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The Peaceful War Against Comcast’s Data Caps: Don’t Like ‘Em? Get Off Your Butt

Licensed to print money

Licensed to print money

In 2008, Stop the Cap! was launched because the telephone company that serves our hometown of Rochester, N.Y., decided on a whim that it was appropriate to introduce a usage allowance of 5GB per month for their DSL customers. Frontier Communications CEO-at-the-time Maggie Wilderotter defended the idea with the usual claim that the included allowance was more than enough for the majority of Frontier customers. DSL customers already have to endure a lot of issues with Internet service and data caps should certainly not be one of them.

Stop the Cap! drew media attention and focus on the issue of data capping, organized customers for a coordinated pushback, and sufficiently hassled Frontier enough to get them to make the right decision for their customers by quietly rescinding the “allowances.”

As it would turn out, Frontier’s correct decision to suspend usage caps would prove an asset to them less than one year later when Time Warner Cable made it known it would trial its own usage caps in Austin and San Antonio, Tex., Greensboro, N.C., and yes… Rochester, N.Y. starting in the summer of 2009.

Time Warner Cable was slightly more generous with its arbitrary allowance — 40GB of usage for $55 a month. Customers already paying a lot for Internet access would now also have an arbitrary usage allowance and overlimit penalty fees with no service improvements in sight. Frontier’s decision the year before to rescind data caps played to their advantage and the company quickly launched advertising in Rochester attacking Time Warner Cable for its data caps, inviting customers to switch to cap-free Internet with Frontier.

Data caps are here!

Data caps are here!

Time Warner Cable’s experiment lasted less than two weeks and was permanently shelved, never to return. Four years later, Comcast began its own usage cap trial that not only continues to this day, but has expanded to cover more than 1,000 zip codes. Capped service areas typically live with a 300GB usage allowance with an overlimit fee of $10 per 50GB.

Yesterday at the investor-oriented UBS Global Media and Communications Brokers Conference, Comcast chief financial officer Mike Cavanagh assured Wall Street and shareholders Comcast’s desire to boost revenue from monetizing broadband usage remained an “important contributor” to the company’ goal of “demonstrat[ing] value and derive value from that pricing.”

Cavanagh said the company is using the line ‘heavy users should pay more’ to justify its caps.

“It’s been an experiment that we are using that the key data point behind it is kind of intuitive – ‘10% of our client base uses 50% of capacity.'”

While not ready to announce Comcast’s cap plan would be introduced nationwide, Cavanagh assured investors the experiments will continue as Comcast makes sure that over time it is “compensated for the investments that today’s marketplace requires us to make.”

The difference that makes it possible for Comcast to carry its usage cap experiments forward while Time Warner Cable had to quickly end theirs comes down to one thing: organized customer pushback. Time Warner Cable got heat from relentless, organized opposition in the four cities where caps mattered the most to consumers. Comcast, for the most part, is getting about as much heat as it usually does from customers. It’s time to turn the heat up.

protest

In fighting this battle for the last seven years, I can share with readers what works to force change and what doesn’t:

In 2009, Time Warner Cable faced protesters opposed to usage limits at this rally in front of the company's headquarters in Rochester, N.Y.

In 2009, Time Warner Cable faced protesters opposed to usage limits at this rally in front of the company’s headquarters in Rochester, N.Y.

Generally Useless

  • Complaining about usage caps in the comment sections of websites;
  • Signing online petitions;

Impotent But Potentially Useful in Large Numbers

  • Calling the provider to complain about usage caps;
  • Complaining about usage caps to a provider’s social media team (Facebook, Twitter, etc.);
  • Writing complaints on a company’s open support forum;

Useful, But Unlikely to Bring Immediate Results

  • Writing a letter or making a call complaining to elected officials about usage caps;
  • Advocating for more competition, especially from public/municipal broadband;
  • Filing formal complaints with the FCC and Better Business Bureau;
  • Complaining to state telecom regulators and your state Attorney General (they have no direct authority but can attract political attention);
  • Canceling or downgrading service, blaming usage caps for your decision.

Gasoline on a Lit Fire

  • Organizing a protest in front of the local cable office, with local media given at least a day’s notice and invited to attend;
  • Contacting local newsrooms and asking them to write or air stories about usage caps, offering yourself as an interview subject;
  • Sending local press clippings or links to media coverage to your member of Congress and two senators. Suggest another media-friendly event and invite the elected official to attend and speak, which in turn generates even more media interest.
In 2009, Time Warner Cable planned to implement mandatory usage pricing starting in Rochester, N.Y., Greensboro, N.C., and San Antonio and Austin, Tex.

In 2009, Time Warner Cable planned to implement mandatory usage pricing starting in Rochester, N.Y., Greensboro, N.C., and San Antonio and Austin, Tex.

In the battle with Time Warner Cable, we did all the above, but especially the latter, which quickly spun the story out of control of company officials sent to distribute propaganda about usage cap “fairness” and “generous” allowances. We were so relentless, we managed to get under the skin of at least one company spokesperson caught on camera being testy in an on-air interview, which backfired on the company and angered customers even more.

In the case of Comcast, very few of these techniques have been used in the fight against their endless data cap experiment. Customers seem satisfied writing angry comments and signing online petitions. Some have filed complaints with the FCC which are useful measures of hot button issues on which the FCC may act in the last year of the Obama Administration. But there is no detectable organized opposition on the ground to Comcast’s data caps. That may explain why Comcast’s CEO has repeatedly told investors your reactions to Comcast’s caps have been “neutral to slightly positive.” Many Wall Street analysts obviously believe that, because some are advocating the time is right to raise broadband prices even higher. After all, if your reaction to data caps was muted, raising the price another $5 a month probably won’t cost you as a customer either.

It would be very different if these analysts saw regular news reports of small groups of angry customers protesting in front of Comcast offices in different areas of the country. That would likely trigger questions about whether broadband pricing has gotten out of hand. Coverage like that often attracts politicians, who cannot lose opposing a cable company. Once Congress gets interested, the fear regulation might be coming next is usually enough to get companies to pull back and reconsider.

comcast sucksIf you are living with a Comcast data cap and want to see it gone, you can do something about it. Consider organizing your own local movement by tapping fellow angry customers and recruiting local activist groups to the cause. In Rochester, there was no shortage of angry college students and groups ready to protest. Google local progressive political groups, technology clubs, and technology-dependent organizations in your immediate area. Some are likely to be a good resource for building effective public protests, sign-making, and other TV-friendly protest techniques. Contact town governments, the mayor’s office of your city, technology-oriented newspaper columnists, radio talk show/computer support show hosts, etc., to build a mailing list for coordinated announcements about your efforts. Many local officials also oppose data caps.

If a local news reporter has covered tech or consumer issues in the past, many station websites now offer direct e-mail options to reach that reporter. If you give them a good TV-friendly story to cover, they will be back for more coverage as your local protest grows. We helped coordinate and share news about efforts against Time Warner in the cities that were subject to experiments, which also gave us advance notice of their talking points and an ability to offer a consistent response. Several stations carried multiple stories about the cap issue, supported by calls to TV newsrooms to thank them for their coverage and to encourage more.

We realize Comcast’s responsiveness to customers is so atrocious it approaches criminal, but Comcast does respond to Wall Street and shareholders who do not want the company under threat of fact-finding hearings, FCC regulatory action, or Congressional attention. They also don’t want any talk of municipal broadband alternatives. Sidewalk protests in front of the local cable office on the 6 o’clock news is a nightmare.

In the end, Time Warner Cable didn’t want the hassle and got the message — customers despise data caps and want nothing to do with them. Time Warner hasn’t tried compulsory usage caps again. If you want Comcast to get the same message, those living inside Comcast service areas (especially customers) need to lead the charge in their respective communities. We remain willing to help.

FCC Demands Details About Charter’s Suddenly Retired Usage Caps

charter twc bhLess than three months before announcing it would acquire Time Warner Cable in a $55 billion deal, Charter Communications quietly dropped usage caps, in place on its broadband plans since 2009, without explanation and the FCC wants to know why.

FCC officials have sent a letter to Charter requesting a range of information about the company’s broadband services, including information about Charter’s since-dropped usage cap program. The federal agency reviewing its buyout of Time Warner Cable wants to know when Charter dropped its usage caps and why.

Charter Communications has promoted “no usage caps” as a selling point to convince regulators its purchase of Time Warner Cable is a consumer-friendly transaction. Charter has promised a cap-free Internet experience for Time Warner Cable customers for three years, but has not committed to offer unlimited broadband service beyond that date.

Two months before Time Warner Cable planned a since-dropped 2009 market test of usage caps in New York, North Carolina and Texas, Charter Communications confirmed it was introducing “monthly residential bandwidth consumption thresholds” on its broadband customers ranging from 100GB for customers with speeds of 15Mbps or slower and 250GB for customers subscribed to 15-25Mbps service.

“In order to continue providing the best possible experience for our Internet customers, later this month we will be updating our Acceptable Use Policy (AUP) to establish monthly residential bandwidth consumption thresholds,” Charter’s Eric Ketzer told DSL Reports at the time. “More than 99% of our customers will not be affected by our updated policy, as they consume far less bandwidth than the threshold allows.”

Few customers realized Charter had placed a cap on Internet usage because the cable company treated the limits as “soft caps” — guidelines they could cite if they found a customer using a very large amount of bandwidth. But customers were not charged overlimit fees and few ever heard from Charter about their usage, even if it well-exceeded their allowance.

In front of Time Warner Cable protesting Internet Overcharging in 2009.

In front of Time Warner Cable offices in Rochester, N.Y. protesting Time Warner Cable’s proposed usage caps. (April 2009)

Only a handful of companies, including national providers like AT&T (for DSL) and Comcast (in usage cap market trial areas), have followed up usage allowances with stinging overlimit fees for those exceeding them, applied to customer bills. The practice is far more common among smaller and regional cable companies like Alaska’s GCI, which earned 10 percent of its broadband revenue billing customers for excess usage.

In March of this year, Stop the Cap! reported Charter quietly dropped usage caps (or “thresholds”) from their Acceptable Use Policy, ending six years of usage capped service — less than three months before announcing it was acquiring Time Warner Cable.

Time Warner Cable’s own experience with usage caps was short-lived after Stop the Cap! and other consumer advocates and elected officials launched a protest campaign against Time Warner Cable’s plans to expand a test of usage-based billing beyond Beaumont, Tex. to Rochester, N.Y., Greensboro, N.C., and the cities of Austin and San Antonio in Texas.

Time Warner proposed four tiers of usage allowances: 5, 10, 20, and 40 GB priced from $29.95 to $54.90 a month. The overlimit fee was to be $1/GB. Sanford Bernstein, a Wall Street research firm, predicted an average family subscribed to Time Warner’s top 40GB usage plan would pay around $200 a month in overlimit fees if they used Netflix more than 7.25 hours a week.

Within two weeks of launching protests in the four cities where Time Warner was planning to add caps, the plan was shelved permanently. But many Time Warner Cable customers have remained wary of the company’s plans regarding usage caps. Time Warner’s retooled, optional usage capped tiers offered to customers looking for a discount have proved dismal failures since their introduction, with fewer than 1% of Time Warner customers finding usage-limited Internet access compelling.

Rationing Your Internet Experience?

Rationing Your Internet Experience?

Consumer advocates also fear usage caps could reappear under Charter as quickly as they disappeared. Stop the Cap! is suspicious of Charter’s time-limited commitment to keep customers free of usage caps for three years. We are lobbying state and federal regulators to permanently extend that commitment as a condition of approving any merger between Charter and Time Warner.

“Customers must be assured they can always choose a reasonably priced unlimited use Internet option,” said the group’s founder Phillip Dampier. “If Charter/Time Warner Cable/Bright House wants to offer optional discounts for customers volunteering to limit their personal use, we are not opposed to that. But based on Time Warner’s own record, you can count on only a few thousand customers willing to voluntarily surrender unlimited, flat rate access.”

Stop the Cap! believes there is no credible reason Internet providers should be imposing compulsory usage caps or usage billing on anyone.

“Broadband is a huge money-maker and the costs to offer it continue to drop even as provider profits rise,” said Dampier. “Rationing broadband with a usage allowance is as credible as rationing Niagara Falls or breathing.”

The FCC is also requesting documentation detailing Charter’s proposed expansion of Wi-Fi hotspots in Time Warner Cable areas and company plans to boost standard broadband speeds from 15Mbps to 60Mbps. Charter has until Oct. 13 to respond.

Special Report: Drahi Strikes Again: Stop the Cap! Analyzes Altice’s Acquisition of Cablevision

special reportAfter 44 years in the cable television business, the Dolan family has agreed to part with its prize possession, Cablevision Systems Corp. in a $17.7 billion dollar deal with Patrick “The Slasher” Drahi’s Altice NV.

The transaction will profoundly impact Cablevision’s employees, customers, and potentially the cable business in general in the New York City metropolitan area, where Cablevision’s 3.1. million customers live.

Who is Patrick Drahi?

Although few Americans have heard of the self-made billionaire Patrick Drahi, most of French-speaking Europe knows Mr. Drahi only too well, regularly criticized in the French press for surrounding himself with debt-laden acquisitions, stiffing vendors and suppliers, and paying rock-bottom wages to the employees that remain after constant campaigns of ruthless cost cutting.

Drahi’s idol is none other than cable magnate billionaire John Malone, the man pulling the strings at Charter Communications. In the 1970s and 1980s, Malone ran America’s largest cable conglomerate – Tele-Communications, Inc. (TCI), a company castigated by customers for high rates and poor service about as much as Comcast is today.

Altice1Malone’s reputation with the U.S. Congress reached its lowest point in the 1980s when then-Sen. Al Gore, Jr. (D-Tenn.) alternately accused Malone of heading a monopolistic cable “Cosa Nostra” that extorted his constituents with rate increases that exceeded 180% in less than five years and the “Darth Vader of Cable.” Malone taught Drahi that massive sums of money could be made buying and selling cable television (and later broadband) over systems that are usually de facto monopolies. Although entertainment is always in high demand, few governments treat the cable systems that offer it as an “essential utility,” allowing them to charge whatever they want for service.

From his earliest days working for a small cable operator, Drahi dreamed of building a cable empire buying and selling cable systems, extracting whatever he could from subscribers. One of his earliest techniques was flouting a French telecommunications law that, at the time, forbade the carriage of non-French language channels. His cable systems quietly added Arabic language networks to entice the large North African immigrant community in France to sign up for service. Drahi did not directly promote the networks, relying on word-of-mouth to deliver sales in the Arabic speaking community.

The Sacred Monster

While very conservative about spending money on wages, service upgrades, and technology, customers of Drahi-owned cable companies report he had no problem raising their rates. Numericable’s customer satisfaction rating rivals that of Comcast — a one-star cable company charging five-star prices.

Drahi

Drahi

The announced acquisition of Cablevision (and earlier Suddenlink) by Drahi’s company — Altice NV, came with glowing coverage from the American media, particularly cable business news channels, the Wall Street press, and the New York Times. A Sept. 7, 2015 piece by Nicola Clark in the Times presented Drahi as a classic “rags to riches” success story, noting he loathes being interviewed and allegedly leads a humble existence:

Despite a personal fortune estimated at close to €17 billion, Mr. Drahi indulges in few of the trappings of great wealth, friends and colleagues said. Although he keeps several elegant homes — in Geneva, Paris and Tel Aviv — his personal tastes and habits hew to the mundane. He wears a plastic Swatch instead of a Rolex and often arrives at business meetings on foot or a bicycle, instead of by chauffeured car.

Clark only mentions in passing she relied almost entirely on a series of interviews with “a half-dozen friends and colleagues” to paint what turned out to be a one-sided picture of Mr. Drahi for American readers. That story had eyes rolling among staffers in the offices of French newspaper Les Echos, incredulous at the American infatuation with a man the newspaper calls the “sacré monstre” — sacred monster. In New York, reporter Lucie Robequain, foreign business correspondent for the French daily, tried to share the scene at the Goldman Sachs-organized Communacopia conference where the deal was personally announced by Mr. Drahi for her French readers.

cablevision“Newspapers [in America] devote entire pages [about Drahi], emphasizing his self-made-man side which Americans love so much,” Robequain noted. She added the New York Times painted Drahi an almost romantic figure, proposing to his wife one hour after meeting her and then putting everything between them at risk to build his personal fortune.

A later piece in the Times on Sept. 17 by Emily Steel and Mark Scott also was the subject of derision in the European press. Steel and Scott called Altice a “bold new player” in the American cable market and gave Dexter Goei, one of Drahi’s lieutenants (some in the French press prefer ‘minion’) space to gush about the game-changing deal. Goei joined Altice in 2009, having worked for 15 years in investment banking with JP Morgan and Morgan Stanley until the Great Recession arrived.

“There’s a new sheriff in town, and we’re probably going to run it a little differently,” Goei said during the investor conference in New York on Thursday that unveiled the deal.

Phantom Fiber

The Times piece also relied on unnamed “analysts” dangling the promise of fiber optics to appease subscribers concerned about a legendary cost-cutter taking the helm of the cable company.

[…] Analysts said Altice invests heavily in new infrastructure — with a focus on upgrading fixed-line networks with the latest fiber-optic technology. The priority, analysts said, is to provide subscribers with faster Internet connection speeds at competitive prices.

Previous deals involving Altice (Image: Financial Times)

Previous deals involving Altice (Image: Financial Times)

In Europe, the press is skeptical about promised upgrades, noting Altice is “an empire built on a mountain of debt” largely made possible by quantitative easing and record low interest rates, which permit companies to finance buyouts on the cheap. Drahi says he can save money through synergy — sharing operations and minimizing the need for customers to reach out for customer service. Altice officials claim just by simplifying Cablevision’s bills, the company can save $14 million annually.

Drahi’s success story with Wall Street and other investors comes from his ability to cut costs at acquired companies, often dramatically. It is part of the informal deal with investors that has allowed the company generous credit to continue its buying spree. The Cablevision deal promises the Dolans and other investors only $3.3 billion in cash. The rest of the purchase price will come from raising $8.6 billion in new debt, saddled on Cablevision’s books inside Altice.

So while unnamed analysts are promising fiber upgrades for Cablevision customers, the Financial Times and CNBC report only one thing will be on Cablevision’s menu post-merger: spending a lot less, not more. Drahi seems to agree.

In a slide presentation to investors, Altice compares Cablevision’s $49 a month in operating expenses per customer against what its Numericable operation in France spends on its customers: $14 a month.

So how does Numericable spend three times less on subscribers than Cablevision?

Cost Cutting Specialists

Say hello to Michel Combes, former CEO of Alcatel-Lucent. Two years ago, he took leadership of the company that was better known by many as Bell Labs. Known as a cost-cutter, Combes quickly announced plans to strip the company of less profitable business units and fired about 10,000 workers while also holding the line on salaries (except for his) of the remaining employees. After two years in the leadership position, Combes engineered the sale of the company to Nokia, putting himself out of a job. But he won’t be hurting. A breathtaking golden parachute package approved by his colleagues on Alcatel Lucent’s board caused a political furor in France.

Combes

Combes

Combes’ departure bonus was originally planned to amount to $15 million in stock after completing the company’s sale to Nokia, an amount Emmanuel Macron, France’s economic minister, called shocking and irresponsible. Under pressure, the board has since cut the payoff roughly in half. But according to L’Observateur, Drahi has offered his friend an even more lucrative “golden hello” — stock options awarded as a signing bonus worth up to $100 million. Combes’ first role will be to serve as Altice’s chief operating officer, presiding over new rounds of cost-cutting at the company’s various acquisitions. One item spared from review is Combes’ own compensation package. Those under him are not so lucky.

Wages and Jobs

“I do not like to pay salaries, I pay as little as I can,” Drahi told investors at the Goldman Sachs event last week. Drahi complained more than 300 employees at Cablevision were being paid more than $300,000 a year. “This we will change.

In addition to a large number of expected layoffs at Cablevision, widespread salary reductions are also likely to be forthcoming. Drahi’s cable companies have some of the smallest compensation packages in the industry, except at the top executive level.

Cablevision’s already testy relationship with some of its union employees will likely grow much worse under Drahi’s leadership. But that battle may have to wait until another day. In February, the union ratified a two-year agreement with Cablevision. In Europe, Drahi’s reputation among public unions is so poor many of the opinions expressed by unionized workers cannot be printed in a family newspaper.

Suppliers complain Drahi's companies don't pay their bills.

Suppliers complain Drahi’s companies don’t pay their bills.

In Lisbon, Jorge Felix – a representative of the trade union organization of workers at PT (Portugal Telecom) warns U.S. unions should get everything from Altice and Mr. Drahi in writing.

“There are commitments made by Altice before our union and are written,” Felix said, adding that he was disturbed by Drahi’s attitude toward his middle class employees. Felix notes Drahi has already created tremendous controversy in Portugal by stonewalling payment of suppliers and vendors’ outstanding invoices until the company secures written agreements promising enormous discounts, often amounting to 30-40% off current prices. That, in turn, can cause layoffs and salary reductions at suppliers, enriching Altice but hurting just about everyone else.

Drahi: Looking to run faster than the music

France’s Economic Minister Macron seems to agree, lashing out at Drahi’s now familiar business model.

“Is it good for the economy? The answer is no,” he said. “Is it good for investment? The answer is no. Is it good for employment? The answer is no.”

Macron also expressed concern that Drahi’s telecom empire was growing too fast — and taking on too much debt too quickly.

“I have a big concern in terms of leverage on Drahi due to its size and its place in our economy,” he said. “That’s my responsibility to look at it. He is looking to run faster than the music.”

Macron

Macron

Macron and his staff are concerned many of Drahi’s top executives and advisers come from New York’s financial markets and investment banks who either left or were pushed out in the turmoil of the Great Recession. Macron worries Drahi could be constructing the world’s first “too big to fail” cable operator that could cost nearly 100,000 jobs and require a government bailout if things turn sour.

Promised Service Improvement & Upgrades

With each cable consolidation merger, companies routinely promise subscribers will benefit from improved service. As mentioned earlier, unnamed analysts predict Drahi could invest up to $30 billion to improve the cable companies he buys in the United States.

“Which Altice are they talking about,” asks Stop the Cap! reader François Ribaud. “Altice owns Numericable, the largest cable company in metropolitan France, and if they are spending money it certainly was not on us.”

Ribaud’s original cable company Noos was acquired by Numericable in a massive acquisition effort in the early 2000s which today leaves almost all of France served by a single cable operator — Numericable.

“Things stagnated after that because Patrick Drahi does not spend money unless he has to,” Ribaud said. “The set-top boxes are outdated, the broadband service is often oversold, and heaven help you if there are service problems. The North African call center customer service help is an example for Numericable of getting what you pay for. They are awful.”

Charles Dolan

Charles Dolan

Drahi’s competitors in the fixed line and wireless markets eventually forced his wallet open, requiring an investment in fiber optics to help it remain a player in one of Europe’s most contentious telecommunications price wars. Drahi’s company in France lost subscribers as its network suffered from a lack of needed upgrades to manage demand.

“Now that I live in New York, I can say it is completely different than in France,” Ribaud said. “There is certainly no price war here, so there is no need to spend more money. The only people spending money will be customers I assure you.”

The Creator of Home Box Office Signs Off

Cablevision has been rumored “for sale” for so long without a deal, many analysts predicted the founding family would never let go of the company founded by 88-year old Charles Dolan, who helped transform what used to be a rural service to help customers receive distant over the air stations over a shared antenna into an urban and suburban subscription television business. Dolan made cable television something more.

Dolan founded Home Box Office (HBO), a commercial-free premium movie and entertainment channel free from the network “standards and practices” divisions that removed profanity and edited out violence from movies originally shown intact in theaters.

Cablevision systems used to cover 2.9 million subscribers in 19 states, many in small and medium-sized communities. By the 1990s, cable systems were swapped or sold to build regional empire-like service areas. Cablevision was no different, retreating to just three large service areas in New York, Cleveland and Boston. Soon thereafter, Cablevision would only serve metropolitan New York, particularly in Brooklyn, the Bronx, Long Island, parts of northern New Jersey and Connecticut, while exiting Cleveland and Boston.

The New York Post reported secret talks for the sale began in June, and a deal was complete at the end of August. Some of the discussions took place on a yacht floating around the Mediterranean. The Post reports the sale of Cablevision was an emotional experience for Dolan and he still thinks of the people who work there as family. But in the end, the Dolan family’s proceeds from the sale will reinforce their already well-established wealth and prominence. The same is unlikely to be true for Cablevision’s employees and customers under Drahi’s cost-conscious leadership.

Cable Operators Told to Get Ready for a Gigabit, But Will Rationed Usage Make It Meaningless?

Phillip Dampier: A cable trade publication is lecturing its readership on better broadband the industry spent years claiming nobody wanted or needed.

Phillip Dampier: A cable trade publication is lecturing its readership on better broadband the industry spent years claiming nobody wanted or needed.

Remember the good old days when cable and phone companies told you there was no demand for faster Internet speeds when 6Mbps from the phone company was all you and your family really needed?

Those days are apparently over.

Multichannel News, the largest trade publication for cable industry executives, warns cable companies gigabit broadband speeds are right around the corner and the technological transformation that will unleash has been constrained for far too long.

Say what?

Proving our theory that those loudest about dismissing the need for faster Internet speeds are the least equipped to deliver them, the forthcoming arrival of DOCSIS 3.1 technology and decreasing costs to deploy fiber optics will allow cable providers to partially meet the gigabit speed challenge, at least on the downstream. Before DOCSIS 3.1, consumers didn’t “need those speeds.” Now companies like Comcast claim it isn’t important what consumers need today — it’s where the world is headed tomorrow.

Comcast 2013:

Comcast executive vice president David L. Cohen writes that the allure of Google Fiber’s gigabit service doesn’t match the needs or capabilities of online Americans.

“For some, the discussion about the broadband Internet seems to begin and end on the issue of ‘gigabit’ access,” Cohen says, in a nod to Google Fiber. “The issue with such speed is really more about demand than supply. Our business customers can already order 10-gig connections. Most websites can’t deliver content as fast as current networks move, and most U.S. homes have routers that can’t support the speed already available to the home.” Essentially, Cohen argues that even if Comcast were to deliver web service as fast as Google Fiber’s 1,000Mbps downloads and uploads, most customers wouldn’t be able to get those speeds because they’ve got the wrong equipment at home.

Comcast 2015:

“We’ve consistently offered the most speeds to the most homes, but with the current pace of tech innovation, sometimes you need to go to where the world is headed and not focus on where it is today.”

“The next great Internet innovation is only an idea away, and we want to help customers push the boundaries of what the Internet can do and do our part to inspire developers to think about what’s possible in a multi-gigabit future.  So, next month we will introduce Gigabit Pro, a new residential Internet service that offers symmetrical, 2-Gigabits-per-second (Gbps) speeds over fiber – at least double what anyone else provides.”

Nelson (Image: Multichannel News)

Nelson (Image: Multichannel News)

Rich Nelson’s guest column in Multichannel News makes it clear American broadband is behind the times. The senior vice president of marketing, broadband & connectivity at Broadcom Corporation says the average U.S. Internet connection of 11.5Mbps “is no longer enough” to support multiple family members streaming over-the-top video content, cloud storage, sharing high-resolution images, interactive online gaming and more.

Nelson credits Google Fiber with lighting a fire under providers to reconsider broadband speeds.

“Google’s Fiber program may have been the spark to light the fuse — Gigabit services have fostered healthy competition among Internet and telecommunications providers, who are now in a position to consider not ‘if’ but ‘when and how’ to deploy Gigabit broadband in order to meet consumer’s perceived ‘need for speed’ and maintain their competitive edge,” Nelson wrote.

But the greatest bottleneck to speed advances is spending money to pay for them. Verizon FiOS was one of the most extravagant network upgrades in years among large American telecom companies and the company was savaged by Wall Street for doing it. Although AT&T got less heat because its U-verse development costs were lower, most analysts still instinctively frown when a company proposes spending billions on network upgrades.

Customer demand for faster broadband is apparent as providers boost Internet speeds.

Customer demand for faster broadband is apparent as providers boost Internet speeds.

The advent of DOCSIS 3.1 — the next generation of cable broadband technology — suggests a win-win-win for Wall Street, cable operators, and consumers. No streets will have to be torn up, no new fiber cables will have to be laid. Most providers will be able to exponentially boost Internet speeds by reallocating bandwidth formerly reserved for analog cable television channels to broadband. The more available bandwidth reserved for broadband, the faster the speeds a company can offer.

Many industry observers predict the cable line will eventually be 100% devoted to broadband, over which telephone, television and Internet access can be delivered just as Verizon does today with FiOS and AT&T manages with its U-verse service.

The benefits of gigabit speeds are not limited to faster Internet browsing however.

Nelson notes communities and municipalities are now using gigabit broadband speeds as a competitive tool selling homes and attracting new businesses to an area. According to a study from the Fiber to the Home (FTTH) Council, communities with widely available gigabit access have experienced a positive impact on economic activity — to the tune of more than $1.4 billion in GDP growth. Those bypassed or stuck in a broadband backwater are now at risk of losing digital economy jobs as businesses and entrepreneurs look elsewhere.

The gigabit broadband gap will increasingly impact the local economies of communities left behind with inadequate Internet speeds as app developers, content producers, and other innovative startups leverage gigabit broadband to market new products and services.

The Pew Research Center envisioned what the next generation of gigabit killer apps might look like. Those communities stuck on the slow lane will likely not have access to an entire generation of applications that simply will never work over DSL.

But before celebrating the fact your local cable company promises to deliver the speed the new apps will need, there is a skunk that threatens to ruin your ultra high speed future: usage-based pricing and caps.

At the same time DOCSIS 3.1 will save the cable industry billions on infrastructure upgrade costs, the price for moving data across the next generation of super high-capacity broadband networks will be lower than ever before. But cable operators are not planning to pass their savings on to you. In fact, broadband prices are rising, along with efforts to apply arbitrary usage limits or charge usage-based pricing. Both are counter-intuitive and unjustified. It would be like charging for a bag of sand in the Sahara Desert or handing a ration book to shoreline residents with coupons allowing them one glass of water each from Lake Ontario.

skunkCox plans to limit its gigabit customers to 2TB of usage a month. AT&T U-verse with GigaPower has a (currently unenforced) limit of 1TB a month, while Suddenlink thinks 550GB is more than enough for its gigabit customers. Comcast is market testing 300GB usage caps in several cities but strangely has no usage cap on its usage-gobbling gigabit plan. Why cap the customers least-equipped to run up usage into the ionosphere while giving gigabit customers a free pass? It doesn’t make much sense.

But then usage caps have never made sense or been justified on wired broadband networks and are questionable on some wireless ones as well.

Stop the Cap! began fighting against usage caps and usage pricing in the summer of 2008 when Frontier Communications proposed to limit its DSL customers to an ‘ample’ 5GB of usage per month. That’s right — 5GB. We predicted then that usage caps would become a growing problem in the United States. With a comfortable duopoly, providers could easily ration Internet access with the flimsiest of excuses to boost profits. Here is what we told the Associated Press seven years ago:

“This isn’t really an issue that’s just going to be about Frontier,” said Phillip Dampier, a Rochester-based technology writer who is campaigning to get Frontier to back off its plans. “Virtually every broadband provider has been suddenly discovering that there’s this so-called ‘bandwidth crisis’ going on in the United States.”

That year, Frontier claimed most of its 559,300 broadband subscribers consumed less than 1.5 gigabytes per month, so 5GB was generous. Frontier CEO Maggie Wilderotter trotted out the same excuses companies like Cox and Suddenlink are still using today to justify these pricing schemes: “The growth of traffic means the company has to invest millions in its network and infrastructure, threatening its profitability.”

Just one year later, Frontier spent $5.3 billion to acquire Verizon landline customers in around two dozen states, so apparently Internet usage growth did not hurt them financially after all. Frankly, usage growth never does. As we told the AP in 2008, the costs of network equipment and connecting to the wider Internet are falling. It still is.

“If they continue to make the necessary investments … there’s no reason they can’t keep up” with increasing customer traffic, we said at the time.

We are happy to report we won our battle with Frontier Communications and today the company even markets the fact their broadband service comes without usage caps. In many of Frontier’s rural service areas, they are the only Internet Service Provider available. Imagine the impact a 5GB usage cap would have had on customers trying to run a home-based business, have kids using the Internet to complete homework assignments, or rely on the Internet for video entertainment.

So why do some providers still try to ration Internet usage? To make more money of course. When the public believes the phony tales of network costs and traffic growth, the duped masses open their wallets and pay even more for what is already overpriced broadband service. Just check this chart produced by the BBC, based on data from the Organization for Economic Co‑operation and Development. Value for money is an alien concept to U.S. providers:

_70717869_countries_with_high_speed_broadband

The usual method of combating pricing excess is robust competition. With a chasm-sized gap between fat profits and the real cost of the service, competitors usually lower the price to attract more customers. But the fewer competitors, the bigger the chance the marketplace will gravitate towards comfort-level pricing and avoid rocking the boat with a ruinous price war. It is one of the first principles of capitalism — charging what the market will bear. We’ve seen how well that works in the past 100+ years. Back in 2010, we found an uncomfortable similarity between broadband prices of today with the railroad pricing schemes of the 1800s. A handful of executives and shareholders reap the rewards of monopolistic pricing and pillage not only consumers but threaten local economies as well.

special reportThe abuses were so bad, Congress finally stepped in and authorized regulators to break up the railroad monopolies and regulate abusive pricing. We may be headed in the same direction with broadband. We do not advocate regulation for the sake of regulation. Competition is a much more efficient way to check abusive business practices. But where an effective monopoly or duopoly exists, competition alone will not help. Without consumer-conscious oversight, the forthcoming gigabit broadband revolution will be stalled by speed bumps and toll booths for the benefit of a few giant telecommunications corporations. That will allow other countries to once again leap ahead of the United States and Canada, just as they have done with Internet speeds, delivering superior service at a lower price.

China now ranks first in the world in terms of the total number of fiber to the home broadband subscribers. So far, it isn’t even close to the fastest broadband country because much of China still gets access to the Internet over DSL. The Chinese government considers that unacceptable. It sees the economic opportunities of widespread fiber broadband and has targeted the scrapping of every DSL Internet connection in favor of fiber optics by the end of 2017. As a result, with more than 200 million likely fiber customers, China will become the global leader in fiber infrastructure, fiber technology, and fiber development. What country will lose the most from that transition? The United States. Today, Corning produces 40% of the world’s optical fiber.

Global optical fiber capacity amounted to 13,000 tons in 2014, mainly concentrated in the United States, Japan and China (totaling as much as 85.2% of the world’s total), of which China already ranked first with a share of 39.8%. Besides a big producer of optical fiber, China is also a large consumer, demanding 6,639 tons in 2014, 60.9% of global demand. The figure is expected to increase to 7,144 tons in 2015. Before 2010, over 70% of China’s optical fiber was imported, primarily from the United States. This year, 72.6% of China’s optical fiber will be produced by Chinese companies, which are also exporting a growing amount of fiber around the world.

John Lively, principal analyst at LightCounting Market Research, predicts China could conquer the fiber market in just a few short years and become a global broadband leader, “exporting their broadband networking expertise and technology, just like it does with its energy and transportation programs.”

Meanwhile in the United States, customers will be arguing with Comcast about the accuracy of their usage meter in light of a 300GB usage cap and Frontier’s DSL customers will still be fighting to get speeds better than the 3-6Mbps they get today.

The Philippines: Free Market Broadband Paradise or Deregulated Duopolistic Hellhole?

special reportFans of the “hands-off” approach to broadband oversight finally have a country where they can see a deregulated free marketplace in action, where consumers theoretically pick the winners and losers and where demand governs the kinds of services consumers and businesses can get from their providers.

That country is the Philippines, which has taken the libertarian free market approach to Internet access in a dramatic leap away from the authoritarian Marcos era of the 1980s.

The Deregulation “Miracle”

Until 1995, the Philippines Long Distance Telephone Company (PLDT) maintained a 60-year plus government-sanctioned monopoly on telecommunications services. Its performance was less than compelling. Establishing landline service took up to 10 years on a lengthy waiting list. Getting a phone line was the first problem, making sure it worked consistently was another. Just over 10 years after the United States formally broke up AT&T and the Bell System, the government in Manila approved RA 7925 – the Public Telecommunications Policy Act of 1995, breaking PLDT’s monopoly and establishing a level playing ground for each of 11 regions across the country and its many islands in which private companies could compete with PLDT for customers.

philippinesTo attract investment and competition, the government declared all value-added services like Internet access deregulated and guaranteed the complete privatization of all government telecom facilities no later than 1998. It also initially limited the number of companies that could compete against PLDT in each region to two new entrants. The government felt that would be necessary to attract competitors that knew they would have to quickly invest millions, if not billions, to build telecom infrastructure in the Philippines. It would be hard to make a case for investment in a region where a half-dozen companies all engaged in a price war fighting for customers while stringing new telephone lines and building cell towers.

To prevent cherry-picking only the wealthiest areas of the country, the government declared its desire for a privately funded nationwide telecom network and used the 11 regions, combining urban and rural areas in each, to get it. Competitors were required to support at least 300,000 landlines and 400,000 cellular lines in each region. That assured new networks could not simply be built in urban areas, bypassing smaller communities. After building their networks, companies largely operated on their own in a mostly-free deregulated market, slightly overseen by the National Telecommunications Commission (NTC) — the Philippines equivalent of the FCC.

The early years of telecom deregulation seemed promising. PLDT, much like AT&T in the United States, kept the lion’s share of customers (67.24%) after deregulation took effect, but new competitors quickly captured one-third of the market. But with lax regulation and oversight, some of the Philippines’ most powerful families, many benefiting under years of the Marcos dictatorship, managed to gain influence in the newly competitive Philippines telecom business. In the United States, telecom competition meant a choice between Sprint, MCI, AT&T or others. In the Philippines, you dealt with one or two of nine powerful family owned conglomerates, each operating with a foreign-owned telecom partner. It would be like choosing between companies owned by the Rockefellers, the Astors, the Carnegies, or the Morgans.

pldtThe NTC remained more “hands-off” than the FCC, avoiding significant involvement in critical interconnection issues — how competing telephone companies handle calls from subscribers of a competing provider. That was last an issue in the United States in the early 1900s, where rare independent competitors to the rapidly consolidating Bell System faced a telecom giant that initially refused to handle calls from customers of other companies. American regulators eventually demanded interconnection policies that guaranteed customers could reach any other telephone customer, regardless of what company handled their service. In the Philippines, the NTC eventually mandated less-demanding access, allowing companies to charge long distance rates to reach customers of other companies. In the 1990s, it was not uncommon to find businesses maintaining at least two telephone lines with different companies to escape long distance expenses and stay accessible to all of their potential customers.

PLDT initially fought the opening of the marketplace but benefited handsomely from it once it took effect. The company got away with setting sky-high interconnection rates to connect calls from other smaller providers to its customers. It also made access to its network a minefield of bureaucracy and often required competitors to sign unfair revenue sharing agreements.

It is Cheaper to Buy Out the Competition Instead of Competing With It

competition-issues-in-philippine-telecommunications-sector-challenges-and-recommendations-3-638

(Image Courtesy: Mary Grace Mirandilla-Santos/LIRNEasia)

The investment community eventually balked at the cost of constructing competing telecommunications networks, especially after the dot.com crash in 2000, and a drumbeat for industry consolidation through mergers and acquisitions quickly grew too loud to ignore. Investors fumed over the amount of money being spent by providers to meet their service obligations in the 11 subdivided regions. Instead of building redundant or competing infrastructure, allowing competitors to merge would cut costs and enhance investor return. The NTC let the marketplace decide, as did the government, and it led to a frenzy of industry consolidation that ran far beyond what the FCC and American Justice Department would ever tolerate.

In 2011, the government backed a colossal merger that brought together the wireless networks of Pilipino Telephone Corporation, PLDT, and Smart under the PLDT brand. The three former competitors became one and controlled 66.3% of the Philippine’s wireless customers. The merger was comparable to allowing Verizon to buy out Sprint.

Additional mergers in response to the super-sized PLDT rapidly reduced the competitiveness of Philippine’s telecommunications marketplace to a duopoly. Just two companies — PLDT, Globe, and their respective house brands — dominate landline, DSL, cable, and wireless telecommunications service in the Philippines. The investment community celebrated the deal’s approval as a lucrative goldmine of future revenue gains from a less competitive market.

Philippine Broadband: Hey, It’s at Least Moderately Better Than Afghanistan

competition-issues-in-philippine-telecommunications-sector-challenges-and-recommendations-8-638

(Image courtesy: Mary Grace Mirandilla-Santos/LIRNEasia)

Broadband performance, under any measure other than financial success, has proved abysmal for Philippine consumers and businesses. The country’s broadband speeds are among the worst in the world, only beating Afghanistan in many speed tests. Look the other wayoversight led to a bribery scandal in 2007 that threatened to bring down the government. Officials exploring the development of a National Broadband Network were accused of soliciting kickbacks from Chinese equipment vendor ZTE, which would have been responsible for supplying equipment for the project. The government canceled the project as the scandal widened and some of the principals left the country or in at least one case were kidnapped.

Eight years later, broadband in the Philippines would be considered a North American nightmare. The free market approach has led to free-flowing profits and a profound lack of marketplace competition, with broadband ripoffs and broken promises rampant across the country.

Although both PLDT and Globe Telecom are spending large sums on infrastructure, much of it benefits their very profitable wireless networks and business customers. Despite the investments, residential customers are stuck with some of the world’s worst broadband speeds and performance.

An independent Quality of Service test revealed the bad news all around:

The findings of the Philippine QoSE tests were expected, but nevertheless still disappointing.

The best performing among the three ISPs delivered only 21% of actual versus advertised speed on average. This same ISP also offered at least 256kbps download speed (generally accepted definition of broadband) only 67% of the whole time it was tested, falling short of the required 80% service reliability.

The Broadband Commission defines the core concepts of broadband as an “always-on service” with high capacity “able to carry lots of data per second.” While there is no official definition of broadband locally, the Philippine Digital Strategy 2011-2016 defines broadband Internet service as 2Mbps download speed.

Finally, like the last nail in the coffin, Philippine ISPs performed the worst in terms of value for money when compared to select providers in South Asia and Southeast Asia. The highest value given by any of the three Philippine ISPs tested was a measly 22kbps per US dollar. This figure is too low when compared to similar mobile broadband ISPs that offer 173kbps per dollar in Jakarta, Indonesia and 445kbps per dollar in Colombo, Sri Lanka.

These results have huge implications on truth in advertising, consumer welfare, and the need for appropriate regulation.

My DSL Service is So Bad I Prefer 3GB Usage-Capped Slow Wireless Instead

senloren

Legarda

Home DSL broadband is so bad that customers have increasingly dropped service in favor of tightly managed wireless service. Companies report DSL customer losses over the past few years, with no end in sight.

The telecom regulator has generally just shrugged its shoulders at the situation, suggesting competition between equally poor providers will somehow resolve the problem. That view is applauded by service providers who claim the Internet is “just a value-added service” not essential to basic living needs. But consumer groups wonder why providers are allowed to make false advertising claims about the speed of their service with no repercussions. A range of position papers appealing to the government to create a meaningful minimum broadband speed have been introduced and some are being pushed by members of the Philippine Senate.

Senator Loren Legarda joined scores of other frustrated customers complaining about unreliable and expensive Internet in the country. In a 2014 hearing Legarda complained she had once again lost her DSL Internet connection in her office and her wireless connection was so slow it was unusable.

“As we speak now, there is no Internet connection in my office,” Legarda said. “I received a message this morning from my staff on my way here because I may be e-mailing, etc. And for someone whose deadline was yesterday, I always want things done fast and I’m sure many of you want that efficiency too to serve our people better.”

ANC aired this story about Sen. Legarda’s broadband problems and how Philippines’ providers oversell their networks back in 2014. (4:56)

We Oversold Our Networks So Sue Us, Except You Can’t

Providers blame the problem on oversold networks that attempt to manage too many paying customers on an inadequate network. In other words, they blame themselves with little fear any regulator will create problems for them.

Wireless service is no panacea either. Customers in the Philippines face draconian “fair use policies” on so-called “unlimited plans” that leave them throttled after 1GB of usage per day or 3GB of usage per month, whichever happens first. Providers suggest the policy is a benefit, promising them a better user experience. Besides, they suggest, even those that run into the speed throttle can still browse the Internet, albeit at as speed resembling dial-up:

Your internet speed will slow down if you use up 1GB of data for the day, or accumulate 3GB of data usage for the month.

If you hit the 1GB/day threshold, you’ll experience slower speed, but no worries because as we mentioned above, you can still surf! You’ll move up to normal speed at midnight. If you hit the 3GB/month threshold, your speed will move up to normal speed on the next calendar month (not based on bill cycle).

With a stifling usage allowance, shouldn't providers in the Philippines be offering better speeds?

With a stifling usage allowance, shouldn’t providers in the Philippines be offering better speeds?

Say Hello to the “Promo Pack” – Your Net Neutrality Nightmare Come True

Remember the scary ads from Net Neutrality proponents promising a future of Internet add-ons that would charge you to surf theme-based websites without facing network slowdowns or stingy usage caps if Net Neutrality protections were not forthcoming? In the Philippines, the nightmare came true. Mobile providers sell added cost “promo packs” that bundle extra throttle-free usage with theme-based apps. A package with Spotify runs about $6.50US a month and includes 1GB of usage. Anyone can buy a Spotify premium membership in the Philippines for around $4.37US without the add-on. But even worse are app-based promo packs that bundle free-to-download-and-use apps in the U.S. with special designated usage allowances.

Want to use Google Maps on your wireless provider? A “promo pack” including it costs around $2.17 a month and includes 300MB of usage. That money doesn’t go to Google — it stays in the pocket of the provider – Globe Networks. Twitter will set you back $4.37US a month and includes 600MB of usage, which seems odd for a short message service when contrasted with an identically-priced promo pack for Facebook, that needs the extra usage allowance more than Twitter likely would. But then they also get you for Facebook Messenger, which costs an extra $2.17US per month and comes with its own usage allowance — 300MB.

"What If" actually "Is" in the Philippines.

“What If” actually “Is” in the Philippines.

Globe-Telecom3While segmenting out popular mobile apps for special treatment, Philippine mobile providers have also taken Verizon and AT&T’s lead, pushing plans like myLIFESTYLE that bundle unlimited text and phone calls with expensive data plans.

Lifestyle Promo Packs:

Lifestyle Bundle

Price (Philippine Peso)

Consumable MBs/GBs

Description

Spotify

299

1GB

Premium membership to Spotify, with 1GB data
Work

299

1GB

Access to Gmail, Yahoo Mail, Evernote, + 10GB Globe Cloud Storage
Explore Bundle

99

300MB

Access to Agoda, Trip Advisor, Cebu Pacific, PAL
Navigation Bundle

99

300MB

Access to Waze, Grab Taxi, Google Maps, MMDA app, Accuweather
Shopping Bundle

299

1GB

Access to Zalora, Amazon, Ebay, OLX, Ayosdito
Facebook

199

600MB

Access to Facebook
Twitter

199

600MB

Access to Twitter
Viber

99

300MB

Access to Viber
FB Messenger

99

300MB

Access to FB Messenger
Chat Bundle

299

1GB

Access to Viber, Whats App, FB Messenger, Kakao Talk, Line, WeChat
Photo Bundle

299

1GB

Access to Instagram, Photogrid, Photorepost, Instasize

Extra Add-ons:

Basic Price Description
Consumable 100 Stackable Amounts of P100 denomination consumables
Unli Duo 299 Unlimited Calls to Landline/duo
Unli Txt All 299 Unlimited Texts to other networks
Unli iSMS 399 Unlimitend International SMS to one intl. number
Unli IDD 999 Unli IDD calls to one intl. number
DUO International 499 Unlimited calls to US landlines

The Philippines Should Regulate Under the American Example vs. The Philippines Should Not Regulate Under the American Example (It’s Obama’s Fault)

Lincoln_MemorialProviders in the Philippines have learned a lot from America’s telecommunications lobbyists. Their advocacy campaigns revolve around the theme that the United States has the best wireless networks in the world, developed under a largely hands-off regulatory philosophy that the Philippine government should follow.

The government and regulators largely acquiesced to that campaign until this year, when that idea came back to haunt providers. Earlier this year, the Obama Administration and the FCC began taking a more hands-on approach to telecom regulation after recognizing the marketplace is not as competitive as providers suggest. Strong Net Neutrality enforcement, limits on mergers and acquisitions and strong signals marketplace abuses would no longer be tolerated are now being pushed in Washington by the White House and the Federal Communications Commission. Providers in the Philippines no longer advocate following the American model, but it may now be too late.

obamaThe NTC is close to issuing new minimum broadband speed and performance standards and is now listening to Filipino consumers that launched Democracy.net.ph to fight usage caps in the Philippines back in 2011. The NTC may soon require providers advertise average speeds and performance, not “up to” speeds nobody actually receives. Those getting poor service would be entitled to refunds or rebates.

That could be the first step towards a more activist NTC that may have learned the lesson that listening to the broken promises of better service through deregulation has resulted in some of the worst broadband performance the world has to offer. The Philippines took the advocacy arguments of the deregulation crowd and doubled down, not only allowing providers to lie and distort in their advertising, but also permitting massive industry consolidation reducing the choice for most Filipinos to just two providers for almost all telecommunications services. The government looked the other way as corruption turned into a scandal and today it is left with two very powerful conglomerates that deliver third world Internet access while pocketing the generous proceeds.

A Better Way to Better Broadband

A deregulated, free market only works where healthy competition exists. Too few players always leads to reduced innovation, poorer service at higher prices, and a corporate fortress deterring would-be competitors that are unlikely to be able to survive in a fair, competitive fight. For the Philippines (and by extension the United States) to fully benefit from healthy competition, large conglomerates must be broken up and further mergers must be prevented above all else. Until sufficient competition can self-regulate the marketplace, strong oversight is necessary to protect consumers from the abuses that always come from monopolies and duopolies. Charging wireless customers for free apps and suggesting 3GB of usage is equal to unlimited broadband are two places to start cracking down, quickly followed by an investigation into where investment dollars are being spent and for whose benefit. It seems like customers are not reaping any rewards in return for high-priced service.

The Philippine government should also continue exploring a National Broadband Network strategy that puts the country’s broadband needs above the profit motivations of the current duopoly. Governments build roads and bridges, airports and railways. Broadband is another infrastructure project that needs to be developed in the public interest. If private companies want to be a part of that effort, that is wonderful. But they should not be dictating the terms or holding the country back from what may be the biggest scandal of all — broadband that barely performs better than what the Taliban can get these days in Helmand province.

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