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Charter CEO Admits You May Be Sharing Your Internet Connection With 499 Neighbors

The average Charter/Spectrum customer shares their internet connection with up to 499 of their neighbors, according to an admission made today by Charter Communications CEO Thomas Rutledge.

“Our average node size is around 500 homes,” Rutledge told investors on a morning conference call.

According to a lawsuit filed by the New York State Attorney General Eric Schneiderman, from about 2012, Spectrum-TWC’s network across New York typically provided about 304Mbps (8 x 38Mbps channels) of bandwidth to be shared among all the subscribers in a service group. In some areas, this would mean that 300 customers in a node would have around 1Mbps of bandwidth to use if all 300 subscribers used the internet at the same time. Time Warner Cable had begun expanding bandwidth on DOCSIS nodes to 16 channels at the time Charter Communications acquired the company, giving customers shared bandwidth of about 608Mbps.

Remarkably, Rutledge’s admission suggests some Charter customers may be serviced by DOCSIS nodes even more populated than the ones in New York State that regularly failed to deliver advertised internet speeds and prompted the Attorney General to file a lawsuit against Charter.

New York’s lawsuit claimed as of February 2016, the average Time Warner Cable customer in the state shared their connection with about 340 other customers. Information obtained from Time Warner Cable found some nodes with as few as 32 subscribers while the most overcongested had as many as 621 subscribers.

Rutledge’s comments this morning suggest Charter/Spectrum customers may be sharing their connection with up to 499 of their neighbors, making them more likely to experience congestion potentially worse than experienced with Time Warner Cable. Standard internet service from Charter is also much faster than Time Warner Cable’s corresponding Standard plan — 60Mbps vs. 15Mbps, which has the potential to lead to even worse slowdowns if customers use their internet connections at the same time.

Rutledge defended the average node size by claiming Charter has a lot of fiber in its network.

“And we have the ability to take that fiber deeper,” Rutledge said. “We have the ability incrementally to take the network to a passive network and to do that at reasonably efficient capital cost through time and to do that in very targeted ways where we need the capacity. So we’re very comfortable with the extensibility of our network and the ability to put high capacity anywhere in our network.”

Rutledge said node expansions take place through a “market demand driven sort of process.”

“There are bunch of ways you can manage capacity on our network,” Rutledge explained. “We can do what are called virtual node splits. If you clear analog spectrum and go all-digital, [that can create] excess capacity in your network, and [if] you have demand to put more capacity in a node, there [are] two ways of doing it. One way is to physically split a node into a smaller node, which requires the placing of an electronic device in the field, and maybe the extension of some fiber. It depends on how the architecture of that is structured, but it’s relatively inexpensive on a grand scale capital perspective, but a lot more expensive than a digital or virtual node split. And you can do those if you have channel capacity by just recreating additional DOCSIS paths to create a virtual node essentially. And so we manage our network for the future based on the actual load on the network as opposed to some theoretical issue.”

AT&T Follows Verizon Back to Optional Unlimited Data Plans for All Starting Tomorrow: $100/Mo

Unlimited data is back.

AT&T has followed Verizon Wireless back the era of unlimited data plans, starting tomorrow.

The AT&T Unlimited plan will be available to all customers, not just those signed up with DirecTV, and will be expensive. A single line unlimited voice, text, and data plan will reportedly cost $100 a month. Customers switching four lines to unlimited data will pay $180 after a $40 bill credit kicks in 60 days after signing up. This means for the first two months, customers will pay $220 for the privilege of unlimited data.

The new plan is open to residential and business/corporate accounts and business customers will also get the benefit of any corporate discounts.

AT&T’s definition of “unlimited” actually means 22GB. If you exceed that amount, AT&T reserves the right to slow your data connection “during periods of network congestion.”

The plan includes:

  • unlimited calls from the U.S. to Canada and Mexico
  • unlimited texts to over 120 countries
  • talk, text and use data in Canada and Mexico with no roaming charges when adding the free Roam North America feature
  • the ability to switch off AT&T’s “Stream Saver” which limits online video playback to 480p

“We’re always listening to our customers and will continue to evolve to provide more choice, more convenience, and more value,” claims AT&T in a press release. But observers believe AT&T listens to the competitive realities of the marketplace more than its customers who never wanted to lose the option of unlimited data in the first place.

 

The Return of the Verizon Wireless Unlimited Data Plan Provokes Wall Street Anxiety

The days of wine and roses from wireless data profits may be at risk, according to some Wall Street analysts, after Verizon Wireless on Monday brought back an unlimited data plan it vowed was dead for good in 2011.

The “Cadillac” wireless network reintroduced unlimited data, phone, and texting this week at prices that vary according to the number of lines on your account:

  • $80 a month for one line
  • $70 a line for two lines
  • $54 a line for three lines
  • $45 a line for four lines

Verizon Wireless last enrolled customers in its old unlimited data plan in 2011, and a dwindling number of customers remain grandfathered on that plan, which began increasing in price last year and has since been restricted to no more than 200GB of “unlimited” usage in a month.

Verizon’s new unlimited data plan is a response to pressure from increasing competition, especially from T-Mobile and Sprint. All of Verizon’s national competitors have unlimited data plans with varying restrictions, and Verizon’s lack of one is likely to have cost it new customer signups last year. The company only managed to add 2.3 million postpaid customers in 2016, down from 4.5 million signed up in 2015.

CEO McAdam swore unlimited data was dead at Verizon

Causing the most irritation is T-Mobile, which near-constantly nips at Verizon’s heels with innovative and disruptive plans designed to challenge Verizon’s business model. BTIG Research analyst Walter Piecyk noted Verizon’s claims it does not need to respond to T-Mobile’s marketing harassment just don’t ring true any longer.

“Verizon has a long history of rebuffing T-Mobile’s competitive moves as non-economic or unlikely to have an impact on the industry for more than a quarter or two, only to later replicate the offer,” Piecyk said. “That was true for phone payment plans, ETF payments for switchers, overage etc. We can now add unlimited to that list. How long will it be until Verizon offers pricing that includes taxes? Despite those delayed competitive responses, T-Mobile has maintained industry leading growth while Verizon’s has declined.”

Piecyk believes Verizon Wireless rushed their unlimited data plan into the marketplace and its introduction seemed not well planned.

“We asked Verizon what has changed to explain such an abrupt reversal, but have yet to receive a response,” Piecyk said. “They had recently been running an advertisement promoting the 5GB rate plan that argued why customers do not need unlimited. The rate plan remains, but it is not clear if the advertisement will. The launch of unlimited seemed rushed, coming a week after the exposure they could have secured with a Super Bowl advertisement. The ad run last night during the Grammy’s did not appear to have taken much to produce.”

Verizon Wireless executives have argued for years customers don’t need unlimited data plans and Verizon would no longer offer one:

  • With unlimited, it’s the physics that breaks it. If you allow unlimited usage, you just run out of gas. — Lowell McAdam, Verizon CEO (September, 2013)
  • At this point, we are not going to entertain unlimited. Promotions come and go. We can’t react to everything in the marketplace.” — Fran Shammo, former Verizon CFO (January, 2016)
  • “I’ve been pretty public saying the unlimited model does not work in an LTE environment. Unlimited is a very short-term game in the LTE market. Eventually unlimited is going to go away because you have to generate cash to reinvest.” — Fran Shammo, former Verizon CFO (March, 2016)
  • Unlimited data plans were “not something we feel the need to do.” — Matthew Ellis, Verizon CFO (January, 2017)

Shammo: Unlimited doesn’t work on LTE networks.

The impact of not having an unlimited data plan appears to have convinced Verizon to change its mind, and that comes as no surprise to Roger Entner of Recon Analytics.

“In three to five years, unlimited plans will come back,” Entner predicted in 2011. He claimed back then wireless carriers were initially unsure how to predict data usage growth on their networks and placing limits on usage gave carriers more predictable upgrade schedules. But after several years of data, Entner said carriers can now better predict the amount of data an average subscriber will use in a month, giving them confidence to remove the caps.

Verizon Wireless’ unlimited plan includes several fine print limitations that provide additional network protection for Verizon and manage any surprise usage:

  • Unlimited use is only provided on Verizon’s 4G LTE network. Limits may apply to customers using older 3G networks, which are less efficient managing traffic;
  • Unlimited not available to Machine-to-Machine Services;
  • Customers with unlimited data plans may find their traffic deprioritized on congested cell sites after 22GB of data consumption during a billing cycle. This speed throttle can reduce network speeds to near-dial up in some circumstances, at least until site congestion eases;
  • Mobile hotspot tethering on this unlimited plan is limited to 10GB per month on Verizon’s 4G LTE network. Additional usage will be provided at 3G speeds. This is designed to discourage customers from using Verizon Wireless as a home broadband replacement;
  • Verizon’s ultimate 200GB monthly limit is also presumably still in place. If you exceed it on Verizon’s legacy unlimited data plan, you were told to shift to a tiered data plan or had your account closed.

Piecyk thinks Verizon’s unlimited data plan may have been rushed out.

Although consumers clamoring for an unlimited data plan from Verizon are happy, Wall Street is not. Analysts are generally opposed to Verizon’s return to unlimited, with many suggesting it is clear evidence the days of high profits and predictable revenue growth are over. That is especially bad news for AT&T and Verizon Wireless, where investors expect predictable and aggressive returns. Verizon has already warned investors it expects revenue and profits to be flat this year.

Jeffrey Kvaal with Instinet believes Verizon’s traditionally robust network coverage is no longer an advantage as competitors catch up and unlimited data is the final nail in the coffin for wireless revenue growth. That means only one thing to Kvaal, AT&T and Verizon must pursue growth outside of the wireless industry. Verizon, in particular, is facing investor expectations it will do something bold in 2017, such as making a large acquisition like a major cable operator.

Evercore ISI’s Vijay Jayant believes unlimited data is bad news for all carriers from the perspective of investors looking for revenue growth.  Jayant told investors in the short term, unlimited data may help Verizon’s revenue because the plans are expensive, but in the long run Verizon is sacrificing the revenue potential of monetizing growing data usage in return for a high-priced, flat rate option. That guarantees “customers won’t see their bills rise, even as their usage does,” Jayant said.

Some analysts point out Verizon’s unlimited data plan is expensive, limiting its potential attractiveness to customers considering jumping to another carrier. While Verizon charges between $80-180 (for one to four devices), AT&T charges between $100-180 for unlimited plan customers, who must also sign up with DirecTV to get an unlimited data plan. T-Mobile charges between $70-160 and Sprint charges between $60-160. The cheapest is T-Mobile, because its plans are all-taxes/fees inclusive. All four carriers have soft limits after which customers may be exposed to a speed throttle. AT&T can temporarily throttle users at 22GB, Sprint can throttle above 23GB and T-Mobile after 28GB.

The Wall Street Journal discusses Verizon’s unlimited data plan and its caveats. (4:55)

Time Warner Cable’s Secret Scheme to Fool FCC’s Broadband Speed Measurement Program

This is part two of a multi-part series examining Time Warner Cable’s internal documents, made partly public as a result of a lawsuit filed by the New York Attorney General. You can read part one here.

In the summer of 2014, Time Warner Cable had a problem. For three years, the Federal Communications Commission had been issuing reports about the quality of broadband service from the nation’s largest internet service providers. The raw data collected by about 800 subscribers of Time Warner Cable who volunteered to participate in the project began to worry executives because it showed their broadband service was oversold in certain large cities and was no longer capable of consistently achieving advertised speeds. Even worse, the company’s congestion problems threatened to lower Time Warner Cable’s internet performance score at the FCC.

Sam Knows (but so does Time Warner Cable): The Not-So-Independent, Not-So-Confidential FCC Speed Test Program

The FCC commissioned a private company – Sam Knows – to distribute modified internet routers to gather data about the internet connections of thousands of volunteers and shared the results with the FCC to incorporate into its Measuring Broadband America program. After the FCC issued its first report in 2011, providers quickly learned the consequences of overpromising and underdelivering when Cablevision was called out for dramatically overselling its broadband service and not delivering the speeds customers paid to receive. While Cablevision executives publicly attacked the FCC speed test program as unreliable and wrong, they also quietly opened the company’s checkbook and spent millions quickly upgrading their facilities. The metric they failed to achieve was the FCC’s 80/80 test: “speed that at least 80% of the subscribers experience at least 80% of the time over peak periods.”

Here is what broadband performance on an oversold broadband service looks like. Notice Cablevision’s 2011 speed ranking plummets during peak usage periods when too many customers are sharing too little available bandwidth.

The incident embarrassed and damaged Cablevision’s reputation, and no cable operator wanted to be the next highlighted company for a public spanking by the FCC.

Time Warner Cable’s “Slow-Motion Train Wreck”

In 2013, a Time Warner Cable executive recognized the company’s practice of limiting company-financed expansion of their upstream connections with the rest of the internet would have serious implications for their own speed test scores, because customers were encountering nightly slowdowns on popular websites like YouTube caused by overcongested connections. Company executives feared customers participating in the Sam Knows/FCC program would soon reveal Time Warner Cable’s internet speeds were beginning to suffer some of the same peak usage problems Cablevision was encountering in 2011. The executive’s solution? Temporarily expand upstream connections just long enough to protect Time Warner Cable’s broadband speed scores:

“Our Sam Knows scores are like watching a slow-motion train wreck. We need to get in front of this. One thing I think we may need to be prepared to do is just give more ports to Cogent during sweeps month [when FCC results are measured for purposes of the MBA report]. We don’t have to make any promises, we just have to make it work temporarily.”

But even tricks like that failed to help Time Warner Cable’s speed scores in New York City, where serious congestion problems were obvious, even as late as last year:



The lawsuit filed by New York’s Attorney General revealed that FCC panelists in New York were getting speeds consistently well below the speeds they paid for, especially those paying for premium speeds:

FCC/Sam Knows Time Warner Cable Maxx Panelists in New York Speed Test Reports:

100Mbps subscribers received 73-87% of advertised speed (<80% advertised speed over six month period)
200Mbps subscribers received 49-58% of advertised speed (<60% advertised speed over six month period)
300Mbps subscribers received 33-52% of advertised speed (<38-74% advertised speed over six month period)

Speed test results showed consistent speed deficiencies between 2013-2016 occuring for many reasons, according to the lawsuit, including customers using outdated, company-supplied cable modems insufficient to support the customer’s speed plan, chronically oversold neighborhood groups that Time Warner Cable did not split or upgrade with additional capacity, and inadequate upstream/backbone connections to properly deliver content originating outside of Time Warner Cable’s own broadband network.

Overprovisioning Your Broadband Speed = “Putting Lipstick on a Pig”

We subscribe to 50/5Mbps service but receive closer to 62/6Mbps because Spectrum/Time Warner Cable overprovisions our service.

Instead of investing adequately in network upgrades and node splits, a July 7, 2014 internal email from Time Warner Cable’s former head of corporate strategy told senior colleagues the best way out of this dilemma was to cheat on the FCC broadband tests:

“We recommend increasing over-provisioning our modem speeds to around 20% to drive our Sam Knows scores >100% and then to market that we deliver more than promised speeds.”

In plain English, Time Warner Cable boosted the maximum allowed speed of each customer by about 20%. As a result, during non-peak usage times customers would find, for example, a plan advertising 50/5Mbps speed now delivered around 60/6Mbps. Although some customers considered overprovisioning a hidden free upgrade, Time Warner Cable’s motives were not altruistic. Because the Sam Knows testing program averages scores received from periodic testing, Time Warner Cable padded the results with higher-than-advertised speeds when their network was not congested, which compensated for the slower speeds and worse performance customers were getting during peak usage times. The lawsuit also alleges the practice helped to hide the abundance of obsolete rented cable modems still in use across Time Warner Cable’s broadband network.

The strategy worked to boost Time Warner Cable’s scores, but only as far as the FCC was concerned. Some customers were still finding their visits to YouTube, Netflix, and other websites littered with buffering problems and degraded resolution videos just about every evening. In 2013, before Time Warner Cable went ahead with its overprovisioning plan, the company’s own network engineers called the practice putting “lipstick on a pig.”

The Attorney General had its own analogy:

Using the highway analogy, Spectrum-TWC’s overprovisioning strategy amounts to allowing cars to go faster than the posted speed limit at certain times to compensate for the fact that often the highway slowed to a crawl. Boosting the average results with outlier results masked the enormous frustration for most subscribers stuck in traffic.

Breaking the FCC’s Rules

The lawsuit also alleges Time Warner Cable broke its own commitment to the FCC in the Code of Conduct it signed as a participant in the FCC’s testing program.

The FCC’s Code of Conduct required Spectrum-TWC to “at all times act in good faith” and not do anything “if the intended consequence of such act or omission is to enhance, degrade or tamper with the results of any test.” Specifically, the Code of Conduct prohibited the company from “modifying or improving services delivered to any class of subscribers” that was not “consistent with normal business practices.”

Stop the Cap! has also learned Time Warner Cable was able to identify each participant of the FCC/Sam Knows Time Warner Cable panel. This allowed the cable company to secretly verify the line quality and equipment in use by each participant, and give extra attention to those customers/volunteers to make sure service was performing as well as possible. In fact, executives instructed customer service representatives to assign FCC panelists “VIP treatment” and “best in class devices” when swapping modems, even as the company continued to supply deficient equipment to other customers who were not FCC panelists.

Still to Come: Playing games with online gamers, company officials tell the truth about bandwidth costs and Net Neutrality, and more….

Cox Feels Safe Expanding Its Usage Cap Ripoff Scheme That ‘Affects Almost Nobody’

In an effort to keep up with Comcast, Cox Communications has quietly expanded its internet overcharging scheme to customers in Arkansas, Connecticut, Kansas, Omaha, Neb, and Sun Valley, Ida. (perhaps the only community that can afford Cox’s threatened overlimit fees). Cox’s customers have noticed and told DSL Reports about the forthcoming highway robbery.

These unlucky customers join those in Cleveland, Oh., Florida and Georgia who have already been enduring Cox’s usage cap and penalty fee system.

Cox hasn’t shown any interest in listening to customers who do not appreciate usage allowances and have repeatedly told the company they want unlimited access, especially considering how much they already pay Cox for service.

“It’s a total ripoff and customers have no option to keep unlimited, unless they move to the next city over where Charter/Spectrum offers internet access without any data caps,” notes Cleveland resident Shelly Adams.

Cox has followed Comcast by boosting most usage allowances given to customers to 1TB, an amount many believe was set high enough to avoid threatened regulatory scrutiny of stingy data caps by the FCC under the former Obama Administration.

As with every provider that has ever conjured up an internet overcharging scheme, no matter what the allowance is, the company always claims it is generous and impacts almost nobody. Cox claims 99% of their customers will never hit the cap, which always begs the question, if it affects so few customers why spend time, money and energy creating a data cap, usage measurement tools, and billing scheme for only a handful of customers? Is that Cox’s idea of innovation?

Usage caps for one and all.

In fact, Comcast has claimed the same thing, but their math came into question when more than 13,000 Comcast customers managed to stumble their way to the FCC’s complaints bureau in one year and write a formal protest about Comcast’s own overlimit fee scheme. We are certain there are many more customers with overlimit fees on their bills than that, and guess only a small fraction took the time to write a complaint and submit it.

As Stop the Cap! has said for almost a decade, beware of cable company “generosity” because it usually comes with fine print.

“Cox High Speed Internet packages include 1 TB (1,024 GB) of data to provide you with plenty of freedom to stream, surf, download, and share,” the company writes on its support website (its much rarer Gigablast gigabit plan includes 2TB). For now, if you use Cox Wi-Fi or CableWiFi hotspots, usage on those networks does not count toward your data plan.

Cox reserves itself some extra freedoms, such as automatically charging customers who exceed their allowance a $10 overlimit penalty for each 50GB of usage they incur until the next billing cycle begins. Cox’s generosity ends with the unused portion of your allowance, which Cox keeps for itself, not allowing customers to roll over unused data to the following month.

In an effort to get customers to accept the scheme, Cox calls it a “data plan,” similar to what wireless customers might pay, and says other companies have data caps too. But none of this justifies the practice.

You’re over our arbitrary usage limit!

In another “generous” move, Cox is offering a grace period for two consecutive bill cycles before it slaps overlimit penalties on customer bills for real in Arkansas, Connecticut, Kansas, Omaha, and Sun Valley. The grace period window begins with bills dated on or after Feb. 20, 2017. To make sure you get the message, the company will bill you the overlimit fee it claims almost nobody will ever pay along with a corresponding grace period credit for two months, just to put the scare in you. After May 22, it is time to pay up.

Cox will make sure you can’t claim you “didn’t know” you ran through your allowance by harassing you with data usage messages via Cox browser alert, email, text message, or an automated outbound call when you have used about 85% and 100% of your monthly data plan. You will receive additional alerts when you have reached 125% of your monthly data plan, at which point Cox will throw a party in your honor with thanks for allowing them to run up your bill.

Coincidentally, Cox isn’t testing their scheme in markets rife with competition from providers like Verizon FiOS, where usage is effectively unlimited. In many of Cox’s usage-capped markets, customers have AT&T as their alternative, and they have a 1TB usage allowance as well.

Incoming FCC chairman Ajit Pai is on record opposing any involvement in regulating usage-based pricing schemes, claiming it amounted to government meddling in business. But customers can complain directly to Cox and threaten to cancel service. It may be a good time to renegotiate your cable bill to win discounts that may help cover any overlimit fees that do make it to your bill.

There remains little, if any justification for a company like Cox to peddle data plans with usage allowances to their customers. The company is moving towards gigabit broadband speeds but apparently lacks the resources to manage customers that want a hassle-free unlimited experience? If Cox is being honest about how few customers will ever be affected by the cap, there is no reason the company cannot continue an unlimited plan at current prices.

Cox’s scheme does shine light on the uncompetitive broadband marketplace that continues to afflict this country. As one reader pointed out, customers are constrained by the offerings of whatever provider has set up shop in a city that typically has, at best, one other choice (usually a phone company selling DSL or up to 24Mbps U-verse). A truly competitive market would give customers a wide choice of “data plans” that include unlimited plans customers enjoyed for years and want to keep. But safe in their broadband duopoly, cable companies like Cox have no incentive to treat customers to a better or even fair deal.

The real reason for usage caps and data plans with penalty pricing was exposed by Wall Street analysts like Jonathan Chaplin, a research analyst for New Street Research LLP. Although he was speaking to a cable company executive at the time, his words traveled to our ears as well:

“Our analysis suggests that broadband as a product is underpriced,” Chaplin said. new street research“Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment).”

“The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business,” Chaplin added. “Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

Exactly.

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