Hultquist

Hank Hultquist, AT&T’s federal regulatory vice president, is taking questions on broadband Internet policy in an upcoming Washington Post piece.

Here is your chance to question AT&T about broadband issues ranging from Internet Overcharging schemes like usage caps and rationing experiments, Net Neutrality, U-verse and DSL broadband expansion, and AT&T’s involvement in the public policy arena.

AT&T is currently seeking major changes to the $8 billion Universal Service Fund that helps subsidize phone service for rural Americans.  AT&T wants to see that fund expanded to subsidize broadband improvements, which will directly benefit AT&T as it is among the top recipients of USF funds.  With 16 million current broadband customers and a service area that extends into the often-rural midwest and southern parts of the country, AT&T could receive a windfall in federal funds to pay for broadband service it doesn’t provide many areas today.

But what kind of broadband service will AT&T offer?  The company recently concluded a trial limiting use of its AT&T DSL service to customers in Beaumont, Tex., and Reno, Nev.  AT&T claims it is currently analyzing the results of that trial, and could bring usage limits on all of its customers.  Feel free to pose your own questions in the comments section of the Washington Post article (reg required) or sending an e-mail to Cecilia Kang (kangc@washpost.com) no later than Friday morning.

Scott Cleland, who runs the dollar-a-holler, broadband-industry funded astroturf group Net Competition already has his question in:

Shouldn’t those broadband Internet users (consumers or big businesses), who use the most bandwidth and benefit the most from faster more ubiquitous broadband, contribute relatively more to the Universal Service fund than those consumers and businesses that use much less bandwidth? Isn’t that the basic fairness principle that has long undergirded the current Universal Service fund, which is based on long distance usage/minutes?

Scott Cleland
Chairman, NetCompetition.org an eforum supported by broadband interests

Do you want to pay the higher broadband bills that Cleland advocates?

Kang promises to include as many of your questions as possible and post the Q&A early next week.

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Dingell

Rep. John Dingell has told FCC Chairman Julius Genachowski to drop broadband reform because the Michigan Democrat has not received a detailed reply to his letter about the matter sent back in May.  The Hill reports Dingell doesn’t like to be kept waiting for responses to his “Dingell-grams.”

“I find it wholly frustrating that Chairman Genachowski, after nearly two months, still has not responded to my questions about the classification of broadband Internet access services,” Dingell said in his letter.

Dingell added that he has “serious concerns about the FCC’s proposed course of action” and that Congress has “intense interest” in Genachowski’s plans.

In his May letter, Dingell had said he doubts Genachowski’s plan despite his support for network neutrality rules, which the FCC hopes to enact under the authority it would gain through its administrative maneuver.

“I feel Chairman Genachowski’s responses to my questions would be invaluable in informing the debate on the matter,” Dingell wrote this week.

He said the FCC should not proceed with Genachowski’s proposal to boost its power over Internet service providers through a regulatory maneuver known as “reclassification.” In his original letter, Dingell expressed “grave concern” that Genachowski’s plan risks reversal by the courts, putting “at risk significant past and future investments, perhaps to the detriment of the Nation’s economic recovery and continued technological leadership,” he wrote at the time.

Dingell’s days of putting his constituents first are well past.  He is the longest currently-serving Congressman and the third longest serving Congressman in the history of the country.  These days, having Washington officials bow before him is a much higher priority.  In a petulant letter sent to the chairman on July 20th, Dingell puts a deadline, in bold, for Genachowski’s reply.

Genachowski is probably wasting paper and time responding, considering Dingell already made public his opposition for broadband reform back in May when he wrote, “I have strong reservations about the course the commission is presently taking.”  Dingell said he’s worried that Genachowski’s proposal would be struck down in court, puts at risk “significant” past and future investments and could even “paralyze” other regulatory initiatives.

The reasons for his opposition amount to little more than concern trolling.  The telecommunications industry already challenges virtually every controversial policy enacted by government in the courts, threatens to slash investment in providing broadband service to those they’ve shown little interest in serving before, and do not deserve credit for “technological leadership” as the United States falls further behind others in broadband rankings.  The only threat to the national economic recovery from some cable and phone companies is another rate increase eating away at already tight budgets for most Americans.

Dingell’s latest noise opposing broadband reform brought praise from the U.S. Telecom Association, a group run by and for major broadband providers.  That should not be a surprise either, considering the USTA is Dingell’s 14th largest campaign contributor, donating $9,000 so far this congressional term.

Telecommunications interests who oppose pro-consumer broadband reform are among Dingell’s biggest contributors (in order of ranking):

Open Secrets reminds us this is a big money, high stakes fight with special interests pouring tens of millions into an all-out effort to stop meaningful broadband reform:

Since the start of the 2008 election cycle, telephone utility companies have given $12.7 million to federal candidates and party committees and spent $118.7 million on lobbying. Current lawmakers have collected $37.9 million from the industry, with Republicans collecting 51 percent of that.

The computers and Internet industry has spent even more money politicking and has leaned a little more heavily toward Democrats, giving current members of that party 60 percent of their nearly $50 million in total contributions. The industry has also spent $331.4 million on lobbying since 2007.

As the top all-time donor to federal politics, AT&T may have an especially strong standing on Capitol Hill. The company’s employees and political action committee have given $22.6 million since 1989 to current lawmakers through their candidate committees and leadership PACs, with 52 percent of that going to Republicans.

Verizon, too, is considered a “Heavy Hitter” for its extensive contributions over the years to federal political candidates. Current lawmakers have collected $9.2 million from Verizon’s employees and political action committee since 1989, with Democrats receiving 51 percent of that.

[...]

Here are the current lawmakers to bring in the most through their leadership PACs and candidate committees from telephone utility companies since 1989:

Opposing broadband reform that ultimately helps your constituents in return for campaign contributions and praise from groups like the USTA is business as usual in Washington.  Dingell’s outburst shows he’s forgotten exactly who he is supposed to be representing in this debate — his Michigan constituents, facing ever-increasing broadband bills.

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Tim Conway's "Old Man" character from the Carol Burnett Show would be right at home using the Internet in these areas.

Nick Saint at the Business Insider has been sifting through some of the raw data released last week by the Federal Communications Commission regarding broadband service in the United States.  He’s managed to identify the 10 worst counties in America for broadband service based on statistics from 2008.  But two of those probably should have never been on the list.  More on that later.

Harrison County, Mississippi — A single pond in Harrison County is the only known habitat of the critically endangered dusky gopher frog.  It doesn’t have broadband, and neither do most of the residents of this beleaguered part of southern Mississippi.  The cities of Gulfport and Biloxi are in Harrison County, an area torn up by hurricanes from Camille to Katrina.  Now, the beaches are coated in BP oil.  Harrison County can’t get a break. Cable One and AT&T are the primary providers.  Cable One’s dreadful service only reaches well-populated areas and AT&T has taken its sweet time expanding DSL service in the area.

Imperial County, California — The nation’s lettuce basket, Imperial County communities live on a very low fiber-optic diet.  While the soil is rich for crops, the people who plant and harvest them are not.  El Centro, the biggest city, has some broadband available, but with the city having the nation’s highest unemployment rate (27.3 percent), many can’t afford it.  Once in farm country, cable doesn’t offer service and DSL is hard to come by.

Corson County, South Dakota — Representative of the pervasive problem of broadband unavailability on Native American lands, a large part of Corson County includes the Standing Rock Indian Reservation.  Saint notes the FCC found just 12.5 percent of Native Americans subscribe to broadband service, compared to 56 percent of the rest of us.

Ector County, Texas — Odessa’s hometown America-charm was put on display for all to see on NBC’s Friday Night Lights, which celebrated small town high school football.  The reality is less exciting.  Like Harrison County, Ector residents are stuck with Cable One, which loves Internet Overcharging schemes and spied on its Alabama broadband customers.  Good ole AT&T grudgingly provided DSL, if you could get it, until mid-2009 when U-verse finally started to show up.  Now large parts of the county outside of Odessa can’t get that either.

San Juan, Puerto Rico — Usually considered an afterthought by American telecommunications companies, Puerto Rico has long suffered with low quality service.  Caribbean Net News: “Puerto Rico’s broadband penetration rate is unacceptable, with less than 40% of households subscribing to broadband services”, said Carlo Marazzi, President of Critical Hub Networks. “While there are many factors at play, broadband in Puerto Rico is simply too expensive and too slow, when compared to the rest of the nation.  Broadband Internet service in Puerto Rico is 60% more expensive and 78% slower than the United States national median. In a report published this year by the Communication Workers of America (CWA) which ranked broadband speeds in the 50 states, Puerto Rico and the District of Columbia, Puerto Rico was ranked in last place (52nd place).

Jasper County, Missouri — Saint noted 18 percent of Jasper County lives below the poverty line, which is not exactly attractive to broadband investment.  Jasper County’s broadband needs are barely met by a cable provider, AT&T, and for some, an electric utility operating a Wireless ISP, providing service where cable and DSL don’t go.  For Jasper County residents, the challenge can be cost as much as access.

Appomattox County, Virginia — Every student known Appomattox was the last stand of Confederate leader Robert E. Lee during the Civil War.  Today, residents there are worked to their last nerve because they can’t easily obtain high speed Internet.  There is no DSL service from the phone company and only limited cable service.  But at least the county is trying.  Let’s let John Spencer, assistant county administrator, tell you in his own words what Appomattox County is doing to deliver broadband for its 14,000 residents:

Bristol Bay Borough, Alaska — The epitome of rural America, large swaths of Alaska are dependent on subsidies paid from the Universal Service Fund for basic telephone service.  Outside of large cities, cable television is a theory.  Telephone company DSL service and wireless are the predominate broadband technologies in rural, expansive Alaska.  For many areas, both are awful.  Bristol Bay Borough is known as the “Red Salmon Capital of the World,” if only because there are far more salmon than there are fishermen to catch them.  Internet access for many of the area’s 953 residents means a trip to the Martin Monsen Library, which offers free Wi-Fi for limited access. If you want Internet at home, it will cost you plenty:

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The days may be numbered for Sunflower Broadband

A Kansas cable system notorious for Internet Overcharging is nearing a deal to be acquired by a cable overbuilder that does not usage cap broadband customers.

Sunflower Broadband, an independent cable system providing cable, phone, and broadband service to 30,000 Lawrence residents, is expected to be acquired by Georgia-based cable overbuilder Knology, which has been on a buying spree of late.  The asking price – $127 million dollars, according to a report in the cable trade journal Multichannel News.

Sunflower has been overcharging their broadband customers for years with schemes like usage caps and a flat rate service plan that delivers speed throttled broadband service to customers.  Sunflower has remained a hot topic for Stop the Cap! because we hear so many complaints from their long-suffering customers.  In fact, no independent cable operator has generated more reader complaints than Sunflower Broadband, almost all targeting the company’s unjustified usage caps.

Broadband Reports reminds us Sunflower was among the first to implement the idea of low caps and high overages ($2 for each additional gigabyte).  Customers also routinely complain about Sunflower’s stingy upstream speeds, maxed out at just 1Mbps for their $60 Gold tier.

None of the details about Sunflower Broadband’s impending sale can be found in the local newspaper — the Lawrence Journal-World or the local “Channel 6″ news operation.  That’s ironic, considering the same parent company that owns Sunflower Broadband, The World Company, also happens to own the newspaper and Channel 6.  It took a cable trade publication based hundreds of miles away to break the story — not exactly a shining moment for journalism in Lawrence, especially considering an LJWorld reporter need not break a sweat to chase the story.

Part of the reason for the sale may have been AT&T bringing U-verse competition to Lawrence.  U-verse does not have customer unfriendly usage limits.  With AT&T ready to usher away many of Sunflower’s customers, management may have decided now was a good time to sell.

The good news for Lawrence residents is that none of Knology’s cable systems engage in Internet Overcharging schemes, so Sunflower’s usage caps may be gone after the sale.

Still, some Lawrence residents are concerned about the implications of a Knology takeover.  The Lawrence Broadband Observer is among them:

I browsed Knology’s corporate web site and was actually pretty unimpressed. To put it mildly, Knology is well behind Sunflower both geographically and technically. Knology offers service in rural areas much smaller then Lawrence, like Storm Lake, Iowa and Dothan, Alabama. They also offer service in a few towns that are equal or larger then Lawrence like Charleston, South Carolina.

Technically, Knology is well behind Sunflower in what they offer customers in other cities. Top internet speeds (albeit cap-free) are only in the 8-10 megabit range, five times slower then Sunflower’s new DOCSIS 3 offerings. On the television side, while it varies from city to city, Knology generally offers only 30 or so HD channels, which is less then half of what Sunflower offers. Knology offers a rudimentary DVR, but nothing like Sunflower’s multi-room options.

Perhaps Knology is interested in buying Sunflower to learn how to offer more advanced services, knowledge they can take to their other markets. I don’t know, but it seems like this is a case of a large buggy-whip manufacturer buying out a smaller company that makes automobiles.

Most of Knology’s network of systems have been acquired from other companies and providers.  Technically, they are a cable “overbuilder” because they do overlap other providers in some areas, such as Knoxville, Tenn., where they compete with Comcast.  In many communities, they are most common in rental parks and apartments.

Knology’s customers in other cities have usually suffered some transitional glitches (Knology uses a more “advanced e-mail system” they eventually forced their PrairieWave customers to join), but overall they have usually increased broadband speeds in their markets and add lots of new HD channels.  Knology is aggressively deploying DOCSIS 3, something Sunflower already has, so few changes should be expected there.  They do not have a history of downgrading customers.

Clues about the impact of a Knology buy can be found in communities like Rapid City, S.D., who saw their cable system switched from Black Hills FiberCom to PrairieWave to Knology.  Rapid City residents first saw changes to the cable system’s technology and billing.  That was followed by the introduction of new services and packages, and then finally the name change to Knology.

With the anticipated sale, existing Sunflower customers (and ex-customers) might want to impress on the new owner that Internet Overcharging schemes like usage caps and throttled speeds are unacceptable, and you want an immediate end to both.

Remember too it could be worse — Mediacom could have been the buyer.

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Tens of thousands of Oceanic Time Warner Cable customers across Hawaii were without Internet, cable, and phone service for up to 14 hours after an undersea TW Telecom fiber cable was cut near Lanai at around 1:10am Tuesday.

While broadband users on Kauai and Oahu managed to be rerouted after a two hour outage, residents on Maui and the Big Island endured more than a half-day outage for all of Time Warner Cable services.

The affected cable experienced an outage off Lanai Island

The impact of the fiber cut also disrupted over-the-air broadcasting — many feeds to Hawaii’s translator stations, which extend signals from Honolulu across the Hawaiian Islands, were also sent over the affected cable.

When Time Warner customers in Hawaii woke up Tuesday morning, many were left with fewer than 20 cable signals still working — those delivered via satellite, and no phone or broadband service.

The affected fiber cable is laid in water 3,000 feet deep, which means it will take weeks to manage repairs.  The cable company managed to obtain alternate connections, and some criticized the operator for not having backup service available immediately.

Restoration of services were complete around noon Tuesday for the Big Island, with Maui County getting phone and Internet service back by 3pm.

Hawaiian Telcom, Hawaii’s largest telephone company, said it wasn’t affected by the outage.

The Star-Advertiser reports the fiber cable is rented by Oceanic to communicate with their other cable operations throughout Hawaii:

Oceanic Time Warner rents bandwidth (data transmission capacity) from the fiber-optic cable, co-owned by Colorado-based TW Telecom and Wavecom Solutions, formerly Pacific Lightnet. TW Telecom was part of Time Warner Cable but became an independent entity in 2008.

Oceanic Time Warner is among 144 Maui firms that rent bandwidth from that section of the cable. That section went online in 1997, Miyake said.

When the cable was cut, Internet protocol addresses did not know which route to take back to the mainland. Oceanic crews had to reroute connections through alternate cables connecting the islands.

“We have a daisy-chain fiber connection that connects all the islands together,” said Norman Santos, Oceanic’s vice president of operations. “The main transmission point for Oceanic Cable is here on Oahu.”

Oceanic promises they will be developing additional redundancy in their network in the future to make sure they can restore service more rapidly in the event of a future disruption.

Typically, Oceanic Time Warner Cable does not give refunds unless service is out for a full 24 hours -and- customers specifically requests credit, but the company is debating whether to grant an exception this time.

“We’re going to make a determination as to if and how blanket credits will be authorized, if individual credits will be authorized, but we’re going to do the right thing,” Norman Santos with Oceanic Time Warner Cable told KHON-TV.

Customers can be in a better position to receive that credit by contacting Oceanic today and asking for it before you (and perhaps they) forget.

Click here to view the embedded video.

Every major television station in Hawaii covered the extensive service outage.  Here is a compilation of reports from KGMB, KHNL, KHON, and KITV-TV regarding the outage, its cause and impact.  (14 minutes)

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A snake in the grass... defective water meters can result in customers paying hundreds of dollars for water they never used.

“Paying for what you use” is an idea some broadband providers want to adopt to re-price broadband service in an effort to capture additional revenue and profits from “high usage” customers.  But when the provider reads the meter without any independent oversight, customers can be billed for any amount of usage — accurate or not — and have little recourse to prove their case if overbilled.

At least water customers in Charlotte, N.C., are getting an independent audit of their water meters after Charlotte-Mecklenburg Utilities began sending some customers bills in the hundreds of dollars for a single month’s usage.

Broadband providers who bill consumers based on their usage answer to no one.  Completely deregulated, providers need not submit to independent verification of their measurement tools.

“There is no Bureau of Weights and Measures verifying broadband usage meters anywhere in North America that I’m aware of,” writes Stop the Cap! reader Mitch.  In fact, in several countries the telecommunications industry is specifically excluded from oversight by such accountability agencies.

In Australia, large businesses are often the first to discover overbilling because of their accounting practices which track usage over time.  Australian telecommunications companies are exempt from monitoring by weights and measurement oversight.  Canadians have complained about metered charge accuracy for several years now, especially when usage doesn’t appear on web-based “usage gauges” for days.  Nobody verifies those meters, either.

In late June, the Charlotte Observer reported a sampling audit of 9,000 out of 250,000 water meters found a significant error rate of at least 1.4 percent.  While that’s a small percentage, the numbers add up — more than 3,000 area customers would be billed erroneously at that error rate, some for hundreds of dollars more than they actually owe.

The audit is continuing, but early findings show that the utility has a significant problem in how it bills customers.

The audit so far has found 78 residential accounts where there was a mismatch of more than 1 CCF (100 cubic feet) of water usage. The mismatch was between the mechanical water meter, which is considered reliable, and the more error-prone electronic transmitters that send water usage data to the utility.

Some of the mismatches suggested that the customer was billed too much, while others showed the customer was billed too little.

“Some (of the accounts) were for only a few dollars, said Barry Gullet, CMU director. “Some were several hundred dollars.”

CMU calls the results thus far “not unexpected and within industry norms.”  But when customers called to complain about suddenly higher bills, CMU feigned ignorance, telling several customers the meters were accurate — perhaps they had a leak or washed their cars too many times.  One customer reporting a bill four times higher than average was told to hire a plumber at his expense to repair the problem.  It later turned out to be an erroneous meter.  Now that customer is also out the cost of the plumber visit.  CMU inflamed matters further in early June when it blamed the news media for “hyping” a non-existent problem, despite a finding from the Charlotte-Mecklenburg Utilities Advisory Committee showing an electronic equipment failure rate three times the national average.

That CMU is being held accountable by an independent audit was an important part of the process that eventually led them to admit there may be a problem with meter accuracy, say city officials.

“It is a breath of fresh air to have some acknowledgment that there is a problem and a sense about what to do about how to move forward with it,” Mayor Anthony Foxx told WCNC-TV.

CMU’s final report will be out in September.  By then a third party auditor will have looked at 9,000 meters.

The question for broadband consumers is whether you trust your cable or phone company to read your usage and bill you fairly if they know nobody is watching them do it.

Click here to view the embedded video.

WCNC-TV in Charlotte ran three reports on the water meter controversy, starting in December 2009 when some enormous water bills arrived as unwelcome Christmas gifts from the local water provider.  (6 minutes)

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Broadband providers with a vested interest in keeping the marketplace a comfortable (for them) duopoly want you to believe everything is great in American broadband.  They would have you believe there is little room for improvement, despite the ongoing drop in America’s global broadband rankings and the ever-increasing price for the service.

Google’s announcement this spring that it was looking for a few great communities to provide 1 gigabit broadband service at competitive rates caused a firestorm… of interest.  Over 1,100 communities have applied for the service and more than 200,000 consumers have nominated their towns and cities for Google Broadband.  Apparently there is plenty of room for improvement after all — from coast to coast and in every state.

The small dots refer to local government applications for the service, the large dots indicate places where more than 1,000 individuals nominated their community.

Communities Applying for Google’s Think Big With a Gig Project

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Kyle "What Broadband Problem?" McSlarrow

In Kyle McSlarrow’s world, the only broadband problem is the one invented by the Federal Communications Commission when it claims that service is not being deployed to all Americans on a “reasonable and timely” basis.  The head of the National Cable and Telecommunications Association (NCTA), the cable industry’s lobbying group, has declared today’s broadband a U.S. “success story that keeps getting better.”

Writing in the group’s “CableTechTalk” blog, McSlarrow tells his readers that 95 percent of Americans already have broadband service available to them that meets the 4Mbps minimum speed standard proposed by the FCC, so where is the big problem?

McSlarrow’s interest in the economics of rural broadband is ironic considering the cable industry routinely bypasses rural Americans.  Where cable lines do predominate, meeting the FCC’s anemic 4Mbps minimum speed standard is not the biggest problem — cost is.  Where cable lines don’t reach, speed is an issue for many wireless and DSL subscribers.  For others, broadband service is not available at any price.

McSlarrow plays cable’s advantage on speed issues to promote minimum speeds higher than those sought by phone companies like AT&T and Verizon.  Of course, cable broadband does not rely on antiquated copper wire telephone networks.  In rural areas, many of these networks are held together with minimal investment.  DSL at any speed can be a luxury when available.

McSlarrow’s recognition that most of rural America will continue to be served by telephone companies doesn’t stop the cable industry from seeking an advantage over their nearest competitors by advocating for reduced subsidies for rural areas and policies that guarantee no potential competitor can ever see a dime in government broadband money.

Because the report plainly acknowledges that there is no reasonable business case to be made for extending broadband facilities to many of the unserved homes.  So instead of viewing the report’s finding as an indictment of broadband providers, it’s  perhaps better read as a statement of principle by the Chairman and two commissioners that, in their opinion, broadband already should be universally available, and, if there is no business case for that universal deployment, the government may have to step in to achieve it. So far as that goes, we agree.  For example, we support the report’s call to action on specific items that will speed broadband deployment to unserved communities.  Immediate FCC action on Universal Service Fund (USF) reform and pole attachment policy is critical to connecting unserved areas.

As explained in comments we filed last week, our industry strongly supports the USF reforms recommended in the National Broadband Plan (NBP).  To fund the FCC’s broadband USF proposals, we recommend adopting our proposal – filed in a November 2009 rulemaking petition – to reduce subsidies in rural areas where ample phone competition exists.  The sooner the Commission reduces unnecessary funding in the existing high-cost support program, the sooner it can direct funding to broadband deployment and adoption.

McSlarrow’s comments neglect to tell the whole story about what the NCTA actually wrote in its comments filed with the FCC:

The 4Mbps/1Mbps standard reflects today’s marketplace reality that most consumers choose not to purchase the highest speed tiers that are offered by their broadband provider. By setting a standard based on the services actually purchased by consumers, the Plan strikes the appropriate balance – not so low that it deprives consumers of the ability to purchase a service that meets their needs and not so high that it will require a significant infusion of new government funding.

Second, based on this definition of broadband, the Plan found that the vast majority of Americans – 95% of households – already have access to broadband, and that 80% of those consumers live in geographic areas served by two or more providers. For these areas where broadband has already been deployed, there is no basis for any increase in support; indeed, as NCTA has demonstrated, in many of these areas there is no basis for any high-cost support at all.

Consequently, the only areas that should see an increase in the support they receive are those areas that do not have broadband and qualify for CAF support, i.e., areas where there currently is no business case for private investment in broadband facilities.

In Great Britain, speeds promised don't match speeds delivered. The FCC is studying whether the same is true in the United States.

McSlarrow is disingenuous about Americans’ interest in improved broadband.  It’s not surprising many do not choose the highest speed tiers available from telephone and cable providers when one considers the premium prices charged for that service.  Some NCTA members charge $99 for 50/5Mbps service, which in other countries like Hong Kong sells for a fraction of that price.  One need only consider Google’s plan to deliver 1Gbps service to a handful of American communities.  It’s easier to count the communities that were not interested in this super-fast service.

The cable industry can afford to relent on a 4Mbps minimum speed standard for downloading as virtually all cable broadband providers already offer “standard service” plans well above that rate.  The cable industry’s own “lite” plans, usually 1.5Mbps or less, are not exactly the industry’s most popular.  Americans will choose higher speed service at the right price.

Broadband availability figures have become an important political issue, which is why controlling broadband mapping is so important to cable and phone companies.  Being able to offer that “95 percent of Americans already have access,” a figure in dispute by the way, can make a big difference in the debate.  As Stop the Cap! readers have seen repeatedly, broadband maps that depict broadband service as widely available in many areas actually is not, especially from phone company DSL service, which depends heavily on the quality of the existing infrastructure.

Most importantly, the NCTA seeks a new, even stricter standard for broadband funding under Universal Service Fund reform that would immediately deny money to any applicant that cannot prove there is no chance for any private investment in broadband.  As we’ve seen from broadband improvement applications filed under the Obama Administration’s broadband stimulus program, cable and phone companies routinely object to most proposals, claiming “duplication” of existing broadband service even in areas they have chosen not to provide service.  The NCTA would have us set the bar even lower, allowing any private entity to kill funding projects based solely on their claimed interest in providing the service themselves.

One sensitive spot the FCC did manage to hit was taking providers to task for advertising broadband speeds they don’t actually provide to customers.  While DSL speeds vary based on distance from the telephone company’s central office, cable broadband speeds vary depending on how many customers are online at any particular moment.  The cable industry’s shared access platform can create major bottlenecks in high-use neighborhoods, dramatically reducing speeds for every customer.  While some cable operators are better than others at re-dividing neighborhoods to increase capacity, others won’t spend the money to upgrade an area until service becomes intolerable.  That means consumers sold 10Mbps service may actually find it running at less than half that during evening hours.

A sampling of British cable and telephone company DSL providers, all of which aren't giving their customers what they are paying for.

McSlarrow’s view is there isn’t a problem there either — the FCC is relying on old data:

The key statistics in the report are drawn from Form 477 data for December 2008, data that was out of date when it was released earlier this year and is now 18 months old.  Broadband providers have made two subsequent Form 477 filings (with another one scheduled in a few weeks), so the reliance on stale data is frustrating.

Equally troubling is the Commission’s repetition of the NBP’s claim that “actual” broadband speeds are only half of “advertised” speeds.   After the NBP was released, we submitted an expert technical report demonstrating that the comScore data used was deeply flawed.  Since then, cable and telco ISPs have been working constructively with Commission staff on a hardware-based testing regime that should produce more accurate results.  Given the hard work that has been devoted to produce accurate speed measurements, it is disheartening that the 706 Report chose to perpetuate the NBP’s flawed speed data conclusions.

Finally, some of the data relied on in the 706 Report is not publicly available.  The report relies extensively on a cost model created for the NBP, but that model hasn’t been released, making it impossible to validate its results.  The Commission also repeatedly refers to an FCC staff report on international trends, but that report also has not been released.

The frustration McSlarrow writes about is shared by cable subscribers stuck in overloaded neighborhoods where service does not come close to marketed speeds.  The FCC is conducting an independent speed analysis that goes beyond speedtest data, and the results will be forthcoming.  In other countries where similar speed claims have not met reality, providers were usually found culpable for promising service they didn’t deliver.

Just ask Ofcom, the British regulatory agency charged with addressing this dilemma.  Earlier today they released evidence that 97 percent of UK broadband customers were not actually getting the speeds they were promised, and the gap between marketed speed and actual speed was growing. Will things be any different for American providers who use fine print to disclaim their bold marketing promises about speed?  Time will tell.

Finally, McSlarrow’s concerns about withheld data is ironic enough to call it a “pot to kettle” moment.  As those challenged with broadband mapping can attest, nobody keeps raw data about broadband availability and speeds closer to the vest than cable and telephone companies.

Of course, the ultimate agenda of the NCTA is to defend its industry’s record in broadband service, which means reducing any broadband challenges into little more than whining by Americans who don’t know how good they have it.

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In the financially difficult world of landline service, there has been one bright spot for Verizon — its state-of-the-art fiber optic service FiOS.  The cost of replacing obsolete copper phone with 21st century fiber optics has proved to be an expensive, but successful endeavor, at least in the eyes of customers.  Hated by Wall Street for its costs but loved by those who enjoy the service, FiOS has successfully proven traditional phone companies can earn money by providing the kinds of services consumers want, just so long as investors are willing to hang in there while the investment pays off over time.  But many investors aren’t.

Some of Verizon’s critics in the investment community complain the company is n0t earning enough from FiOS — in fact, for some critics who didn’t want Verizon spending money on a fiber-to-the-home network in the first place, financial returns provide the evidence used to claim they were right all along.

Despite the naysayers, revenue for Verizon FiOS is up by almost one-third each year, with average revenue per user now reaching $145 a month.  That’s well above the money Verizon earns on its legacy copper network phone customers keep leaving, especially outside of major cities where DSL service is spotty.  There is plenty of room for Verizon FiOS to grow in the limited communities it reaches.  Unfortunately, Verizon has stopped expanding its FiOS network to new communities, in part from pressure from investors who want to see cost cutting from the telecommunications giant.

Despite the positive reviews (subscription required) FiOS earns from consumer publications like Consumer Reports, Verizon slashed marketing and promotion expenses, resulting in second-quarter net additions for FiOS TV coming in at 174,000, compared with 300,000 a year earlier.

With Verizon now deploying service to communities on a reduced schedule, the results have been underwhelming according to the Wall Street Journal:

Verizon Communications may want to tweak the ad slogan for its TV and ultrafast Internet service to “This is FIOS. This is pretty small.”

Not catchy, but it would be more accurate than the current “This is Big” line.

[...]It eventually became clear that Verizon had slowed the time frame of the buildup, originally scheduled to be mostly done this year. Instead, it now expects to meet its target of passing 18 million homes with the network by 2012.

The slower timetable allows Verizon to trim capital spending this year. The problem is that FiOS’s expansion could stall with a less aggressive approach to growth. Already, Verizon has retreated from its target of adding one million subscribers a year, in favor of boosting penetration to 40% of homes passed. At June 30, its 3.2 million TV subscribers was about 20% of homes passed.

[...]And that can only reinforce questions about long-term returns on the $23 billion FIOS investment.

Evidence that Verizon is looking for more customers in its existing FiOS markets can be found in the news the company dropped its contract commitment for new customers.  The term contracts may have held some potential customers back out of fear of a lengthy term commitment with a $360 early cancellation fee.

Click here to view the embedded video.

Verizon started running this ad several weeks ago touting its new “no contract” FiOS service.  (15 seconds)

But a change in strategy isn’t enough for investors who demand immediate results through further cost cutting measures.

In Verizon’s second quarter earnings reports, company executives speak to this perception, proudly noting they have slashed costs through job-cutting and reduced spending on infrastructure and services.  Some of those services include DSL expansion for rural Verizon customers, many who are now left on hold waiting for broadband from Verizon indefinitely.

In many states, Verizon’s DSL expansion was incremental at best, with the company issuing press releases touting new service for literally hundreds of potential customers.

Verizon’s traditional landline business continues to lose customers year after year, and is abandoning millions of others through sell-off deals with companies like Frontier Communications.  Light Reading notes Verizon eliminated 11,000 jobs in its Mid-Atlantic and Eastern regions through early retirement incentive programs, an idea soon to spread to other regions, particularly California and Texas in the coming months.  This kind of cost cutting saves cash and allows companies to report positive financial results in quarterly reports.

According to John Killian, executive vice president and CFO of Verizon, the job cuts are just getting started.  As Verizon further alienates its non-FiOS landline customers who can find better service and lower prices elsewhere, the company expects “further force reductions” in the coming months.  Verizon is also slashing costs by selling off real estate, consolidating operations and vacating buildings.

The impact can become a vicious circle of deteriorating service, customer defections, and additional cost cutting, which starts the circle all over again.  In West Virginia, deteriorating Verizon phone lines reached the point of serious service outages whenever major storms hit the state.  Then Verizon simply sold off its network in West Virginia.  Those customers are now served by Frontier Communications.

Verizon previously declared the era of the landline dead, and is now seeking to prove its point, even as it demonstrates it can make money by spending money on FiOS, if only investors would give them the chance.

Click here to view the embedded video.

CNN took a behind the scenes tour of Verizon’s FiOS network in New York City, from the central offices to individual apartments.  (4 minutes)

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Qwest provides local service in 14 states in the Midwest and West.

Antitrust regulators have given the green light for CenturyLink to proceed with its buyout of Qwest Communications, but Qwest executives on their way out are hardly complaining about the deal.

Stop the Cap! has reviewed recent filings with the Securities and Exchange Commission and learned the proposed deal will bring almost $110 million in bonuses and golden parachutes for seven senior Qwest executives, some of whom will leave Qwest as a consequence of the merger.

Qwest CEO Ed Mueller will receive the largest amount: nearly $43 million — $10.8 million in cash he can spend now and $32 million in stock which he can sell later.  Mueller has already made a mint as CEO of Qwest, getting a five percent raise in his base salary to $12 million dollars in 2009, a nine percent boost in his performance bonus — $2.5 million, nearly $250,000 towards personal use of the Qwest corporate jet fleet, and $7.6 million in new stock awards.  While Mueller won, some 2,800 Qwest employees lost — their jobs.  As part of broad cost cutting moves, Qwest eliminated 8.5 percent of its workforce in 2009.  That helped the company achieve an increase in profits of 2 percent despite a 9 percent loss in revenue for the year.

Most of the generous compensation packages were part of the executives’ employment agreements which guaranteed golden parachute payouts and stock options in the event of a merger.  Those employee agreements were well-positioned to pay off for the executives, as Qwest’s “for-sale” sign had been public knowledge for years.

Last week, the Federal Trade Commission determined the deal between CenturyLink and Qwest did not bring any antitrust issues to the table.  But the deal still faces a review from state regulators and the Federal Communications Commission.  Qwest shareholders will have their say August 24th in a special shareholder meeting to vote on the deal.  Qwest has already been negotiating with significant shareholders who have sued the company, claiming the deal did not adequately compensate Qwest’s investors.  Sixteen of those lawsuits have since been quietly settled on undisclosed terms.

Meanwhile, opposition to the merger has come from smaller independent phone companies, consumer groups, labor unions, and some of Qwest’s competitors who rely on Qwest’s facilities to bring services to customers.  The Communications Workers of America is the largest union expressing concerns about the deal and has filed to intervene in public service commission proceedings regarding the merger in four states: Arizona, Colorado, Iowa and Minnesota.  Those are the only four states in Qwest’s 14 state territory receptive to hearing the union’s point of view, according to the CWA.  The others have oversight agencies that exist little beyond rubber-stamping the requests of the companies they oversee or have commission members who are openly hostile to unions.

Despite the opposition, most analysts believe the deal will win approval because CenturyLink only has a limited presence in most of Qwest’s service areas, which are in the mountain west and desert south.

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AT&T’s idea of “unlimited service” has its limits.  Five gigabytes to be exact, as some customers are now learning.

Weeks after promising AT&T customers enrolled in unlimited smartphone data plans that they could keep them, AT&T is now calling some subscribers of an earlier unlimited plan, telling them they need to limit their use of the “unlimited service.”

AT&T’s Data Connect Unlimited plan was discontinued by AT&T back in 2008, but the company promised current customers they could keep their unlimited plan.  But now, the company has started calling customers when they exceed 5GB of usage during a month.

The Washington Post reports AT&T has been sending mixed messages to customers, and is cracking down on those customers exceeding the company’s arbitrary limits.

“We’ve had a small group of customers on a DataConnect 5GB plan who were not being charged for overage when they went beyond that limit,” she wrote. “We’re now working to bring their accounts in line with the policy for the other DataConnect 5GB plan subscribers.”

Clark added that users who had signed up for AT&T’s earlier Data Connect Unlimited plans (which it stopped selling in 2008) could keep using them, but if they made “certain changes to their account” — for instance, transferring it to a new line — they would have to sign up for a new $60 plan with a 5-gigabyte usage cap.

That comes as news to several AT&T customers who have been in touch with the Post, who were switched, without permission, to limited service plans when they made minor changes to their account or were told AT&T was going to end unlimited service for all AT&T customers.

Rob Pegoraro, who writes the Fast Forward column for the Post, notes AT&T’s customer-care staff seems a little confused about these matters. He advises users with old, unlimited-data plans should be prepared for lengthy calls to customer service — and keep careful records of their interactions with the company.

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Connected Texas is well-connected -- to AT&T and Verizon, charge critics.

Texas Agriculture Commissioner Todd Staples in under fire for choosing Connected Nation, a telecom industry-financed mapping group, to draw broadband availability maps for Texas.  Connected Nation has close financial and organizational ties to the nation’s largest telecommunications companies, several of which have also contributed heavily to Staples re-election campaign.

Critics contend Staples should have never chosen Connected Nation for the project, especially when two of its biggest backers — AT&T and Verizon, both made substantial campaign contributions towards his re-election.  Staples also owns small amounts of stock in both companies, according to a report published yesterday in the Dallas Morning News.

The Texas mapping project has been condemned by smaller Internet service providers for leaving them off the map altogether while providing plenty of details about large phone and cable company offerings.  For consumers shopping for broadband service, who is on the map may have a considerable influence over which provider they pick.

“They hit the big guys,” James Breeden, founder of LiveAir Networks, which covers rural parts of Central Texas told the Morning News. “I didn’t even know they were putting together a broadband map until I saw it on the news and went ‘Oh.’ Then I logged in and went, ‘Oh, really!’ ”

Staples

He said he couldn’t find his company or two nearby providers on the map. Some areas didn’t show the correct distributor. Others named one when none existed. “The map is just off. It’s not technically accurate,” he said.

As Stop the Cap! reported earlier, maps produced by Connected Nation are notorious for favoring the telecommunications companies that back the mapping group, in addition to being just plain inaccurate. But more importantly, their maps downplay broadband availability problems and conveniently serve the industry’s position that America doesn’t have a broadband problem.  Connected Nation maintains tight control over the raw data, citing provider confidentiality agreements.  That makes reviewing the data for accuracy impossible.

“It’s a scandal, a total scandal,” Art Brodsky, communications director of Public Knowledge, a public interest group that follows digital culture said in the Morning News piece. A longtime critic of Connected Nation, Brodsky has tracked the nonprofit since Kentucky officials accused it of overestimating broadband availability several years ago. The agency that grew into Connection Nation started there in 2001.

Brodsky said nondisclosure agreements make it difficult to see who really benefits from the mapping process.

The controversy has become campaign fodder for Democratic Ag Commissioner candidate Hank Gilbert, who has been bashing Staples in the press for spending taxpayer money to produce maps that benefit his campaign more than the people of Texas.

“Staples and … [the Agriculture Department] are willing to let a bid go to a company with such close ties to the telecom industry,” said Vince Leibowitz, Gilbert’s campaign manager. “That means they’re not doing their job as a consumer protection agency.”

Other groups given the opportunity to apply either were not given enough advance warning, or simply never heard anything back from the state.

Five other organizations responded to the Agriculture Department’s request for proposals. Luisa Handem of the Austin nonprofit Rural Mobile & Broadband Alliance said her group never heard back.

“We didn’t think the process was transparent,” she said. “We’re not even sure they looked at our application.”

The Agriculture Department restricted the opportunity to nonprofits, based on its interpretation of federal law. The agency told the University of Texas at Austin it could apply, but officials didn’t think they could complete the proposal in a month. The Agriculture Department said the federal government set the timeline.

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Rogers Cable: Setting the Bar Lower Than Ever

Just a day after Netflix announced they are coming to Canada, Rogers Cable has responded by announcing it is lowering the usage allowances of its customers.  Stop the Cap! reader Munly writes to inform us Rogers Lite service plan, intended for occasional users, has dropped its 25GB usage allowance to 15GB per month, making it suitable for even less usage.

New customers on Rogers’ popular Extreme plan will find their usage limit cut from 95GB to just 80GB per month.  But if you accept the cut in your allowance, Rogers will increase the speed on that tier from 10Mbps to 15Mbps, allowing customers to blow through that usage limit that much quicker.

Existing customers may be grandfathered in, at least temporarily, but Rogers is notorious for eventually terminating grandfathered plans and moving customers to higher-priced alternatives.

All this from a company that claims it offers its customers “abundant usage.”

Rogers buries in the fine print the fact customers can stay with their current higher allowance if they forego the speed increase.

AND AN EVER INCREASING BILL

With the new lowered usage allowances, Rogers offers tips for customers to reduce their usage, including our favorites:

Use medium quality photos when sending them through e-mail. Your family’s cherished memories don’t deserve high resolution, even if you want to send them to a digital photo lab for printing.  Maybe you could get the kids together and have them draw copies of those vacation pictures with crayons.  At least they won’t be online using up your Rogers Internet ration.

Be aware of how others in your home use your Internet connection.  If you are not spying on your family’s online usage, it’s your own fault if we send you an enormous bill.  In the time it took you to read these tips, your kids could have downloaded over 20 e-mails, looked at more than three web pages, or watched almost a minute of online video.  Don’t make us bill you for that.

Turn off Peer-to-peer programs when you’re not downloading. Better yet, since we know you are using them to steal the content we’d like to sell or rent you, stop using them altogether… or else.

Try the tools. No, we’re not talking about us, silly.  If you are doing more than reading your e-mail or browsing web pages, look out because we’re coming for your wallet.  You can try and outwit our overcharging ways by using our usage notifications service, which will flash messages to you that we’re about to cash in on your over-usage.  Hey, don’t say we didn’t warn you!  Remember, if you use Rogers Internet to download files, stream video or music or play online games, we own you.

Does this mean I should use the Internet less to avoid paying more? Is Sarah Palin American?  You betcha.  We want to get the most out of our customers who use their Internet service too much, which is why we expose them to up to $5.00 per gigabyte if they exceed our ever-dwindling usage allowances.  Our goal is for you to feel free to use the Internet as you always have, just so long as you recognize it’s not free and that you’ll need to pay us for every web page your read, more if you dare to watch cable programming online you should be watching on our cable TV service.  The only surprise you’ll have about your bill is that we haven’t found a way to charge you even more… yet.

What About Netflix? Seriously? You weren’t really thinking of using that service on Rogers were you?  A word to the wise — we can cut your allowance down even further.  Go outside.  Read a book.  Rent a movie from Rogers Plus or enjoy some great Rogers Cable TV.

Rogers Cable’s Internet Packages

A Before And After Comparison

Rogers Old Pricing and Usage Allowances

Rogers All-New Pricing and Usage Allowances, Effective July 21, 2010

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Verizon hopes to herd its smartphone owners onto limited use data plans

Engadget is speculating Verizon Wireless is planning to end its unlimited data plan for smartphone customers July 29th.  In a brief story published last night, the site claimed it had heard rumors of the impending demise of unlimited at the nation’s largest cell phone company:

We’re hearing that Big Red intends to move to some sort of tiered bucket strategy on July 29. We don’t have details on whether the pricing will be identical to AT&T’s ($25 for 2GB, $15 for 200MB), but we imagine it’ll be within shouting distance if not. Of course, Verizon has been sending this message for a long time — even before AT&T was — so it shouldn’t come as a surprise to anyone that this is going down. You might say that Droid Does Caps, eh?

Verizon and AT&T have followed each others’ relentless price increases, tricks and traps for the last few years — forcing customers to accept mandatory service “add-ons” when buying the latest phones, paying higher costs to terminate contracts early, and driving customers onto higher priced service plans bundling services and features many customers do not want.

It therefore comes as no surprise Verizon would follow AT&T’s lead on severely restricting customers’ data use, even though Verizon does not suffer from the level of congestion AT&T has.

We expect Verizon will announce data pricing identical to that offered by AT&T.

However, existing customers can be grandfathered into today’s unlimited plans, so if you think you’ll need unlimited data on Verizon’s network, you have until the end of the month to sign up for a plan should Engadget’s report turn out to be true.

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Netflix is coming to Canada.  Sort of.

Canadians will be able to sign up for Netflix’s on-demand video streaming service beginning this fall, but will Canadians be interested in using the unlimited service on their usage-limited broadband accounts?

Netflix is not planning on bringing its rental-by-mail service to Canada, instead relying exclusively on streaming its library on-demand over the Internet. Netflix currently licenses streaming rights for over 17,000 titles in its 100,000 plus library.  How many of those titles with be licensed for Canadian subscribers is not yet known, nor is an exact price for the service.  Netflix will launch for English-speaking Canadians at the outset, with French to come later.  This is the first time Netflix is making its service available outside of the United States.

But many Canadians are questioning the value of Netflix in their heavily-usage-limited country.  Most Canadian ISPs have either chosen or been forced to limit subscribers’ broadband usage.  Even ISPs that want to offer unlimited service find flat rate wholesale pricing nearly impossible to get because of Bell’s stranglehold on the market.  Cable providers like Rogers have implemented their own usage limits to boost revenue and keep costs down.

For Canadians living under an average usage cap of 40-60 gigabytes per month, adding streaming video will only eat their allowance that much faster.

“Netflix and the Canadian press covering this story have ignored the reality of bit-capped Canada,” writes Stop the Cap! reader Jeffrey from Calgary.  “I would be paying $75 a month for a broadband account and be limited in how I could use the service.  The CRTC (Canada’s equivalent of the Federal Communications Commission) has been in the providers’ pockets for years and this is why high bandwidth services bypass Canada or risk failure if offered here.”

Rogers, one of Canada's biggest cable companies, also happens to own one of the largest chains of video rental stores: Rogers Plus

Jeffrey believes Canada’s largest broadband providers, including Bell, Rogers, Shaw, Telus, and Vidéotron will never allow Netflix.ca to gain the kind of foothold it has in the United States.

“These companies all own or control Canada’s cable, IPTV, and satellite TV services, all of which are threatened by an American company like Netflix,” Jeffrey notes. “They’ve already got universal usage limits on their accounts, but these guys will also run to the CRTC and Canadian government to throw up roadblocks over everything from copyright and licensing issues to Canadian content rules and the initially ignored Québécois.”

Jeffrey believes more than anything else, Internet Overcharging schemes will serve their role in keeping would-be competitors under control.

“In Canada, we already had the debate about who gets to use our pipes for free,” he says. “Thanks to the CRTC, only the providers get to use them for free.  Everyone else pays a usage tax to them which fattens their bottom lines while stunting the growth of Canadian broadband.”

In Quebec, it’s much the same story.  Asperger notes Zip.ca, a Canadian rent-by-mail service, can get him 20 new DVD releases a month for around $25.  If he signed up for Netflix, anything beyond five DVD’s a month would put him over his limit forcing him to “pay and pay, and then pay some more.”  With Canadian ISP’s increasing their penalty rates for exceeding usage allowances, the overlimit fee could easily exceed the cost of just sticking with Zip.ca’s by-mail service.

Or, for many Quebecers, the next best alternative is Bibliothèque et Archives nationales du Québec, which offers an enormous collection of DVD’s that can be checked out for free.

Canadian press accounts of Netflix’s imminent entry into Canada have largely ignored the limits Canadian Internet providers impose on their subscribers, something readily noted by readers who comment on those stories.  Canadian consumers are well aware of their usage limits, and they avoid services that could expose them to even higher broadband bills.

Those who use their Internet service heavily, unaware of overlimit fees up to $5 per gigabyte, will be educated by bill shock when their next bill arrives in the mail.  After that, no more Netflix.ca for them.

Still, Netflix.ca will probably deliver a challenge to the already-stressed Canadian video rental market where Blockbuster and Rogers Plus duke it out for a dwindling number of renters.  Price cuts have not stopped the erosion of interest in DVD rentals, and Blockbuster is mired in more than $900 million in debt, trying to avoid bankruptcy.

The Canadian Radio-television Telecommunications Commission's support of industry-promoted Internet Overcharging schemes may limit Netflix's success in Canada.

If Netflix’s streaming library, mostly of titles two or more years old, is deemed sufficient by many Canadians, it could also cause a wave of cancellations of premium movie channels and other cable services.

The Ottawa Citizen reports some analysts believe Netflix.ca will cause an earthquake in the Canadian entertainment marketplace.

Carmi Levy, an independent technology analyst based in London, Ont., believes Canadians can expect a major entertainment industry shakeup this fall.

Levy says Netflix will sound the death knell for movie-rental services such as Blockbuster and Rogers Video and will force a pricing war among traditional cable and satellite TV providers who will be forced to scramble to keep customers.

“Netflix is not some Johnny-Come-Lately to the market. Even though they are new to Canada, they have been so successful in the U.S. that only a Canadian living underneath a rock wouldn’t be aware of their brand,” Levy said. “It’s the most seismic change to the content distribution system landscape that we have seen. It forces the incumbents to change their business model.”

Levy said the arrival of Netflix will allow casual TV watchers to cut their satellite and cable TV bills in favour of Netflix’s all-you-can-eat monthly offering. He said the $9 U.S. a month charged by the company was carefully thought out and he expects to see a similar price on the service later this year.

Click here to view the embedded video.

CBC News discussed the introduction of Netflix Canada and how it will work with Netflix vice president Steve Swasey.  (5 minutes)

Click here to view the embedded video.

CTV News and its Business News Network ran four reports on the impact usage caps might have on the service, what kinds of titles will be available, and what it means for Canada’s entertainment businesses.  (12 minutes)

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Lee, Massachusetts is located in broadband sparse western Massachusetts

Mark Williams is the kind of customer Time Warner Cable would normally love to have.  He wants the complete, super deluxe Time Warner triple play — cable, digital phone, and especially broadband service for his home-based business.

Time Warner wants Williams to have their service, too — but for a price.  Instead of charging the regular $35 installation fee, the cable company wants him to pay $12,000 to install his service, because, they claim, Williams’ driveway is 100 feet too long.  Time Warner says the $35 dollar installation fee is only for homes within 200 feet of the nearest utility pole.  Williams home is 300 feet away.  He doesn’t mind paying something extra to cover the additional 100 feet, but not $12,000.

The town of Lee, Berkshire County, in western Massachusetts, managed to wrangle a franchise agreement from Time Warner Cable that entitles every home and business to cable service if electric and telephone service are already available.  That’s unique for many smaller communities, who routinely have cable service available in town, but not in outlying areas.  Cable companies hate wiring rural density neighborhoods, where the costs to wire comparatively few homes takes too long to earn back from the few subscribers they can reach.

But Time Warner found themselves a loophole — a “long driveway” clause in the franchise agreement that allows them to charge more for installing service to homes set far back from the road.

Now, according to the Berkshire Eagle, Lee’s representative to the Five Town Cable Television Advisory Committee is calling out Time Warner, claiming they are misinterpreting the town’s franchise agreement and wants the Lee Board of Selectman to start imposing fines against the cable company if they don’t relent within 30 days.

Malcolm Chisholm says the real reason Time Warner wants to charge $12,000 is because Williams’ home is roughly a half-mile away from the closest Time Warner Cable subscriber, not because his driveway is too long.

“We just want to put pressure on them,” Chisholm said. “We’re just trying to get them to follow the agreement.”

Chisholm said Time Warner Cable “won’t talk to us” about Williams’ situation. The Eagle was also unable to get a response from officials at the company’s regional office in Albany, N.Y.

The newspaper decided that since Time Warner Cable wasn’t responding to its private inquiries, it would air its views on the editorial page.

If a Lee resident moved into a cave in October Mountain State Forest, Time Warner Cable might be justified in charging him $12,000 to run cable there so he watch the Red Sox on NESN and keep up with the Kardashians on VH-1. But the $12,000 the cable giant wants to charge a resident who lives near the Tyringham line is preposterous, and beyond that provides the latest evidence of the desperate need for expanded broadband service throughout the rural Berkshires.

Because Mark Williams lives roughly a half-mile away from the closest Time Warner subscriber, his installation fee escalates from the standard $35 to $12,000, which may as well be $120,000 it is so devoid of logic. Mr. Williams appears to be an eager customer too, one who wants the entire cable/Internet package Time Warner is regularly flogging.

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Greed is still good at Time Warner Cable

Time Warner Cable has tried every excuse in the book to justify their continued interest in Internet Overcharging schemes directed at residential Road Runner customers.  Over a year after Stop the Cap! and its readers helped bury an experiment in overpriced broadband, the notion of doubling or tripling Internet pricing for consumers is still alive and well at the nation’s second largest cable company.

Nate Anderson of Ars Technica explored the thinking of Time Warner Cable’s executives a year later and discovered their desires for overcharging remain as strong as ever, but the excuses they give for wanting to do so have changed.

TWC’s revenues from Internet access have soared in the last few years, surging from $2.7 billion in 2006 to $4.5 billion in 2009. Customer numbers have grown, too, from 7.6 million in 2007 to 8.9 million in 2009.

But this growth doesn’t translate into higher bandwidth costs for the company; in fact, bandwidth costs have dropped. TWC spent $164 million on data contracts in 2007, but only $132 million in 2009.

What about investing in its infrastructure? That’s down too as a percentage of revenue. TWC does spend billions each year building and improving its network ($3.2 billion in 2009), but the raw number alone is meaningless; what matters is relative investment, and it has declined even as subscribers increased and revenues surged. “Total CapEx [capital expenses] as a percentage of revenues for the year [2009] was 18.1 percent versus 20.5 percent in 2008,” said the company a few months ago.

In fact, CapEx has declined for the industry as a whole. As the National Broadband Plan noted, the big ISPs invested $48 billion in their networks in 2008 and $40 billion in 2009. (About half of this money can be chalked up to broadband; the rest of the improvements were done to aid cable or phone service.)

To recap: subscribers up, revenues up, bandwidth costs down, infrastructure costs down. This might seem like a textbook case of “viability”; what were execs like Britt and Hobbs talking about last year when data caps were held up as a necessary safeguard against doom?

Before moving to Time Warner’s Excuse-O-Matic, let’s pause for a moment and reflect on the fact this company has stalled more on Internet upgrades than virtually every other major cable operator.  Even bankrupt Charter Communications has been aggressively pursuing investment in the win-win DOCSIS 3 technology that allows cable operators to sell faster tiers of service -and- reduce congestion in heavy web-surfing neighborhoods.  By effectively “bonding” several cable channels devoted to its broadband service together, the pipeline into even the most hip college neighborhoods can sustain a full-scale assault by Hulu fans streaming high bandwidth video.  Comcast realized this more than two years ago and rolled out its super-fast 50Mbps tier to a dozen cities well over a year ago.  In contrast, Time Warner Cable managed to bring forth its “wideband” offering in just a handful of communities — New York City being the largest, last year.

Internet providers always try to awe an audience with claims about the billions of dollars they invest in improved technology, while forgetting to mention they earn tens of billions in profit on those investments.  The shock and awe of stacks of money piled high on a table is tempered when you see the warehouse holding the rest of the cash standing behind it.

Broadband is becoming the single biggest revenue source for cable operators, passing digital phone and well on the way to passing cable television service.  It’s the cash cow that can be milked forever, especially with the limited number of choices most Americans have to obtain the service.

Back to Nate’s story:

Several months ago, while on a business trip to Manhattan, I entered a nondescript building near the Flatiron building and rode the elevator to the top. Inside was one of TWC’s main New York operations centers, hosting an astonishing array of cable and Internet gear. But the real showpiece was the monitoring room, a darkened room with control hardware, computers, and a wall of TVs showing every cable channel currently running out over TWC’s network.

It looked brand new and obscenely expensive. Engineers slipped in and out in silence. A huge pile of boxes on the floor held a new set of replacement TVs. When I make my career shift from ink-stained wretch to Evil Genius, this is exactly the sort of room I will build in order to plot my world domination.

“It’s not a cheap endeavor to run a network like we do,” said TWC’s tweeting VP of Public Relations, Alex Dudley, when I had spoken to him the week before. Here was an obvious reminder of what he meant.

Time Warner Cable’s version of a command and control center, wall after wall fitted for television sets — the Time Warner Cable Sports Bar — impresses only until you realize the company could have paid for it out of the petty cash box.  It’s obvious nobody was watching those televisions last spring as wide-scale protests erupted in four of the cities Time Warner Cable chose for their experimental pricing project.  If they had, they would have apologized to their customers and buried the idea then and there.

At this point, Mr. Anderson began the useless attempt to debate Mr. Dudley, whose job is to sell the agenda of Time Warner Cable (and obfuscate when necessary).  Why has Time Warner Cable’s senior management held onto its dreams of Internet Overcharging like a pit bill, refusing to let go, Anderson asked.  Because of labor costs, Dudley replied.

As Internet use increases, TWC techs, engineers, and executives need to make adjustments such as DOCSIS upgrades at the cable company headend or “node splits” that divide a shared cable loop in two when bandwidth use hits certain metrics. Paying all of these people costs money, and those costs increase as the network is more heavily used.

Last April, when Time Warner Cable was relying on its tweeters like TWCAlex to spin a tale about how their Internet Overcharging schemes would benefit customers and help pay for DOCSIS 3 upgrades (which ended up bypassing cities like Rochester, N.Y., and went to New York City instead — where no such pricing scheme was tested), Alex’s bosses were just completing a layoff of some 1,250 Time Warner Cable employees.  As Internet use was increasing, Time Warner Cable was decreasing the number of its employees from coast to coast.

If Alex is telling the truth, Time Warner Cable needs an employment fund from 8.9 million customers.  Considering many Time Warner Cable cities raised the price on Road Runner service by $5 a month this year, that’s $240 million dollars a year to get the pot started and I’m only counting four million of those subscribers.  If Time Warner Cable hired back those 1,250 former employees, they could each get $192,000 a year from that kitty.  Implement Internet Overcharging schemes that could triple consumers’ rates for an equivalent level of service and they could earn as much as CEO Glenn Britt and then some.

I’m also uncertain how often Time Warner Cable executives are shimmying up phone poles or clearing out wasp nests inside those green cabinets positioned all over town while performing service upgrades and node splits.  It’s far more likely they are spending their time dreaming up new excuses to raise cable rates.

Please deposit 25 cents for the next megabyte of usage

This latest excuse, while certainly novel, is just another bit of nonsense.

Time Warner Cable actually spent more money last year dealing with HD channel rollouts and upgrading their cable systems to support Switched Digital Video to accommodate them.  The company did not exactly slap limits on how often cable viewers can leave their sets on, nor pitted their average TV viewers against viewing piggies who watched too much.  Maybe the coin slot on top of the cable box can be tried in 2011.

In fact, as broadband equipment continues to become more reliable and scaled to manage growing demand, it’s becoming easier than ever to keep broadband lines humming at the cable company.  That leaves Time Warner in the envious position of enjoying increasing profits on service that increases in price while decreasing in cost.  In fact the only thing growing at a faster pace than the company’s broadband profits is the level of incredulity informed consumers have towards cable companies with long lists of excuses to justify rape and pillage pricing.

No matter what Time Warner Cable executives want you to believe, the FCC noted in its broadband plan that international bandwidth has grown 66 percent each of the last five years, all while the costs have dropped by 22 percent per year to handle that traffic.

Consumers do not want these Internet Overcharging schemes.  Time Warner Cable should do itself a favor and drop them, once and for all, just as they have done for their Road Runner Mobile service.  If 3G/4G wireless broadband from Time Warner comes without usage caps, why in the world should cable broadband be any different?

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Comcast subscribers in cities across the country are getting as hot as the summer as they learn the cable company is jacking up prices again — for many the second time in a year.  This time, the rate hikes are blamed on the cost to deliver an expanded lineup of HD channels, increased programming costs, and new cable modems.  Yet on the eve of the European Union approving a proposed Comcast-NBC Universal merger, many Comcast cable customers are beginning to wonder if all of these rate hikes are going to pay for that deal.

Here is a sampling of press reports from across the country on the latest round of increases:

San Francisco Chronicle: Comcast Corp. said it is raising rates for California cable and Internet customers by an average of 3.8 percent starting Aug. 1. The average video customer will see their monthly bill increase by $2.49 from $60.76 to $63.25 a month. Internet service will also increase for the first time in five years from $44.72 to $46.67 a month, a $1.95 increase. Andrew Johnson, regional vice president for Comcast California, said the increase is necessary to pay for more programming choices, new features, faster Internet speeds and improvements to customer service.  The last rate increase came October 15, 2009 when rates went up just over 1 percent.

The Record (Stockton, Calif.): For the second time in less than 10 months, Comcast Corp. customers in San Joaquin County face price increases for cable television service and, for the first time in five years a boost in charges for a cable Internet connection, the company announced recently. Customers in Stockton, Manteca, Lathrop and San Joaquin County served by Comcast will see an increase of nearly 4 percent in their cable bills beginning Sept. 1. Notices began going out to subscribers late last week. Other Northern California areas served by the cable giant will see prices change Aug. 1.

“They’ve got you tied in,” said Art Hickey of Stockton, who has five television sets in his home and subscribes to the highest tier of digital service. “They tease you with those six-month deals and 12-month deals and they don’t say what it’s going to be after that. People buy into it and then they’re just stuck with it,” he said.

So why not try another source of television?

“I haven’t compared, and I don’t want to because it’s a nuisance,” Hickey said.

The Spokesman-Review (Spokane, Wash.): Most of Spokane’s Comcast subscribers will see price increases in their Internet and video services effective in August, the cable company announced. Comcast’s last price increase went into effect October 2009. According to Comcast spokesman Walter Neary, most Spokane cable television subscribers will see an average monthly increase of about $3.21, or 4.9 percent. Customers who subscribe to Limited Basic, the least expensive package of Comcast TV channels, will have no increase in their monthly bill. Limited Basic includes all over-the-air local stations and the public, education and government channels.

Customers who pay for Comcast cable Internet will see two increases – a modem rental fee that will rise to $7 from $5 per month, and a $3 hike for monthly Web service. Subscribers who bundle Internet with either Comcast voice or TV service won’t pay the $3 hike, but will still see the modem fee increase, Neary said. Subscribers can eliminate the modem fee by buying their own modem. The Internet price hike reflects increased investment by Comcast in additional security services for subscribers and technology upgrades, Neary said. Another price increase, not reflected in Comcast’s stated 4.9 percent average monthly hike, is a $2 hike in the “HD technology fee.” TV subscribers who see HD Comcast channels will pay $8 per month for that technology fee, said Neary.

York Daily Record (York, Penn.): Comcast Cable is about three weeks away from putting into effect its second price increase in less than one year. On Aug. 1, the company will boost the average York County customer’s bill by roughly 3.5 percent, said Bob Grove , a spokesman for Comcast Cable’s Keystone Region. That increase is on top of a 1.9 percent price hike for the average Comcast customer that took effect Nov.1. The current rate increase is rooted in Comcast’s company-wide digital upgrade that calls for a jump in the number of high-definition channels to climb from 50 to 100, Grove said. Also, Comcast’s on-demand video menu will increase from 18,000 choices, 4,000 of which are HD, to 20,000 selections with 5,000 of those coming in as high-definition, he said.

“We’ve continually invested in next-generation technology to support new product features, more programming choices and improvements to customer service,” according to a statement released by Comcast concerning the increase. However, for those currently enrolled in a Comcast promotion, your bill will remain unchanged until that particular deal ends, Grove said. “Nearly half of all Comcast customers are on some kind of promotion,” he said.

Public Opinion (Chambersburg, Penn.): Many Comcast customers will see an increase in their monthly bills starting next month. The average customer bill in the Chambersburg area will increase by about 3.5 percent, according to a company spokesperson. The new rates take effect Aug. 1. A customer with standard cable or digital starter service will now pay $63.50 a month, or $3.50 more. Expanded basic, digital preferred, digital premier and total premium services are also increasing by $3.50 a month. Limited basic service, digital economy and family tier services are not affected. Economy, Performance and Blast! tiers of high-speed Internet will be increasing $2 a month. Monthly prices for the Ultra and Extreme 50 tiers will not change. Digital voice services will also cost $1.95 more a month.

Centre Daily Times (State College, Penn.): Comcast this week started sending out another round of mailings notifying customers of another change. But this time around the mailing isn’t warning of an impending digital conversion, or announcing the addition of more high definition television channels. This time around, it’s a notification of a rate increase. Effective Aug. 1, the average price for Comcast in the State College area will go up about 3.5 percent.

The company cited technology and infrastructure investments when contacted for comment. “These investments make it possible to deliver continued innovations, such as more HD and On Demand choices, converged services, faster Internet speeds, multi-platform content and new services consumers want and value,” said Bob Grove, director of public relations for the Keystone region of Comcast. Grove said the recent digital conversion by the company was one of the cost factors, as well as other programs that have included increasing Internet speeds for customers in the area. He noted that bills for customers whose service operates under one of the company’s promotions will not be affected until the promotion period expires.

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"Without limits" is ironic from Time Warner Cable, whose CEO still believes in Internet Overcharging schemes, even if customers don't.

Time Warner Cable has stopped promoting three different service plans for its Road Runner Mobile wireless broadband service.  The company’s new promotional literature and website now promotes just one mobile plan  — National Elite, with three different prices depending on what kind of business you do with the cable company.  It also does away with Internet Overcharging schemes, promoting an “unlimited data allowance” regardless of whether you access the service over 3G or 4G networks.  That’s ironic, because Time Warner Cable’s CEO Glenn Britt is still a big believer in consumption billing schemes and usage limits.  Should Time Warner Cable ever return with new overcharging schemes, we’ll be sure to remind them about the implications of providing unlimited wireless service while trying to restrict the much larger wired pipeline Road Runner’s cable-based network provides.

As we reported last year, when Time Warner Cable introduced Road Runner Mobile last winter in North Carolina, the company offered three different service plans for customers considering signing up:

• National Elite: Unlimited access to Clear WiMax and Sprint’s 3G EVDO Rev. A network for $79.95 per month to customers who also take the Road Runner Standard or Turbo cable modem service. Time Warner promises further discounts if customers subscribe to the cable provider’s double or triple-play cable service bundle which includes cable internet access and digital phone service.
• Mobile Elite: Unlimited access to mobile WiMax for $49.95 per month and pricing also applies when bundled with the Standard or Turbo cable modem service with an additional bundle discount available.
• Mobile 4G Choice: Caps mobile WiMax use at 2 gigabytes per month and will sell for $39.95 per month if customers add at least one other Time Warner cable service.

Now, as the company introduces the service in upstate New York, customers are getting promotions online and off for only one plan – National Elite.

Pricing appears to be standardized in most regions of the country, depending on what kinds of services you already receive from Time Warner Cable:

• Current Road Runner subscribers will pay $54.99 per month for National Elite;
• Current Time Warner Cable subscribers and those without cable or broadband service will pay up to $69.99 per month.

(Several cities in Texas can obtain special pricing promotions reducing the cost to $49.99 per month for 12 months.  Ask about special promotional pricing if you intend to sign up.)

Customers can select a plan that includes a two year service agreement with a $175 early termination fee (reduced by $7.50 for each month you remain a customer) and receive a substantial discount on a wireless modem and get the $35 activation charge waived.  Non-contract customers will have to buy their equipment at full price and pay the activation fee.  4G network speeds are up to 6 Mbps for downloads, and up to 1 Mbps for uploads. 3G network speeds are up to 1400 Kbps for downloads, and up to 500 Kbps for uploads, according to the Time Warner Cable website.

Plans directly available from Clear, which actually provides the Road Runner Mobile service are different:

• Clear On-the-Go provides 4G-only service for $40 a month.  No 3G service.
• Clear On-the-Go 3G Upgrade includes unlimited 4G service and up to 5GB of 3G usage for $55 a month.
• Get Two: Home + On-the-Go includes service for one home computer and one portable computer, with no 6Mbps download speed cap, for $55 a month (add $15 for 3G service)
• Get Two: On-the-Go includes service for two portable computers, with no download speed cap, for $65 a month (add $15 for 3G service for one computer, $30 for two)

A $35 activation fee applies to non-contract customers.  If you agree to a two-year contract, you can lease your equipment from Clear starting at around $5 per month and have the activation fee waived.

Now the fine print.

Although Clear markets its 4G service as “unlimited,” the fine print suggests they can make life difficult for customers they consider “disrupting or degrading” the service for others (underlining ours):

Excessive Utilization of Network Resources. Wireless networks have capacity limits and all customers can suffer from degraded or denied service when one or a small group of users consumes disproportionate amounts of a wireless network’s resources. Clearwire, therefore, will monitor both overall network performance and individual resource consumption to determine if any user is consuming a disproportionate amount of available resources and creating the potential to disrupt or degrade the Clearwire network or network usage by others. This process of monitoring both overall network performance and individual resource consumption is consistent with the description of the nature of the Service previously described in this AUP. Clearwire reserves the right to engage in reasonable network management to protect the overall network, including analyzing traffic patterns and preventing the distribution of viruses or other malicious code.

During periods of congestion, Clearwire uses various techniques such as reducing the data rate of individual bandwidth intensive users whose use is negatively impacting other users. This temporarily limits the amount of bandwidth available to the bandwidth intensive users until the congestion has diminished, at which point Clearwire will endeavor to lift any limits it may have imposed on bandwidth intensive users during the period of congestion. Clearwire may also consider historical usage patterns when temporarily reducing the data rate of bandwidth intensive users during periods of congestion. When feasible, upon observation of an excessive use pattern, Clearwire will attempt to contact you by telephone at the telephone number you gave to us or otherwise to alert you to your excessive use of bandwidth and to help you determine the cause. Clearwire representatives also are available to explain this AUP and to help you avoid excessive use incidents. If you are unavailable or do not respond to Clearwire’s attempt to contact you regarding excessive use, or if excessive use is ongoing or recurring and repeatedly having negative effects on other subscribers of the Service, Clearwire reserves the right to immediately restrict, suspend or terminate your Service without further notice in order to protect the network and minimize congestion caused by the excessive use. While the determination of what constitutes excessive use depends on the specific state of the network at any given time, excessive use is determined by resource consumption relative to that of a typical individual user of the Service and not by the use of any particular application.

Unlimited Use Plans.If you subscribe to a service plan that does not impose limits on the amount of data you may download or upload during a month, you should be aware that such “unlimited” plans are nevertheless subject to the provisions of this AUP. What this means is that all of the provisions described in this AUP, including those that describe how Clearwire may perform reasonable network management such as reducing the data rate of bandwidth intensive users during periods of congestion, will apply to your use of the Service. The term “unlimited” means that we will not place a limit on how much data you upload or download during a month or other particular period, however, it does not mean that we will not take steps to reduce your data rate during periods of congestion or take other actions described in this AUP when your usage is negatively impacting other subscribers to our Service.

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A major owner of apartment complexes in 13 states in the southeast and south-central United States has a deal for you, whether you like it or not.

Mid America Apartment Communities, which maintains a portfolio of 42,252 apartments, is requiring its residents to purchase cable television from providers like Comcast or they’ll find the $40 month cable fee tacked on their rent, water, or refuse collection bill.  They call it a wonderful savings opportunity for their residents.  But a Stop the Cap! investigation followed the money and discovered the real benefits are in kickbacks paid to Mid America by participating cable companies.

Mid America is extending the policy to all of its apartment complexes over the coming months, notifying residents about its new CableSaver program through flyers.  Enrollment in the program is automatic for new residents, and will take effect for existing residents upon the renewal of their annual lease agreement.

Known as “bulk buying,” apartment complexes can receive preferential discounts for their residents if they commit to mandatory cable service for each apartment.  In Chattanooga, residents of Mid America’s Hamilton Pointe, Hidden Creek, Steeplechase, and Windridge Apartments were notified this month they’ll be compelled to spend $40 a month for Comcast’s Digital Starter Package.

Mid America owns apartment complexes in 13 states. All of them will find the CableSaver program coming their way sooner or later.

The mandating of cable service is not going down well with every resident, particularly those who purchased satellite TV equipment or who have service with other providers like AT&T’s U-verse or Verizon FiOS.  While Mid America isn’t banning competing cable services from serving its complexes, residents will still be forced to pay for cable service in addition to whatever their current provider charges.

Lydia Ramirez of Chattanooga lives in a Mid America Apartment Communities property.  She told WDEF-TV News, ”We told them that we are not interested in this but they say it’s mandatory. And so here we are.”

Ramirez just had Dish Network installed but says she’s been told she will have to pay for Comcast cable, too, if she renews her lease.  She said, ”We don’t want Comcast and we feel that should be our choice instead of them making it mandatory.”

Instead of being allowed to choose satellite or other cable providers, Ramirez says being forced to go with Comcast is kind of like being told you can only grocery shop at Food Lion.  Ramirez adds, “I don’t see how they can do that. I think we as tenants have an option to choose what cable company we want to go with.”

Some renters in Houston, Texas have been there and done that.  Late last year, KPRC-TV reported residents at The Reserve at Woodwind Lakes got a deal they couldn’t refuse.  A letter from the front office promoted an exciting new offer: It reads the complex “has teamed up with a cable company to bring you an exclusive offer that will allow you to enjoy expanded basic service at a greatly reduced rate.”  Sounds great until you get to the second line of the letter, which uses language only a credit card company could love:

“If you have not yet chosen to opt in, the reduced rate of $40 will be added to your water and trash bill once your renewal takes effect.”

Text of a flyer delivered to Houston-area renters at a Mid America complex

In other words, your “choice” to “opt in” is neither.

Mid America is selling this mandatory cable program as a real money-saver.  But we discovered it’s actually a real moneymaker for Mid America, who earns compensation from kickbacks paid by cable companies in return for cramming cable service down renters’ throats.

Kickbacks for cable is nothing new in the rental business.  Complex owners used to routinely make exclusive deals with providers to deliver service to residents, often through contracts that kept competitors out.  But a 2007 FCC ruling made such exclusive arrangements illegal.  A Federal Court of Appeals agreed: cable companies cannot have exclusive rights to provide service in apartment buildings that they wire.  But complex owners and cable operators discovered an enormous loophole — complex owners can force residents to pay mandatory cable fees as part of their rent so long as they did not bar would-be competitors from also providing service.  But given that renters would already be paying for service, it is unlikely they’d choose another and pay double or more for duplicated cable service.

Cable companies like Comcast enter into these agreements because they provide guaranteed revenue for minimal cost, thanks to “install it once” cable wiring and bulk billing.  Since many renters are also young — renting their first apartment after leaving home — establishing a relationship with those customers may make them customers for life.  Cable companies can also use the program as an opportunity to sell add-on services to renters, such as broadband, digital phone, and premium channel packages.

But why would a company like Mid America want to alienate at least some of their renters who do not want to be forced to pay for cable service?  The answer is easily found in Mid America’s publicly disclosed financial reports — Mid America makes a healthy profit from the CableSaver program.

Mid America owns apartment complexes in these states

Mid America’s quarterly 10-K filing with the Securities and Exchange Commission shows the company is earning so much money from cable companies like Comcast, it has broken the revenue out into a new section of its financial report.

In the first quarter of 2010, as Mid America introduced its CableSaver program, the company reported earning $1.3 million dollars in revenue from cable kickbacks.  The company tells investors its new mandatory cable program will become an important source of new revenue for the complex owner:

“We continue to develop improved products, operating systems and procedures that enable us to capture more revenues. The continued roll-out of ancillary services (such as re-selling cable television), improved collections, and utility reimbursements enable us to capture increased revenue dollars.”

It’s all a part of a profit-making strategy to increase shareholder value and stick residents with increasing costs to deliver fatter profits.  Renters might be interested to know the company has more in store for them in the coming months:

Our goal is to maximize our return on investment collectively and in each apartment community by increasing revenues, tightly controlling operating expenses, maintaining high occupancy levels and reinvesting as appropriate. The steps taken to meet these objectives include:

• [...] developing new ancillary income programs aimed at offering new services to residents, including telephone, cable, and internet access, on which we generate revenue;
• implementing programs to control expenses through investment in cost-saving initiatives, including measuring and passing on to residents the cost of various expenses, including water and other utility costs.

Unfortunately for residents, short of moving, there is no escaping these fees. Some residents have contacted their member of Congress or the FCC to complain about the loophole that allows a complex owner to charge for cable service residents don’t always want. Another way to send a message is to tell Mid America you will not do business with them until they make the CableSaver program truly optional. If the company stands to lose more money than it receives from cable company kickbacks, it may choose to amend its policies.

Click here to view the embedded video.

We have four reports on this story, courtesy of WDEF-TV Chattanooga, Tenn., and KPRC-TV in Houston, Texas  (10 minutes):

1. The FCC bans exclusive cable contracts forcing renters to buy service from one provider.  (KPRC-TV 10/31/2007)
2. Can Complex Choose Your Cable Company? In Houston, Mid America Forcing Renters to Buy Comcast Cable.  (KPRC-TV 1/7/2010)
3. Four Chattanooga Area Apartment Complexes Make Comcast Cable Mandatory for Renters. (WDEF-TV 7/12/2010)
4. AT&T U-verse Arrives in Chattanooga (But Won’t Be Too Attractive to Mid America Residents). (WDEF-TV 4/30/2010)

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Craig E. Moffett joined Sanford C. Bernstein & Co. as the Senior Analyst for U.S. Cable and Satellite Broadcasting in 2002.

Craig Moffett, a Wall Street analyst with Sanford Bernstein, is sounding the warning bells that if AT&T and Verizon assign usage caps to their forthcoming LTE wireless broadband services, they will never provide suitable competition for American consumers.

The implications of Internet Overcharging schemes in wireless broadband go well beyond the two companies’ broadband offerings.  Investors expect either AT&T or Verizon to attempt a buyout of DirecTV in the coming months, hoping to pair the satellite service with broadband packages delivered by DSL, fiber, or wireless broadband.  Because many DirecTV subscribers are located in rural areas where even DSL service is often not available, wireless broadband networks would be the most likely means of reaching customers, but not with onerous usage caps.

“If LTE networks are going to be usage-capped, then the last pretense that LTE networks can be positioned as a substitute for terrestrial broadband would seem to be gone,” Bernstein told his clients. “And if LTE can’t be offered as a replacement for wired broadband, then the notion of an out-of-region bundle of DirecTV and LTE is no more.”

Unlike earlier broadband technologies, WiMax, LTE, and other 4G broadband platforms can deliver far more data to subscribers at reduced costs.  With the increased efficiencies offered by the faster networks, carriers can provide customers with considerably more wireless broadband service, unlike heavily capped 3G networks, most of which are limited to 2-5GB of monthly usage before the penalty rates or speed throttles kick in.  While completely unlimited service is unlikely until capacity increases, there is plenty of room to allow customers to access 4G networks without thinking twice about everything they do on them.

Sprint is betting its comeback on its virtually-unlimited Clear WiMax 4G service, now becoming available in an increasing number of cities across the country.  Marketed as a replacement for wired broadband, Sprint is hoping customers will flock back to the carrier, especially if AT&T and Verizon’s 4G LTE offerings are capped.

But AT&T and Verizon have both made noises about usage capping their LTE offerings, if only to increase revenue.  These profit raising Internet Overcharging schemes come despite efforts by the Obama Administration to dramatically increase wireless spectrum available for wireless broadband services.  Dave Burstein from DSL Prime says Federal Communications Commission chairman Julius Genachowski is betting the farm on wireless broadband being the best chance for increased broadband competition.

“The heart of the U.S. broadband plan is to release more spectrum – enough for 10-20 networks like Verizon’s LTE now building – and pray that will be enough competition in five to seven years to check price increases,” Burstein writes.

Making wireless an important substitute for DSL requires raising bandwidth caps from today’s typical 5-10 gigabytes to several times as high as LTE makes the cost reasonable. If Verizon follows AT&T with an abusively low cap of 2-5 gigabytes and Sprint etc. don’t clobber them, the whole broadband plan falls apart because that’s not enough for competition in the future.

I doubt Julius understands this, because he would be doing everything in his power to avoid low caps. It’s just one more strike against “affordable” broadband, like the recent Comcast and Verizon price increases. People need to laugh out loud when Genachowski says “affordable” while tolerating continuous price increases.

Dave Burstein, DSL Prime

While wireless broadband can deliver access to many Americans who have never had broadband service before, it’s not well-positioned to compete for customers seeking to use the next generation of high bandwidth Internet applications.

None of the current wireless services are suitable for high quality video streaming of HD TV shows and movies, a crucial application for many broadband users. Burstein also notes large uploads are painfully slow on Clear’s WiMax network because of limited upstream speeds, but he expects improvements in time, assuming carriers expand with demand.  If not, as more users pile on the next generation wireless networks, their suitability for high bandwidth services becomes even more questionable.

“How much wireless could compete with landlines, especially as all cable connections are moving to 50 meg, was a crucial question for the broadband plan,” Burstein writes. “The consensus of several good engineers is that 4G competes fine with DSL if not many people expect video or other high-bandwidth apps. Wireless certainly can’t keep up if many people want to watch their TV over the net, so it’s only a partial substitute.”

As for AT&T and Verizon, Moffett suspects both may have to take a pass on DirecTV, consumed with fighting against broadband reclassification and Net Neutrality policies in Washington.  Taking on a second battle to run another dog and pony circus to gain regulatory approval for a buyout of DirecTV may be more than they’re willing to deal with at the moment.

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AT&T was sending 156 page cell phone bills in Linda Drussel's name to her son in Texas

All Linda Drussel tried to do was add her son and daughter-in-law to her AT&T FamilyTalk calling plan, adding a phone to Drussel’s account for $10 per month.  But instead of a $10 monthly fee added to her bill, Drussel got a past due notice from a collection agency demanding $1,182, threatening to ruin her credit if she didn’t pay.

Drussel told WDAF-TV she doesn’t pay her bills late, and had no idea what AT&T was talking about, having never received a past due bill from AT&T.  The collections agency was unimpressed, telling Drussel, “Oh come on, Ms. Dressel, you have to know about this — your name is on this.”

Drussel made multiple calls to AT&T trying to get someone to resolve this, but even company supervisors refused to provide any straight answers.  WDAF-TV felt Drussel’s pain when they got the AT&T runaround themselves.  At one point, a reporter was surprised when AT&T asked her for Drussel’s AT&T cell phone number.

It turns out AT&T didn’t establish service for her son under her own account — instead opening one under her name and charging full price for service, delivering the bill to her son’s home in Texas.  When her son and daughter-in-law divorced, nobody paid the bill and AT&T’s collections department decided to pursue Linda Drussel for the past due bill, claiming it was her responsibility.

With a local station’s newscast following the story, AT&T finally determined Linda didn’t ultimately owe the company a cent and has resumed pursuing her son for the past due balance.

Click here to view the embedded video.

WDAF-TV’s ‘Problem Solvers’ had to be called in to try and get through to AT&T that a Kansas City-area woman didn’t owe the company $1,182 it claimed she did.  (3 minutes)

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Your Friendly Internet traffic cops Time Warner Cable and Comcast paid for research that suggests those Internet speed slowdowns are your fault (or at least not theirs).

A study from MIT suggests that broadband speed test results that show “real world” broadband speeds far below what your provider promises are actually better than you think, and if they’re not — it’s not your provider’s fault.  The paper, Understanding Broadband Speed Measurements, finds slow Internet speeds are often your problem, because you run too many applications on your computer, visit inaccurate speed measurement sites, use a wireless router, or have run into an Internet traffic jam outside of the control of your ISP.

The research comes courtesy of MIT’s Internet Traffic Analysis Study (MITAS) project, financially backed by some of North America’s largest cable and phone companies — Clearwire, Comcast, Liberty Global (Dr. John Malone, CEO), and Time Warner Cable in the United States, Rogers Communications and Telus in Canada.  Those providers also deliver much of the broadband speed data MITAS relies on as part of its research.  Additional assistance came from MIT’s Communications Futures Program which counts among its members Cisco, an equipment manufacturer and promoter of the “zettabyte” theory of broadband traffic overload and cable giant Comcast.

The study was commissioned to consider whether broadband speed is a suitable metric to determine whether an ISP provides good or bad service to its customers and if speed testing websites accurately depict actual broadband speeds.  Because Congress and the Federal Communications Commission have set minimum speed goals and have expressed concerns about providers actually delivering the speeds they promise, the issue of broadband speed is among the top priorities of the FCC’s National Broadband Plan.

“If you are doing measurements, and you want to look at data to support whatever your policy position is, these are the things that you need to be careful of,” Steve Bauer, technical lead on the MIT Analysis Study (MITAS) told TG Daily. “For me, the point of the paper is to improve the understanding of the data that’s informing those processes.”

Bauer’s 39 page study indicts nearly everyone except service providers for underwhelming broadband speeds:

While a principal motivation for many in looking at speed measurements is to assess whether a broadband access ISP is meeting its commitment to provide an advertised data service (e.g. “up to 20 megabits per second”), we conclude that most of the popular speed data sources fail to provide sufficiently accurate data for this purpose. In many cases, the reason a user measures a data rate below the advertised rate is due to bottlenecks on the user-side, at the destination server, or elsewhere in the network (beyond the access ISP’s control). A particularly common non-ISP bottleneck is the receive window (rwnd) advertised by the user’s transport protocol (TCP).

In the NDT dataset we examine later in this paper, 38% of the tests never made use of all the available network capacity.

Other non-ISP bottlenecks also exist that constrain the data rate well below the rate supported by broadband access connections. Local bottlenecks often arise in home wireless networks. The maximum rate of an 802.11b WiFi router (still a very common wireless router) is 11mbps. If wireless signal quality is an issue, the 802.11b router will drop back to 5.5mbps, 2mbps, and then 1 mbps. Newer wireless routers (e.g. 802.11g/n) have higher maximum speeds (e.g. 54 mbps) but will similarly adapt the link speed to improve the signal quality.

End-users also can self-congest when other applications or family members share the broadband connection. Their measured speed will be diminished as the number of competing flows increase.

The study also criticizes the FCC for relying on raw speed data that does not take into account the level of service being chosen by a broadband customer, claiming many service providers actually deliver higher speed service than their “lite” plans advertise.

In short, it’s everyone else’s fault (including yours) for those Internet speed slowdowns.

Ultimately, the report’s conclusion can be summed up in three words: change the subject.  It’s not slow broadband speeds that are the problem — it’s the lack of understanding about what you can accomplish with the speeds you do get from your ISP:

In the next few years, as the average speed of broadband increases, and the markets become more sophisticated, we expect that attention may shift towards a more nuanced characterization of what matters for evaluating the quality of broadband services. Issues such as availability (reliability) and latencies to popular content and services may become more important in how services are advertised and measured. We welcome such a more nuanced view and believe it is important even in so far as one’s principal focus is on broadband speeds.

One thing the paper does effectively deliver at top speed are industry talking points, particularly the one that says less regulation is better (underlining ours):

Our hope is that progress may be made via a market-mediated process that engages users, academics, the technical standards community, ISPs, and policymakers in an open debate; one that will not require strong regulatory mandates. Market efficiency and competition will be best served if there is more and better understood data available on broadband speeds and other performance metrics of merit (e.g., pricing, availability, and other technical characteristics).

These kinds of research reports are often tainted by the industry money that pays for them.  Researchers and universities routinely deliver industry-pleasing, sober-sounding studies in return for considerable financial contributions, grants, and other forms of underwriting.  This report lacks full disclosure about who is helping to pay for it — North America’s largest cable operators, who also deliver much of the data MITAS relies on for their research.

Ask yourself how much longer these companies would be writing checks to MIT had they delivered a report implicating them in false advertising of speeds they do not deliver or for relying on inadequate upstream providers to handle their Internet traffic?  The report pulls any and all punches delivered to the companies who finance it — a clear sign of bought-and-paid-for research in action.

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Rural Alltel wireless broadband customers are getting the axe as the company’s new owners have started pulling the plug on customers caught roaming too much with their service.

Not all of Alltel customers have become Verizon Wireless customers after Verizon bought Alltel in 2008.  In areas where Verizon Wireless already provided service, FCC rules required Alltel to sell its assets to other cell phone companies like AT&T or several regional providers.  One such company, Allied Wireless, bought the rights to use the Alltel name for its service.  But it’s not the same Alltel customers in southern Illinois remember.

Scott Sneddon, who lives near Benton, discovered that for himself when trying to log in using his Alltel Aircard.  When the service wouldn’t work, he called Alltel to learn they had unilaterally canceled his wireless broadband service because he was roaming off Alltel’s original network too often.  For the Sneddon family, that meant the Internet itself would no longer be available to them as they have no access to DSL or cable broadband service.  Sneddon received no warning and no second chance.

Sneddon is concerned because Alltel’s unlimited service plan did not carry the typical 5GB monthly usage allowance other providers enforce.  Despite having a two year contract, Alltel was able to pull the rug out from under his service because the company wanted to cut its roaming costs.  Although the Sneddon initially faced a $400 early cancellation penalty to switch providers, the media attention Alltel received made them relent — Alltel customers in similar positions who find themselves out in the wireless broadband cold will not have to pay a penalty to cancel all of their Alltel services.  Additionally, the company has promised to refund one month of service and refund all wireless broadband equipment charges incurred by dropped customers.

For rural America, incumbent wireless providers disconnecting service for customers they don’t want to serve is just another broken broadband promise.

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WSIL-TV in Harrisburg, Ill., shares the stories of two Illinois families left without Internet service when Alltel suddenly canceled their service “for roaming too much.”  (4 minutes)

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No Cable? No DSL from FairPoint Communications on those phone lines either.

Ossipee (Carroll County), New Hampshire

Some residents of Ossipee, New Hampshire have gotten so desperate for broadband service, they’ve planted lawn signs begging Time Warner Cable to provide it.  Ossipee, population 4,211, is located in the western half of New Hampshire.  Its decidedly rural charm has made it popular for vacationers and those seeking a quiet New England lifestyle.

Unfortunately, for those on Water Village Road, it’s too quiet.  There is no broadband service available.

FairPoint doesn’t offer DSL service in the immediate area and Time Warner Cable, although willing to wire neighbors 1/2 mile away, will not provide service to Water Village Road residents.

Time Warner Cable says it provides service where there are 15 or more homes per mile.  Water Village Road only has 13.95 homes per mile.  The company says it will cost about $100,000 to extend service, and has offered to pay $15,000 towards the cost, with the rest coming from the pockets of residents.

So far, they have refused.

Residents do have one way to get cable and Internet service from Time Warner Cable — commit a crime that lands them at the Carroll County Jail, less than a mile down the road.  It has cable.

As for the signs, Time Warner told WMUR-TV it appreciated the interest, but it still doesn’t make economic sense to provide Water Village Road residents with service.

(See more pictures of the lawn signs below the jump.)

Click here to view the embedded video.

WMUR-TV reports on the campaign by several Ossipee, N.H., residents to embarrass Time Warner Cable into bringing them cable and broadband service.  (2 minutes)

Here are some other examples of lawn signs seen on Water Village Road:

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