among the lowest in the United States.  In Canada, companies have gone even lower with caps like Rogers’ 400MB monthly cap for their $60 wireless Internet plan for iPhone owners.  Canadians were so outraged by that cap, Rogers eventually had to relent and create a 6GB monthly service package for $30.

Usage capping cable and DSL providers are in a race to the bottom as they try to learn how low they can go without creating mass defections among their customers.

Some Comcast customers have told Stop the Cap! they are relieved that at least they are on the top of the usage cap pile with Comcast’s 250GB cap, which at first glance appears generous.  In fact, only a small minority of their customers will currently exceed that kind of usage cap.

But regardless of how generous a usage cap appears, it still raises a lot of questions.

1. If informal efforts to control “bandwidth hogs” have been so successful, why bother with a cap at all?

For several years, Comcast has informally enforced its own internal interpretation of a usage cap with customers who consumed incredible amounts of bandwidth, usually as a result of running a home-based torrent/peer-to-peer file server, web server, or other application that runs contrary to the residential acceptable use policy.  Company officials send warnings to customers who consume hundreds of gigabytes of bandwidth every month.  Comcast’s own public statements indicate such warnings are usually successful.

“We know from experience the vast majority of customers we ask to curb usage do so voluntarily,” Comcast notes on their website.

So why bother the 99% of the rest of your customers with a formal usage cap if they don’t come anywhere close to exceeding it?  It’s awfully hard to convince people of a broadband bandwidth crisis if you also claim the overwhelming majority of your customers consume less than 5% of your proposed cap!

2. While most people won’t come close to 250GB of usage, unless they are backing up their files through an online backup service or are downloading a very large number of files, the usage cap that seems generous today is draconian tomorrow.

This little piggy says you've used enough Internet for this month!

The biggest problem usage caps bring to the table is the artificial drag they create on innovation.  In the global race to be leaders in the emerging Internet economy, the United States was in a strong position to lead the world in high bandwidth next generation applications like streamed high definition video programming, store-and-forward video on demand and Tivo-like recording, storing TV shows online and delivering them to you on demand, online file backup services, high quality video teleconferencing, new “cable-TV”-like services over broadband which compete with cable and satellite providers, and more applications yet to be dreamed up.

Just ten years ago, when most cable modem service began to really get off the ground, the Internet of the late 1990s was very different from the Internet of today.  A usage cap based on what customers did then would likely be under one gigabyte a month, as users satisfied themselves with low bitrate RealAudio streams, slideshow-like online video, and a World Wide Web considered primitive by today’s standards.

As broadband Internet became established in a growing number of consumers’ homes, the applications to take advantage of the increased bandwidth followed.  Voice Over IP telephone services, high quality streamed audio and video, and online file storage would never have been developed based on the Internet of the late 90s, and would never have gotten off the ground in a world with usage caps.

High definition streaming video consumes many gigabytes per hour.  It’s among the very first exciting applications being made available to consumers with broadband connections, but will die an early death if usage caps are the order of the day.

3. Usage caps are anti-competitive and convenient, particularly as those who mandate them have a direct interest in limiting the potential of competitors that exist today or cannot get start-up funding tomorrow.

Usage caps actually do nothing to solve the “bandwidth crisis” the cable and DSL companies suggest are on the verge of killing the Internet.  They merely restrict the natural growth of traffic, allowing companies to pocket higher profits and spend less on expanding and enhancing their networks.

Sky Angel, a "cable"-like system for Christian households, delivers more than 65 channels over broadband. How can they survive usage caps?

More importantly, cable companies conveniently put a stop to plans to bring competing multichannel video packages to consumers over the Internet.  The “cable company online” model exists today with providers like SkyAngel, which delivers Christian and secular “pro-family” programming to its customers over a set top box connected to the Internet.  More than 65 channels ranging from TBN to Animal Planet and The Weather Channel reach their customers over broadband for a monthly subscription fee.  SkyAngel’s service is in peril in a world with usage caps that will limit viewing to as little as a few hours per month before exceeding usage caps.

Netflix and some satellite dish companies offer video on demand programming utilizing the Internet to deliver the programming to subscribers.  In a world with usage caps, you will be stuck watching those programs only from your cable company or local video rental store.

Future businesses that seek start-up funding to build the high bandwidth applications of the future will get a guaranteed rejection once potential investors learn that consumers will be unable to take advantage of those applications because they will exceed their usage caps and have their service shut off.

Of course, the convenient exception to the usage cap world comes from companies that partner with that cable or DSL company.

Frontier has already announced it will exempt its partners from their 5GB usage cap.  ESPN360 and their online backup service preferred partner will enjoy the benefits of an uneven playing field in the marketplace because they aren’t subject to a usage cap.  Everyone else is.

What about Time-Warner and Comcast?  Will their partner services also enjoy exemptions from usage caps while everyone else is forced out of business when customers discover that using them puts them over their monthly limit?

What about Voice Over IP?  Cable companies are giving telephone companies a real headache by offering telephone service over cable lines at highly competitive pricing.  But independent companies like Vonage and MagicJack don’t enjoy the benefit of being exempted from usage caps limiting the number of calls you can make or receive.  If you are owned or are partnered with a cable or DSL company, your service gets a free pass from the usage cap.  Everyone else is potentially buried by it.

4. The punitive measures suggested for those that violate usage caps scare customers into using their connections even less, to the great benefit of the bottom line of the broadband provider.

What’s the best way to make sure your customers use their connections as little as possible?  Impose outrageous penalties for exceeding usage caps.  Comcast proposes to send a warning letter first, but then potentially turn off a customer’s service for six months to an entire year if they dare to use their broadband service more than the company wants.

Other providers have discovered the tangible benefits of the “penalty rate.”  It guarantees striking fear into the hearts of your most hearty customers, when to exceed the cap means paying 50 cents per MEGABYTE for traffic above and beyond your capped limit, as Rogers charges Canadians right now.

Download that one hour episode of CSI: Miami, and pay up to $175 in penalties on your next bill.  Ouch!  Imagine the conversation at that family’s dinner table after your son or daughter downloaded a TV show before you had a chance to tell them you were at your monthly limit.  Horatio Caine can then come and solve the homicide at your house.

It all comes down to paying the same or more money for less service.  And if you are potentially going to have your service cut off or outrageous overage fees billed for exceeding that cap, you will make darn sure you don’t even come close to it out of fear of exceeding it.

Being in the “bandwidth shortage business” means more profits for you, less service for your customers.

The best part about imposing usage caps is that you get to invent word of a “bandwidth crisis” to justify penalizing your customers, provide absolutely no independent evidence to prove such a crisis exists, reduce your investment in keeping your network up with the times, and help protect your product lines from pesky competition. 

After all, your cable modem or DSL service was among your most profitable products before usage caps were even proposed, but now you can make even more money.  And if a competitor ever does arrive without usage caps, you can just drop them and go back to making a decent profit instead of one that rivals the oil industry.

Comcast, the nation’s largest cable broadband provider, has announced it will begin limiting customers to 250GB of usage per month on their cable modem service.  Company officials claim less than 1% of their customers consume “excessive bandwidth,” and a 250GB cap explicitly defines what constitutes excessive use.

Comcast Implements 250GB Usage Cap Effective October 1, 2008.

250 GB/month is an extremely large amount of data, much more than a typical residential customer uses on a monthly basis. Currently, the median monthly data usage by our residential customers is approximately 2 - 3 GB. To put 250 GB of monthly usage in perspective, a customer would have to do any one of the following:

* Send 50 million emails (at 0.05 KB/email)
* Download 62,500 songs (at 4 MB/song)
* Download 125 standard-definition movies (at 2 GB/movie)
* Upload 25,000 hi-resolution digital photos (at 10 MB/photo)

Users who exceed the cap will first receive a warning, followed by account suspension for six months to a year if they rate among the heaviest users of their Internet service.  At this time, no extra bandwidth will be sold by Comcast.  The company has traditionally asked very heavy users to upgrade to a business account, available at a substantially higher cost.

The company has suggested the implementation of usage caps will provide better and more consistent speeds to their customers, blaming a small minority of customers for consuming a huge amount of bandwidth.

A death in the family has kept me away from adding new articles during the past week, but coverage of several important stories, including the Comcast usage cap and some updates on other providers’ plans, as well as more on the Frontier matter, will be forthcoming shortly.

I appreciate your understanding for the delay.  I will be adding additional editors and writers to Stop the Cap! in September to increase our coverage and frequency of reports.

Stay tuned!

Reuters reported this week that a wave of consolidation in the rural telephone marketplace is about to begin as telephone companies fight continued declines in the telephone access line business.

The biggest target for a takeover?  “Frontier Communications,” says Stanford Group analyst Michael Nelson. “They’re really the only one that would move the needle significantly,” he said.

Frontier targeted for takeover?

Frontier, based in Stamford, Connecticut, is the nation’s fourth largest independent largely-rural telephone company, with 2.3 million telephone lines.

In the market for merger opportunities, and speculated to be looking closely at Frontier, is Little Rock, Arkansas-based Windstream Communications.  Windstream, the nation’s second largest rural telephone company, announced it was aggressively interested in pursuing merger opportunities.

Little Rock-based Windstream Communications seen as likely suitor for Frontier Communications

Windstream’s takeover of Frontier is seen by some industry observers as practically a done deal. 

Nelson sees a Frontier deal in about six months, costing Windstream $9 billion, including the assumption of about $4.6 billion in debt.

Big deals that maximize cost savings would make sense for Windstream, according to Jefferies analyst Jonathan Levine, who said closing even small deals require a lot of money and time as they involve reviews from the regulators of each state where the target companies have operations.

“I think they’re going to probably look at some of the larger players,” Levine told the Reuters wire service.

Windstream's Broadband Promotional Pricing for 12 Months

Such a merger would likely leave Windstream in charge of the merged company.  Windstream has aggressively deployed broadband DSL services into their rural service areas, with speeds dependent on the infrastructure available in different areas.

Windstream has no plans to implement usage caps on broadband customers at this time, nor does it charge customers for company-supplied modems.  It is too early to speculate about the impact a merger would have on existing Frontier employees.  Windstream already provides customer and technical support from call centers in India and Georgia and has a track record of eliminating or reducing staff at call centers formerly run by its acquisition targets.

Windstream's coverage area, providing local phone service in 16 states

Windstream was created primarily from the old Alltel network of local telephone companies, mixing in customers from VALOR/GTE Southwest, GTE Georgia, Standard Group, Aliant, and CT Communications.  From a series of acquisitions, it rebranded itself as Windstream Corporation in 2006, dropping the Alltel name.

Consolidation is expected to become a growing factor in the independent telephone company marketplace, as companies face significant challenges from cable systems and wireless phone companies.

The nation’s number three independent telephone company, CenturyTel of Monroe, Louisiana, may also be interested in Frontier, and could spark a bidding war for Frontier’s assets.  CenturyTel is also reportedly looking at Iowa Telecom or Consolidated Communications as potential merger targets.

Only one independent telephone company, the nation’s largest, Embarq, spun off by Sprint-Nextel, is not likely to be in a position to begin a shopping spree.  Analysts report the company’s poorly positioned to embark on a merger adventure because of the company’s perceived lower value.  Analysts have urged Embarq to begin cost-cutting and improve earnings.

Frontier Communications stock has been progressively increasing in value since merger speculation began.  The company is currently trading at 12.72 per share.

Frontier to limit Internet usage

By Tom Grace
Cooperstown News Bureau
The Daily Star (8/16/08) 

Beware, downloaders: Frontier Communication Inc. plans to meter your Internet usage.

Company spokeswoman Karen Miller said Friday that the telecommunication firm plans to limit its customers’ free Internet usage to five gigabytes a month in 2009.

If you download more, you’ll pay more.

“As it stands now, five gigabytes will be free and there will be a tiered system for those who use more,” she said.

Miller said the company, which has many customers in Chenango County, is going to charge for usage “to make the heavy users pay their fair share.”

Asked if five gigabytes a month made one a “heavy user,” Miller said, “Our customers, on average, use 1.5 gigabytes a month.”

Those who use the Internet a lot are a source of concern because they force the company to spend money on its infrastructure to expand its capabilities, she said.

Frontier, a communications giant that operates in 24 states, is now notifying its customers of the coming change: Paying by the gigabyte.

One such customer is Elizabeth Ramsey of Treadwell, who has opted to drop Frontier’s DSL service in protest.

“Five gigabytes is ridiculous; it’s really a backdoor way of ending ‘Net Neutrality,”’ said Ramsey, a retired Time Warner employee.

Ramsey, who has no television, likes to use her computer to watch movies downloaded from the Internet.

“With five gigabytes, they’re limiting you to watching four two-hour movies a month,” she said. “And then, they’re going to charge you more, even though you’re already paying $88 a month for phone and Internet?”

Ramsey said she’s decided to downgrade to dial-up service and get her classic movies another way until the company relents and maintains the value of its DSL service.

The issue of limiting free Internet usage by American Internet service providers has led to the formation of consumers’ groups such as Stop The Cap, at www.Stopthecap.com, and international media coverage.

Read more…

It has been quiet here the last few days as work continues on our expanded Resources section.  Some sample Letters to the Editor are online already, but additional writing is underway to help people do more than just read about usage caps, but also fight them.  Keep an eye out for developments.

I am also contacting many of those who have written in who want to get more actively involved in fighting the cap issue, in addition to joining a team of writers to post articles, news, and links to other stories on this issue.  We welcome anyone who wants to help join the fight.  Just use the Contact form or reply with a Comment and I’ll be in touch.

Some important articles are in the works on the issue of usage caps, including at least one major wire service report which should land in newspapers around the country which should appear in the next few days.