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Wireless Carriers’ Ho-Hum Economics of Wi-Fi Calling; The Real Money is Still in Data

telecom revenueThe year 2013 marked a significant turning point for phone companies that have handled voice telephone calls for over 100 years. For the first time, the volume of domestic telephone calls and the revenue generated from them was nearly flat. For the last two years, both are now in decline on the wireless side of the business as North Americans increasingly stop talking on the phone and text and message instead.

The U.S. wireline business peaked in the year 2000 with 192 million residential and office landlines. Over the next ten years, close to 80 million of those — 40 percent, would be permanently disconnected, replaced either by cell phones, cable telephone service, or a Voice over IP line. Wireless companies picked up the largest percentage of landline refugees, most never looking back.

Over one-third of more than $500 billion in annual revenue generated by telecom companies in 2013 came from voice services. Although that sounds like a lot, it’s a pittance of a percentage when compared to 2005 when AT&T, Sprint, T-Mobile, and Verizon Wireless earned most of their revenue from voice calls. Ten years ago, wireless companies principally sold plans based on the number of calling minutes included, and many customers often guessed wrong, paying per minute for calls exceeding their allowance.

At first, this represented a revenue bonanza for the wireless industry, which earned billions selling customers minute-based calling plans that came with built-in cost-controlling deterrents for long-winded talkers — the concern of using up their calling allowance.

attverizonStarting in 2008, wireless industry executives noticed something peculiar. While revenue from texting add-on plans was surging, the growth in calling began to level off. Wireless voice usage per subscriber peaked at an average of 769 minutes in 2007 and began falling after that year. By 2011, the average customer was making 615 minutes of calls a month. As customers began downgrading calling plans, wireless carriers shifted their quest for revenue towards text messaging.

For awhile, texting earned wireless companies astounding profits that required little extra investment in their networks. SMS service at most carriers was effectively priced at $1,250 per megabyte, broken up into 160 byte single messages. In 2011, over 2.3 trillion text messages were exchanged. A message that cost a wireless carrier an infinitesimal fraction of a penny to send and receive cost consumers up to 20 cents or more apiece if they lacked an optional texting plan. To further boost revenue, some carriers like Verizon Wireless began to pull back offering customers a variety of tiered texting plans with different messaging allowances, switching instead to a single, more expensive unlimited texting plan. Many customers balked at the $19.95 a month price and began exploring other forms of messaging each other.

chetan sharmaThe industry’s demand for profit eventually threatened to kill the goose that laid the golden egg. At the same time wireless carriers were raising prices on text messages and forcing customers into expensive texting add-on plans, free third-party messaging apps began eating into texting volume. By 2012, the use of SMS declined for the first time, with 2.19 trillion text messages sent and received, down 4.9 percent from a year earlier.

It took little time for the wireless industry to realize the days of offering plans based on calling minutes and texting were quickly coming to an end. Younger users began the cultural trend of talking less, texting more — but using a growing number of free alternative apps to do so. As a result, both AT&T and Verizon shifted their plans away from focusing on revenue from calling and texting and instead moved to monetize data usage. Today, both carriers offer base plans featuring unlimited voice calling and texting almost as an afterthought. The real money is now made from selling packages of wireless data.

Wi-Fi calling allows customers to make and receive voice calls over a Wi-Fi connection, not a nearby cell tower. The prospect of bundling that option into a cell phone just a few years ago would have been unlikely at some providers, unthinkable at others. It was never considered a high priority at any traditional carrier, although T-Mobile began offering the service all the way back in 2007.

Since most calling plans now bundle unlimited calling, letting calls ride off the traditional cellular network is no longer much of an economic concern.

wifi callingSome even expect carriers to eventually embrace Wi-Fi calling, declaring it superior to alternatives like Hangouts and Skype, which require an app to handle the call. A Wi-Fi call can be received by anyone with a phone.

This month, the last holdout, Verizon Wireless, capitulated and announced it had won approval from the FCC to introduce Wi-Fi calling to customers, joining Sprint, T-Mobile, and AT&T. But Verizon plans to initially limit that service, offering an app that must be installed to make and receive Wi-Fi calls. The other three carriers integrate Wi-Fi calling directly into the primary phone call app already on the phone.

The introduction of the service is unlikely to have a significant economic impact on any wireless carrier. Most have ample room on their networks to handle cell call volumes. Whether a call is placed over Wi-Fi or traditional cellular service, it will ultimately end up on the same or a similar IP-based phone switch as it makes its way to the called party.

With little revenue-generating opportunities for voice calling or SMS messaging, companies have nearly stopped the practice of monetizing individual telephone calls, preferring to offer unlimited, all-you-want calling and texting plans that used to cost consumers considerable amounts of money.

Now wireless carriers see fortunes to be made slicing up and packaging gigabytes of wireless data, sold at prices that have little relation to actual cost, just as carriers managed with text messaging for the last 20 years. A Verizon Wireless customer using 12GB of data in October that kept a now-grandfathered unlimited data plan paid just under $30 for that usage. (This month Verizon raised the price of that coveted unlimited plan by $20 a month.) Verizon charges $80 for that same amount of data on its new “XL” data plan. Verizon’s cost to deliver that data to customers is lower than it was five years ago, but customers wouldn’t know it based on their bill. As always with the wireless industry, costs often have no relationship to the price ultimately charged consumers.

Comcast Launches Online Video Service It Exempts from Its Own Data Caps

xfinitylogoComcast is inviting controversy launching a new live streaming TV service targeting cord-cutters while exempting it from its own data caps.

Comcast’s Stream TV is comparable to Comcast’s Limited Basic lineup, only instead of using a set-top box, Stream TV delivers online video over the Internet to Comcast’s broadband customers in Massachusetts, New Hampshire, Maine and the Greater Chicago area. For $15 a month, Stream TV offers a large package of local over the air stations, broadcast networks, and HBO, along with thousands of on-demand titles and cloud DVR storage. In Boston, the lineup includes:

WGBH (PBS), HSN. WBZ (CBS), NECN, WHDH (NBC), Community Programming, BNN-Public Access, WWDP-Evine Live, WLVI (CW), WSBK (MyTV), WGBX (PBS), WBIN (Ind.), WBPX (Ion), WMFP (Ind.), The Municipal Channel, Government Access, WFXT (FOX), WCEA (MasTV), WUNI (Univision), EWTN, C-SPAN, CatholicTV, POP, QVC, WYDN (Daystar), WUTF (UniMas), WNEU (Telemundo), Jewelry TV, XFINITY Latino, WGBH World, WGBH Kids, Trinity Broadcasting Network, WGBH Create, Leased Access, WBIN-Antenna TV, WBIN-GRIT TV, WNEU-Exitos, WLVI-BUZZR, WCVB (Me-TV), WFXT-MOVIES!, WHDH-This TV, WFXZ-CA, WUNI-LATV, WFXZ (Mundo Fox), WBZ-Decades, and WFXT-Laff TV + HBO. The package also qualifies the customer as an authenticated cable TV subscriber, making them eligible to view TV Everywhere services from many cable networks.

stream tv

Comcast is offering the first month of Stream TV for free with no commitment to its broadband customers subscribed to at least XFINITY Performance Internet (or above). Up to two simultaneous streams are allowed per account and some channels may not be available for viewing outside of the home. Comcast claims it will expand Stream TV to Comcast customers nationwide in 2016. Comcast will not be selling the service to customers of other cable or phone companies, limiting its potential competitive impact.

Competitors like Sling TV offer their own alternatives to bloated cable TV subscriptions at a similar lower price, and they will sell to anyone with a broadband connection. Sling alone is partly responsible for Comcast’s loss of hundreds of thousands of cable TV customers who don’t want to pay for hundreds of channels many never watch. That Comcast might want to launch its own alternative online video package to retain customers is not a surprise. But Comcast’s decision to exempt Stream TV from the company’s data caps while leaving them in place for competitors is sure to spark a firestorm of controversy.

comcast_remoteComcast claims it is reasonable to exempt Stream TV from its 300GB data cap being tested in a growing number of markets.

“Stream TV is a cable streaming service delivered over Comcast’s cable system, not over the Internet,” wrote Comcast in its FAQ. “Therefore, Stream TV data usage will not be counted towards your Xfinity Internet monthly data usage.”

More precisely, Comcast claims it relies on its own internal IP network to distribute Stream TV, not the external Internet competitors use to reach ex-Comcast cable TV subscribers. Comcast’s premise is it is less costly to deliver content over its own network while Internet traffic comes at a premium. Critics will argue Comcast has found an end run around Net Neutrality by relying on usage caps to influence customer behavior.

For the moment, Netflix is reserving comment after being contacted by Ars Technica. But Sling TV and other services that depend on Comcast’s broadband to reach customers will likely not remain silent for long.

Comcast could effectively deter consumers from using competing online video services with the threat of overlimit fees if customers exceed their usage allowance. The cable company could even use the fact its services don’t count against that allowance as a marketing strategy.

Stop the Cap! has warned our members about that prospect for years. Preferential treatment of certain content over others by playing games with usage caps and overlimit fees could have a major impact on emerging online video competition. Since Comcast owns both the broadband lines and the online video service, it can engage in anti-competitive price discrimination. Competitors will also argue that Comcast’s internal IP network is off-limits to them, making it impossible to deliver content on equal terms over a level playing field.

stream simple

The next move will likely come from the FCC in response to complaints from Comcast’s competitors. As Ars Technica notes, the Federal Communications Commission’s Net Neutrality rules allow for complaints against so-called zero-rating schemes, with the commission judging on a case-by-case basis whether a practice “unreasonably interferes” with the ability of consumers to reach content or the ability of content providers to reach consumers.

With Comcast’s usage caps and overlimit fees, the only reaching will be for your wallet. Consumers need not wait for Sling TV and others to complain to the FCC. You can also share your own views about Comcast’s usage caps by filing a complaint with the FCC here.

Verizon Wireless Giving Away Free GBs of Data to Those Who Ask

freegbSince Verizon Wireless stopped selling unlimited data plans and turned data into a precious commodity usually worth about $10 per gigabyte, the company can afford to give some of it away to their loyal customers.

This holiday season, Verizon Wireless is handing out up to 3GB of wireless data a month, but only to those who ask. As part of Verizon’s Thanksgiving promotion targeting holiday travelers, customers can get a free gigabyte for use immediately and another gigabyte to use next month just by clicking on a link. The offer can only be redeemed once per account on qualifying plans and is shared by all lines on an account.

Users who want even more free data can snag an extra 2GB a month for three months by downloading Verizon’s Go90 online video app (for iOS and Android) and registering for an account. Your confirmed registration will trigger an immediate gift of 2GB of wireless data for your current month’s data plan and an extra 2GB for the next three billing cycles as well. If Go90 proves uninteresting, you can uninstall it and still get free data during the length of the promotion.

This promotion is only good if you have a More Everything or Verizon Plan. It is not available if you use prepaid service, a different grandfathered plan, or do not keep your account in good standing. National and government accounts also do not qualify. Go90 videos are disabled for jailbroken or rooted devices, although you may still register and participate in the promotion if you use such a device.

Among Verizon’s other Thanksgiving promotions customers can grab on Wednesday, Nov. 25:

  • A free $5 iTunes Gift card while supplies last;
  • An unspecified number of free eBooks, music, movies, TV an app downloads from Amazon.com;
  • A free 30-day trial of Pandora One;
  • Up to $20 off a Lyft ride, where available;
  • Free airport Wi-Fi from Boingo;
  • Free 30-minute Gogo Wi-Fi session on select airlines.

Verizon’s website offers an option to send yourself a reminder to participate when the promotions become active next week.

Cable Customers Who Bought Their Own Modems Will Pay Built-In Modem Fee With Charter

time warner cable modem feeTime Warner Cable customers who purchased their own cable modems to avoid the company’s $8 monthly rental fee will effectively be forced to indirectly pay those fees once again if Charter Communications wins approval to buy the cable operator.

A major modem manufacturer, Zoom Telephonics, has asked the Federal Communications Commission to reject Charter’s buyout of Time Warner Cable and Bright House Networks because it will hurt cost-conscious consumers that invested in their own equipment to avoid costly modem rental fees.

Zoom’s argument is that Charter builds modem fees into the price of its broadband service and offers no discounts to consumers that own their own equipment. At least 14% of Time Warner Cable customers have purchased their own modems and are not charged the $8 rental fee. Charter has promised not to charge separate modem fees for three years after its acquisition deal is approved, but that also means the company is building the cost of that equipment into the price of broadband service.

Zoom has an interest in the outcome because Charter has yet to approve any Zoom cable modem model for use on its network. Time Warner Cable has certified at least one Zoom model in the past. Assuming the buyout is approved, consumers would have a disincentive to buy Zoom cable modems (or those manufactured by anyone else) because the equipment will be provided with the service.

Zoom has tangled with Charter before, most recently in the summer of 2014 when it criticized Charter’s policy forbidding new customers from using their own modems with Charter’s service. From June 26, 2012 until Aug. 22, 2014, Charter’s website stated, “For new Internet Customers and customers switching to our New Package Pricing, we will no longer allow customer owned modems on our network.”

Zoom claims Charter modified that policy three days before a key FCC filing deadline that could have eventually brought regulator attention on the cable operator. But Zoom remains unhappy with how Charter deals with the issue of customer-owned equipment.

“Charter has still not adopted certification standards that are open to Zoom and other cable modem producers, nor has Charter yet made a commitment for timely certifications under this program,” Zoom claimed in the summer of 2014. “Of the 17 cable modems Charter shows as qualified for customer attachment to its network, not one is stocked by leading cable modem retailers Walmart, Staples, and Office Depot and not one has 802.11ac wireless capability. Charter still does not separately list the cost of its leased modems on customer bills, and Charter does not offer a corresponding savings to all customers who buy a qualified cable modem and attach it to the Charter network.”

zoomZoom wants Charter to be required to offer consumers that own their own equipment a tangible monthly discount for broadband service as a condition of any merger approval.

“The Communications Act says that cable companies should sell cable modem leases and Internet service separately,” Andrew Jay Schwartzman, a professor at Georgetown University Law Center who is representing Zoom, told the Los Angeles Times. “By combining the prices, Charter’s customers are deprived of the ability to purchase advanced cable modems and save the cost of monthly rental fees.”

Charter argues the Act only covers set-top boxes used for cable television service, not modem fees. Charter also claims its introductory prices are lower than what most cable companies charge, modem fee or not.

“Customers will benefit from Charter’s pro-customer and pro-broadband model with transparent billing policies,” Tamara Smith, a Charter spokeswoman, told the newspaper. “It features straightforward, nationally uniform pricing with no data caps, no usage-based pricing, no modem fees, no early termination fees and does not pass on federal or state Universal Service Fund fees to customers.”

But Charter is only guaranteeing those customer-friendly policies for three years, after which it can raise prices and add fees at will.

Britain Adopting American Broadband Business Model: Less Competition, More Rate Hikes

british poundA decision by Great Britain’s broadband industry to follow America’s lead consolidating the number of competitors to “improve efficiency” and wring “cost savings” out of the business resulted in few service improvements and a much bigger bill for consumers.

A Guardian Money investigation examining British broadband pricing over the past four years found customers paying 25-30 percent more for essentially the same service they received before, with loyal customers facing the steepest rate increases.

It’s a dramatic fall for a market long recognized as one of the most competitive in the world. In 2006, TalkTalk — a major British ISP — even gave away broadband service for free in a promotion to consumers willing to cover BT’s telephone line rental charges.

But pressure from shareholders and investment bankers to deliver American-sized profits have spurred a wave of consolidation among providers in the United Kingdom, similar to the mergers of cable companies in the United States. Well known ISPs like Blueyonder, Tiscali, AOL, BE, Tesco, O2, and others in the United Kingdom have all been swallowed up by bigger rivals – often TalkTalk. As of last year, just four major competitors remain – BT, Sky, TalkTalk and Virgin, which together hold 88% of the market. If regulators allow BT’s takeover of EE, that percentage will rise to 92%.

talktalk-logo-370x229As consumers find fewer and fewer options for broadband, they are also discovering a larger bill, fueled by runaway rate increases well in excess of inflation. While consolidated markets in the United States and Great Britain increasingly lack enough competition to temper rate increases, heavy competition on the European continent has resulted in flat or even lower prices for broadband along with significant service upgrades. British consumers now pay up to 50% more for broadband than many of their European counterparts in Germany, France, the Benelux countries, and beyond.

Also familiar to Americans, the best prices for service only go to new customers. Existing, loyal customers pay the highest prices, while those flipping between providers (or threatening to do so) get much lower “retention” or “new customer” pricing. But only those willing to fight for a better deal get one.

In October, TalkTalk, responsible for much of the consolidation wave, raised broadband prices yet again — the second major price hike this year. Customers are reeling over the rate increases, despite the fact they still seem inexpensive by American standards. Landline rental charges are increasing from $25.40 to $26.91 a month, and are a necessary prerequisite to buying Internet access from TalkTalk. Its Simply Broadband entry-level package is jumping another £2.50 a month just four months after the last rate hike. That means instead of paying an extra $7.60 a month for broadband, customers will now pay $11.40. The average British consumer now pays an average of $57.79 a month for a phone line with enhanced DSL broadband service.

btIn France, competition is forcing providers to move towards fiber optic broadband and scrap DSL service. But French consumers are not paying a premium for upgrades necessitated by competition on the ground. While British households pay close to $60 a month, a comparable package in France from Orange known as L’essentiel d’internet à la maison costs only $36.50 a month, including a TV package and unlimited calling to other landlines. But the deal gets even better if you shop around. Free, a major French competitor, offers a near-identical package for just $32.19 a month. In the United States, packages of this type can cost $130 or more if you do not receive a promotion, $99 a month if you do.

In France, providers rarely claim they need to cap Internet usage or raise prices to cover the cost of investing in their networks. That is considered the cost of doing business in a fiercely competitive marketplace, and it forces French providers to deliver good value and service for money. Providers like Patrick Drahi/Altice’s SFR-Numericable attempted to reap more profits out of its cable business by cutting costs, discontinuing most promotions and marketing, and offshoring customer support to North African call centers. At least one million customers left for better service elsewhere in 2015.

logo_freeIn Britain, there are fewer options for customers to seek a better deal, and the remaining providers know it. As a result, marketplace conditions and an increasing lack of competition have made conditions right for rate increases. BT, Sky, Virgin, and Plusnet (controlled by BT) have all taken advantage and hiked prices once again this year between 6-10%, on top of other large rises.

Ewan Taylor-Gibson, broadband expert at uSwitch.com, told the Guardian, “it’s the existing customers that have borne the brunt of the increase in landline and package costs over recent years.”

Many British consumers are afraid of disrupting their Internet access going through the process of changing providers in a search for a better deal. Some report it can take a few days to a week to process a provider change that should take minutes (because most providers rely entirely on BT’s DSL network over which they offer service). Those willing to make a change are about the only ones still getting a good deal from British providers. Customers are starting to learn that when their new customer promotion ends, asking for an extension or signing up with another company is the only way to prevent a massive bill spike that Taylor-Gibson estimates now averages 89%.

BT spent $1.36 billion dollars securing an agreement with Champions League football.

BT spent $1.36 billion dollars securing an agreement with Champions League football.

Providers with the largest increases use the same excuses as their American counterparts to defend them. BT claims a reduction in income from providing landline service is forcing it to raise prices to make up the shortfall. Critics suggest those increases are also helping BT recoup the $1.36 billion it controversially paid for the rights to carry Champions League football — money it could have invested in network upgrades instead.

The current government seems predisposed to permit the marketplace to resolve pricing on its own, either through competition among the remaining players or allowing skyrocketing prices to reach a level deemed attractive by potential new entrants into the market. The usually protective British regulator Ofcom also seems content taking a light hand to British ISPs, enforcing price disclosures as a solution to increasingly costly Internet service and making it easier for consumers to bounce between the remaining providers many think are overcharging for service.

Things could be worse. British consumers could face the marketplace duopoly or monopoly most customers in the United States and Canada live with, along with even higher prices charged for service. The Guardian surveyed telecom services across several European countries and found that, like in the UK, most customers are required to bundle a landline rental charge and broadband package together to get Internet access, but they are still paying less overall than North Americans do.

Here is what other countries pay for service:

United Kingdom: Basic BT home phone service with unlimited “up to 17Mbps” DSL broadband costs $31.12 per month, plus a monthly landline charge of $27.35 including free weekend calls. An unlimited calling plan with no dialing charges costs an extra $12 a month. Competitor TalkTalk charges $11.40 for unlimited broadband on its entry-level Simply Broadband offer, plus $26.91 for the monthly landline rental charge.

France: Many Orange customers sign up for the popular L’essentiel d’internet à la maison plan, which bundles broadband, a phone line with unlimited calling to other landlines, and a TV package available in many areas for $36.50 a month. Competitor Free.fr charges $32.19 for essentially the same package.

Germany: Deutsche Telekom offers its cheapest home phone/broadband package for $37.75 after a less expensive promotional offer expires. One of its largest competitors, 1&1, offers the same package for $33.29 a month after the teaser rate has ended.

Spain: Telefónica, Spain’s largest phone company, offers service under its Movistar brand combining an unlimited calling landline and up to 30Mbps Internet access for $46.21 a month. Its rival Tele2 offers a comparable package for a dramatically lower price: $29.11 a month.

Ireland: National telecom company Eircomis is overseeing Ireland’s telecom makeover, replacing a lot of copper phone lines with fiber optics. Basic broadband starts with 100Mbps service on the fiber network with a promotional rate of $26.82 for the first four months. After that, things get expensive under European standards. That 100Mbps service carries a regular price of $66.51 a month, deemed “hefty” by the Guardian, although cheaper that what North Americans pay cable companies for 100Mbps download speeds after their promotion ends. For that price, Irish customers also get unlimited calling to other Irish landlines and mobiles. If that is too much, rival Sky offers a basic phone and broadband deal for $32.18 with a one-year contract.

Rogers Enables VoLTE Voice/Video Calling It Exempts from Its Own Usage Allowance

netneutralityIf you make a voice or video call over Rogers’ wireless network using Skype, you will chew into your monthly data plan. If you make the same phone call over Rogers’ Voice over LTE network, your data allowance is safe.

Rogers this week expanded VoLTE in Canada to iPhone 6 series phones, joining select Android devices that have had VoLTE service available as an option under phone settings for some time.

VoLTE relies on the same wireless LTE 4G network data sessions do, but Rogers has “zero-rated” voice and video calls made over its own phones so they do not count against a customer’s data plan allowance. Customers using a competing app like FaceTime or Skype are not so lucky — using either counts against your data plan.

rogers logoThat could suggest a potential Net Neutrality violation for one of Canada’s largest cellular providers because Section 27 (2) of the Telecommunications Act makes it clear unjust discrimination is illegal:

(2) No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage.

“It is the main ‘backbone’ behind implementation of Net Neutrality in Canada, along with the ITMP rules (2009-657),” said , who closely observes the Canadian Radio-Television and Telecommunications Commission, responsible for upholding Net Neutrality in the country. Mezei tweeted the CRTC this afternoon, asking who they thought would be the first to file a Net Neutrality complaint against Rogers for the practice.

Charter’s “Expert” Not Too Convincing About Company’s Commitment to Not Reimpose Usage Caps

get the factsAn expert hired by Charter Communications to offer “qualified” views on the competitive impact of a merger involving Charter, Bright House Networks, and Time Warner Cable got his facts wrong about Charter’s data cap policy, a mistake that calls into question his analysis about the company’s potential to abuse broadband customers by imposing data caps after its three-year commitment not to expires.

Theodore Nierenberg, a professor of economics at the Yale School of Management, among other things, offered an expansive rebuttal to opponents of the Charter merger deal, arguing that it would enhance competition and deliver consumers enhanced benefits.

Nierenberg does not believe Charter has any interest in imposing data caps on customers, despite the fact Charter quietly shelved existing caps on Oct. 1, 2014, several months before unveiling a bid for both Time Warner and Bright House, neither of which have capped customer usage.

“I conclude that actions such as charging interconnection fees, imposing usage based billing or data caps, or degrading network performance are very unlikely, both because New Charter has no incentive to undertake them, and because the FCC will enforce New Charter’s commitments,” Nierenberg wrote.

charter twc bhBut his facts are in error. The same company that believed usage caps were an essential part of its broadband service between early 2009 until October 2014 has suddenly turned over a new leaf? Nierenberg claims there was effectively no leaf to turn, claiming Charter had no “active data cap” since January 2012¹:

For 3 years, New Charter will not charge consumers additional fees to use specific third-party Internet applications, or engage in zero-rating (discriminatory exemptions from a data cap).

These binding commitments provide further assurance beyond the economic reasoning I describe below — assurance that New Charter will not engage in these types of conduct: charging higher interconnection fees, using discriminatory data plans, or reducing the quality of OVD signals. (Note that Charter already does not have data caps for its residential broadband customers. Notwithstanding the dramatic but welcome rise in data usage by broadband customers, Charter has not had an active data cap since January 2012.)

Customers in some areas were called by Charter for exceeding their usage allowance, and usage rationing remained a fact of life in Charter’s Acceptable Use Policy until late last year, not January 2012 as Nierenberg claims.

So what assurance should a customer take from a company that believed strongly in usage caps for more than five years? Surely not that Charter will never consider engaging in data capping yet again three years from now.

Charter can assure consumers of its good intentions by declaring it will always offer affordable unlimited access Internet without a three-year expiration date. Quietly dropping a cap several months before executing a well-planned buy of Time Warner Cable and Bright House doesn’t inspire confidence. Too often short term rate freezes are followed by accelerated rate hikes once the deal conditions expire.

¹ Page 48

Comcast Steamrolls Arkansas, Louisiana, Tenn. and Virginia With More Usage Caps Starting 12/1

comcast gunComcast is accelerating its rollout of compulsory usage caps, adding new markets in the southern U.S. to its three-year old “trial” of what it calls its “data usage plan.” DSL Reports received a tip Comcast is now sending e-mail to affected customers.

Little Rock, Ark., Houma, LaPlace, and Shreveport, La., as well as Galax, Va., will be treated to Comcast’s 300GB usage cap with a $10 per 50GB overlimit fee beginning Dec. 1. These three states join Florida, Alabama, Kentucky, Georgia, Maine, Mississippi, South Carolina and Arizona, which now face Comcast’s form of usage rationing.

In Tennessee, Comcast is introducing its 300GB cap in Johnson City, Gray, and Greenville. The cable operator is also risking customers by introducing caps in Chattanooga, where it already faces serious competition from gigabit provider EPB, which has no usage limits, and AT&T U-verse, which doesn’t dare enforce its own 250GB cap.

Comcast began rapidly expanding its usage cap trial this fall, with new markets being announced for usage limits about once a month.

Chattanooga resident Ron Rogers called to cancel his Comcast service this afternoon. He’s giving up a good promotional discount Comcast offered to keep him a customer back in January and is headed to EPB Fiber.

“This was the last straw for Comcast,” Rogers tells Stop the Cap! “I am tired of being abused by these people. They must be crazy to think anyone who seriously uses the Internet is going to tolerate this when there are two other providers smart enough to realize usage caps are ridiculous in this day and age. Comcast can shove it.”

data trialsComcast’s spreading usage caps are not popular with customers. Within hours of the news Comcast would be expanding its cap “trial,” more than 900 negative comments appeared on Reddit slamming the company.

“It is just staggering that despite all the bad press, publicity and truly awful service, Comcast is actually taking calculated measures to make things worse,” wrote one Reddit commenter.

Comcast’s frequent defense of its usage plan is that the majority of its customers will never be affected by it, consuming less than 40GB a month. But those with experience living under Comcast’s cap tell Stop the Cap! anyone playing downloadable video games or using online video are at serious risk of being charged penalty overlimit fees.

“It is very easy to hit 100GB just downloading game updates and if you watch your shows online, you will come uncomfortably close to the cap,” said Pat Kershaw in Kentucky. “Leaving a live video stream running overnight one night by mistake after I fell asleep meant a Netflix-free weekend for me last month, because it would have put me past my allowance. Hulu’s autoplay feature is also very dangerous.”

courtesy-noticeHans says any household with kids will quickly learn Comcast isn’t being honest claiming usage caps only affect a “few customers” after they start getting warning messages injected into their web browser.

“What is worse is every time I call support about the messages that I am getting on the 18th of the month because I have already burned through my limit with my kids watching all their online content, support keeps putting me back on the queue for the next person or dropping the line,” Hans writes. “No one wants to deal with it!”

Those web warning messages also become intrusive for many customers, because some claim they never go away until the end of the billing cycle.

“I made sure to go over the 300GB cap this month to see what would happen and I received a phone call telling me I’ve went over and now I receive a popup from Comcast on my computer about every 30 seconds telling me I’ve went over as well,” writes Gldoorii. “The popups never stop. I have to deal with them until the end of the month as they keep interrupting my work.”

Other Comcast customers have grown suspicious about the company’s usage measurement tool, which in some cases reported spikes in usage only after the cap began to be enforced.

comcastdatausagemeter“I checked my data usage on Oct. 21 and it said I only used 162GB,” writes Sharon. “I even have [a screenshot] and saved it as I had a feeling Comcast would pull something. [On] Oct. 23, I had a pop-up on my computer that says ‘you have used 292 of 300GB’ and I went to the data usage and it shows that. Nobody in my house downloaded any huge files the past two days. So, is Comcast artificially pumping up our usage to make us go over or what? It is impossible that I only used 162GB for 21 days and then used 130GB the past two days.”

Sharon is lucky her usage meter is working. Other customers report Comcast’s meter often stops working for weeks.

“My data usage meter still does not work and it has been 19 days,” says Gldoorii. “No chat or support person has been able to figure out why it doesn’t work and that I need to call or chat whenever I want to ask what my usage is.”

Customers who want out also get the Comcast treatment as they head for the exit.

“We were charged a $150 early termination fee because Comcast does not consider imposing a usage cap to be a material change to our contract, which is unbelievable,” writes Anna Lu in Ft. Lauderdale. “These guys are nothing less than crooks and they only forgave it after my roommate complained to the Better Business Bureau. They said they were doing us a favor forgiving the charge. No wonder everyone hates Comcast.”

But not everyone is unhappy about Comcast’s usage caps.

“Our call center volumes are way up ever since Comcast brought caps to Atlanta and Florida,” reports an AT&T sales representative who agreed to talk to Stop the Cap! if we kept his identity private. “It’s common knowledge we do not enforce any caps on U-verse although we cannot tell customers that officially, but most never even ask. We’re signing up ex-Comcast customers right and left. They are not happy we cannot give them the same speeds Comcast does, but they won’t have to worry about a cap from us, at least for now.”

Other customers are waiting impatiently for Google Fiber or other competitors.

“In Atlanta Comcast now offers an unlimited data option add on to your plan for additional $35,” writes a customer on Comcast’s support forum. “So now we get to pay over $100 for 25Mbps service whereas Google Fiber [in] Atlanta [charges] $70 for one gigabit service and no data cap.”

In July, Comcast CEO Brian Roberts downplayed the impact of the company’s usage caps with investors, suggesting some customers actually supported the usage plans.

“We do have a few trials going on in different markets,” Roberts said. “The responses have been neutral to slightly positive. We don’t have any plans on expanding that to other market/bases anytime soon.”

Frontier Makes Excuses for Customer Losses: People Moved Away

frontierFrontier Communications continues to face challenges keeping customers in its legacy copper wire service areas, where only modest investments in network upgrades have proved insufficient to stop customers shopping around for better service.

Company officials reported a loss of about 30,000 residential customers during the last quarter, a drop of nearly 1% of its total customer base. Nearly 2% of Frontier’s business customers also took their business elsewhere, leaving the company with 3.1 million remaining residential customers and 294,000 business customers.

Frontier CEO Dan McCarthy blamed many of the customer losses on customers moving.

“During the summer, we do tend to see an uptick in customer [losses] that might have double play and in some cases triple play, as they move or make their decisions about moving their homes to a different location,” McCarthy said, claiming that most of Frontier’s losses overall came from voice-only customers.

As Frontier expands rural broadband opportunities, the phone company is still adding Internet customers, picking up a net gain of 27,200 broadband accounts. The company depends heavily on broadband to replace revenue lost from landline disconnects.

“We continue to see more customers choose higher-speed broadband products,” McCarthy said on a conference call to investors earlier today. “In the third quarter, 47% of the broadband activity was above the basic speed tier of 6Mbps. More than 70% of our residential broadband customers are still utilizing our basic speed tier, so we have substantial opportunity to improve our average revenue per customer as they upgrade their service.”

McCarthy offered no statistics about how many of Frontier’s DSL customers can substantially upgrade their speeds using Frontier’s existing infrastructure. Many Frontier broadband customers have complained their speeds reflect the maximum capacity of Frontier’s network in the immediate area, and many claim they do not consistently receive the speed level Frontier advertises.

Service is appreciably better in areas upgraded before being acquired by Frontier. McCarthy said some areas of Connecticut, acquired from AT&T, are now able to get speed “in excess of 100Mbps over our copper infrastructure.”

“Over time, we will be expanding the technology we use for 100Mbps in Connecticut to more of our markets elsewhere,” McCarthy promised. “In our FiOS markets, we already offer speed up to one gigabit and we have seen the benefit of offering these higher speeds as customers choose speed tiers to match their lifestyle choices.”

Frontier also separately notified the Federal Communications Commission it has no immediate plans to slap usage caps or metered service on customers.

“Frontier does not apply usage-based pricing to any of its broadband offerings,” Frontier said in an FCC filing. “Frontier has no plans at this time to offer a metered broadband service. We continue to monitor the market and continue to consider a usage-based offering as an option.”

Frontier suggested several factors would be considered when discussing usage-based billing: “the FCC’s Open Internet rules, policies of other companies, consumer demand, network capacity, and cost, among other factors.”

Hilton Hotel Chain Fined $25,000 for Obstructing Investigation into Wi-Fi Blocking

The Hilton Convention Center in Anaheim, Calif. Come for the color but don't stay for the $500 Wi-Fi.

The Hilton Convention Center in Anaheim, Calif. Come for the color but don’t stay for the $500 Wi-Fi.

The Federal Communications Commission’s Enforcement Bureau today announced a tentative $25,000 fine against Hilton Worldwide Holdings, Inc., owner of the Hilton Hotel Chain, for allegedly obstructing a FCC investigation into the blocking of consumers’ use of personal Wi-Fi while visiting hotel properties.

“Hotel guests deserve to have their Wi-Fi blocking complaints investigated by the Commission,” said Travis LeBlanc, chief of the FCC Enforcement Bureau. “To permit any company to unilaterally redefine the scope of our investigation would undermine the independent search for the truth and the due administration of the law.”

The regulator accuses Hilton of stonewalling requests for information and documents about how the hotel chain manages Wi-Fi for visitors and guests. In August 2014, the FCC received a consumer complaint accusing Hilton of purposely blocking visitors’ Wi-Fi hot spots on its property in Anaheim, Calif., to compel guests to pay a $500 fee to use Hilton’s own Wi-Fi network. The complaint was followed by others who alleged similar experiences with Hilton hotels elsewhere.

In most cases, fees of that amount are sought from vendors attending conventions and other large events held at Hilton hotels. Wi-Fi services can be a lucrative revenue generator, but not if vendors rely on company or personal cell phone hotspot services to bypass the hotel’s internal Wi-Fi network. Hilton hotels in the area generally offer Wi-Fi in rooms for prices ranging from free to $14.95 a night. The charges evidently vary depending on the promotion in effect when a room is booked. Fees for convention vendors are often dramatically higher, which seems to be the case surrounding this complaint.

In November 2014, the FCC issued Hilton a letter of inquiry seeking information concerning basic company information, relevant corporate policies, and specifics regarding Wi-Fi management practices at Hilton-brand properties in the United States. After nearly one year, the FCC alleges Hilton has effectively ignored the FCC’s request for the vast majority of its properties. Hilton runs hotels under the Hilton, Conrad, DoubleTree, Embassy Suites, and Waldorf Astoria brands.

In the last two years, the FCC has made it clear it will aggressively pursue and fine those intentionally interfering with Wi-Fi signals, especially if a revenue motive is found. In October 2014, the FCC fined Marriott International, Inc. and Marriott Hotel Services, Inc. $600,000 for similar Wi-Fi blocking activities at the Gaylord Opryland Hotel and Convention Center in Nashville, Tenn. In August 2015, the FCC fined Smart City Holdings, LLC $750,000 for similar Wi-Fi blocking at multiple convention centers across the country. The Commission also recently proposed to fine M.C. Dean $718,000 for apparent Wi-Fi blocking at the Baltimore Convention Center.

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