El Paso, Texas

More than 14,000 residents of El Paso are under investigation for potential cable theft.  That remarkable number comes from El Paso, Texas TV station KFOX-TV.  Reporter Martina Valverde notes that Time Warner Cable is now engaged in a city-wide system audit to identify and disconnect illegitimate cable connections.

“Our paying customers who rely on us for phone service, video service, and Internet service,” Gary Underwood, vice president of communications for Time Warner’s Texas operation told KFOX viewers. “They might not be able to access those services when they most need them because the damage that was caused further down the line.”

The company told KFOX when it discovers an illegal connection, it makes two attempts to convert the customer to legitimate service.  On the third attempt, local law enforcement becomes involved.  Those found guilty face fines of $500.

“We have what’s called a tab audit team. They go out and they look at different areas to see. We have a system of tagging and flagging on these lines to so our folks can identify an authorized versus unauthorized connection,” Underwood said.

Cable theft is not just a problem in El Paso.  Some brazen entrepreneurs go further, pretending to represent providers willing to hook customers up for a one time, flat fee they pocket.

Grande Communications faced one such individual, who last summer slapped a magnetic sign with Grande’s logo on his truck and pitched cable service to apartment complexes and homes around San Marcos, Texas.

Unwitting customers who signed up for the deal were offered special discounts by Grande when their illegal cable connection was discovered.

KFOX-TV in El Paso, Texas ran this report last night claiming more than 14,000 residents were under investigation for cable theft in the community. (1 minute)

http://www.phillipdampier.com/video/KXAN Austin Fake Cable Guy Selling Cable 7-24-09.flv

Last summer, Grande Communications had to contend with someone illegally hooking up customers around San Marcos, Texas. KXAN-TV in Austin ran this report July 24th. (2 minutes)

Grande Communications serves 148,000 and 147,000 Texas residential and business customers, respectively.

Grande Communications, the San Marcos, Texas company competing against Time Warner Cable and AT&T, will effectively be sold to ABRY Partners, an investment banking firm based in Boston, for an undisclosed sum.

Grande, familiar to Stop the Cap! readers in Austin, ran advertisements back in April and May against Time Warner Cable and AT&T touting their broadband service as being free from Internet Overcharging schemes.  The company has managed to build its fiber optic network to reach approximately 20% of homes in the Austin area, mostly in the northeast and eastern areas, as well as Tarrytown.

Growth had been slow for the “overbuilder” due to financing difficulties.  Investors feared a three-way competition between cable, telephone, and fiber-based Grande, because heavy competition usually results in lower prices and profits, decreasing their potential return.

With ABRY effectively helping refill Grande’s bank accounts to allow them to accelerate the building of their network, Grande hopes to achieve one million homes passed by their network in a few short years.

ABRY has experience in the broadband market with their ownership of Atlantic Broadband, the nation’s 15th largest cable operator serving customers in Florida, Maryland, Delaware, South Carolina and central Pennsylvania.

The deal requires internal review from Grande’s board of directors and external review by the Federal Communications Commission, the Texas Public Utilities Commission, and others.

If cable operators intend to impose Internet Overcharging schemes to measure and cap residential broadband accounts, the Federal Communications Commission (FCC) must impose equal treatment on traditional video cable television packages to allow customers to subscribe to only the channels they want.

The Austin Broadband Interest Group, a not-for-profit broadband advocacy organization, calls out the cable television industry for advocating an end to flat rate broadband service at the same time they continue to resist a-la-carte pricing for cable television packages.

In a filing with the FCC as part of a nationwide broadband policy inquiry, the Texas group recites the history of Time Warner Cable’s recent proposed experiment curtailing current flat rate Internet service.  Time Warner Cable planned to expand its Internet Overcharging market test conducted in Beaumont, Texas into four additional cities: Austin and San Antonio in Texas, Rochester in western New York, and the Triad region of North Carolina.  Customers in the test would have faced the prospect of paying 300% more for an equivalent level of flat rate service, with bills increasing from $40-50 a month to a staggering $150 a month, with no increase in speed or immediate improvement in service.

The Austin group claims that such Internet Overcharging efforts are designed to protect Time Warner Cable’s video business model, which includes the packaging of flat rate video cable TV packages to customers across the country.  Time Warner Cable, among other cable providers, have grown increasingly concerned about free online video potentially discouraging customers from subscribing to a cable television package.  Industry executives fear that new generations of Internet users will dispense with traditional cable TV service, obtaining video entertainment online, instead.

The group advocates the FCC enforce a rule that any broadband provider that wants to implement limits or consumption-based service tiers must also offer the same pricing model for video programming.  Matthew A. Henry and Chip Rosenthal, authors of the filing, include other competing video providers in their comments.  Telephone companies, including AT&T and Verizon, have begun offering video services to customers in addition to broadband packages.  AT&T is testing an Internet Overcharging scheme to limit consumption in two cities — Beaumont, Texas and Reno, Nevada.

The cable industry has struggled with Congress and the Commission for years to prevent the imposition of a-la-carte video programming pricing, permitting customers to pay for only the channels they want to watch.  The industry claims it would destroy the business model of cable television, where cable programmers like CNN, The Weather Channel, A&E, and most others impose a subscription fee based on the number of “basic cable” subscribers that have access to those channels.  Most networks charge between 10-80 cents per subscriber, with some sports-related channels charging considerably more.  By dividing the costs among every subscriber, the industry argues, it can deliver a robust video package to everyone for the same price.

Unfortunately, cable programmers continually increase the rates they charge for their cable networks, often well above the rate of inflation, and many broadcast networks and stations also demand cable companies take on new networks they may not necessarily want, to obtain continued permission to carry local stations on the cable dial. The result: relentless annual rate increases for cable television packages.

The inequity of cable’s argument that it must be allowed to continue providing flat rate television programming packages (and disallow a-la-carte) while programming costs increase, while demanding an end to flat rate Internet pricing, despite a decrease in the costs to provide it, suggests “fairness” is not the motivation for proposing such Internet Overcharging schemes:

In May of 2009, Time Warner Chief Executive Officer Glenn Britt essentially admitted that the competitive threat of online video to traditional cable is the driving force behind the company’s capped and metered pricing model. Mr. Britt told investors, “If, at an extreme, you could get all of the programming you get over cable for free on the Internet, over time people will stop buying (TV).”  Unfortunately, Time Warner has chosen to protect its cable revenues through unfairly restricting usage of its broadband service. This clearly demonstrates the need regulatory ground rules aimed at dissuading such anti-consumer and anti-broadband business practices.

Rather than representing a “fair” method of billing, metered pricing plans and usage caps are a strategy intended to salvage diminishing cable revenues by forcing users to use less Internet. Users have been watching increasing amounts of video online, with some abandoning their cable service altogether in favor of broadband (an effect that has been sped by the struggling economy). This presents an obvious dilemma for broadband providers that also offer a cable product, like Time Warner: as online video watching goes up, the revenue-generating cable usage goes down. Online video is bad for business because a cable company directly profits from its cable content through advertising, pay-per-view and video-on-demand, but can’t profit off Internet content. The fact is that Time Warner is offering competing products and the company has a vested interest in cable video prevailing over Internet video. Time Warner introduced metered pricing and usage caps to make its customers turn off their computers and pick up the remote.

The Austin Community Technology & Telecommunications Commission convened this past Wednesday for their monthly meeting to discuss, among other items, possible actions on Time Warner Cable consumption billing for broadband Internet.  According to chairman Chip Rosenthal, it was the longest agenda in the many years he’s been there, and the TWC discussion didn’t come up until after 9 p.m.

As a concerned Austinite and former TWC customer (thanks to AT&T U-verse!), I attended this meeting to make sure all the important information on the subject was made available to the commissioners.  I only had three minutes to speak, as per meeting rules, which wasn’t near enough time for me to get through my three pages of material.  Luckily though, since the topic was an agenda item, the commission was allowed to ask questions and they were gracious enough to ask me open-ended questions and allow me to continue my points.  I stressed to the Commission that the most effective actions they and the City Council could do is file comments to the FCC and the FTC, and to put pressure on state and federal legislators to remove impediments to municipal broadband.  I emphasized that even if the City has no intention of creating a municipal broadband service, it is to Austin’s benefit to have the option on the table.  I told the commission that I believe a major reason TWC initially chose Austin as one of its metered billing test markets is that TWC knew the city’s hands were tied and that it had no real recourse.  During the discussion after my presentation, the commission agreed to work on a resolution recommending to the City Council that, through the City Attorney, submissions be filed to the FCC, Federal Trade Commission, and the Texas State Attorney General, and they agreed that the city should begin working with state and federal legislators to stop abusive practices.  The commission also agreed they should focus their efforts on  the state and federal level because little could be done at the municipal level, and that they should seek out other municipalities in a similar situation to present a coordinated effort.

There were two interesting facts that I learned at this meeting.  One, the municipal franchise that TWC has with the city of Austin will expire in 2011, but at that point it will transition to a state franchise agreement.  I had never heard of a state franchise before.  I know that the negotiating power the city has at franchise renewal will be diluted considerably on the state level. Second, the current franchise only applies to TWC cable TV service, not its broadband products.  It was brought up in the meeting that Grande Communications, another regional cable provider, has full authority to compete in TWC’s market for broadband service.  This raised a serious flag to me.  If both cable TV and broadband products are carried on the same infrastructure, but the franchise agreement only applies to the cable TV service, then they are in effect creating and illegal de facto franchise out of the broadband market.  Grande cannot compete with TWC’s broadband product, because they’re not allowed to bring their cable TV infrastructure into TWC’s market.

Since TWC has decided to shelve it’s metered broadband trials in Ausin for the time being, there is not much the Telecom Commission can do against current TWC actions other than possibly investigate instances of service being shut off based on a soft 40 GB cap in their excessive use clause.  But the commission has resolved to begin the groundwork necessary to fight this issue in the future by codifying its own policies and rules for fair market practices and pressing the city of Austin to lobby state and federal lawmakers.

Residents of Austin need to make plans to attend a meeting this Wednesday the 13th at 6:30pm at City Hall to be sure your voices are heard regarding the possibility of Time Warner Cable returning with its metered billing and rationing plan this fall.  It would also be a great time to call attention to the company suspending customer accounts for “excessive consumption” as we’ve documented.

Michael Chaney, one of our readers, gave us the heads-up and also pointed us to the Austinist news and culture site, which published news about the meeting:

Chairman Chip Rosenthal said public input last month justified further inquiry into the metered bandwidth issue, and that the commission is now looking for policy input from experts in regulatory matters. That process, which may take months, begins with Wednesday’s meeting of the Austin Community Technology and Telecommunications Commission.

Rosenthal said the commission faces two challenges:

“As far as we can tell, the city has little regulatory authority over the [Time Warner Cable] broadband Internet product. Yes, TWC does hold a city-granted franchise, but that agreement only covers cable video services,” Rosenthal said. “(Also) the grounds for action are more uncertain now that TWC has rescinded metering (for the time being, so they say). How do you ask for relief when you aren’t being damaged? So, the current effort may end up being groundwork, so that we’re better if they do come back.”

Stop the Cap! will be glad to work on some written input for the meeting which we’ll publish here before Wednesday, should one of our Austin readers like to provide it to them.  Rosenthal is correct — Time Warner Cable’s broadband services are unregulated.  However, forcing language that prohibits capping or tiered pricing into a franchise renewal agreement is a possibility, as would other options ranging from exploring municipal broadband or outright non-renewal of the company’s franchise.

Rosenthal is right to consider their exploration of this issue laying “groundwork,” because we are convinced Time Warner Cable has not permanently shelved these pricing schemes by any means.

What: Austin Community Technology & Telecommunications Commission meeting on TWC metered billing and other issues.

Where: City Hall – Room 1101, 301 W. 2nd Street, Austin, Texas

When: Wednesday May 13, 6:30pm

Details: Agenda & Meeting Information, List of Monthly Time Warner Cable Complaints, Emerging Tech Presentation

Website: Austin Community Technology & Telecommunications Commission

One of the reasons these stories recapping and documenting this entire Internet rationing debacle is important is to come to understand Time Warner’s strategy in trying to implement usage caps.  It was largely the same talking points wherever you went among the four impacted communities, and the reaction from customers was also always the same – outrage.

Local governments also rapidly learned they had their own problem – a complete inability to force the company to do what’s right for customers.  In fact, communities that experienced this experiment, which is likely to return at some point in the near future, should begin contemplating competitive alternatives starting today, and not wait for the next hammer to fall on residential and business customers the next time Time Warner wants to drop a tiered billing system with extremely high overlimit fees on the towns and cities it serves.

KVUE presented a well-balanced story here, and it was a news leader, complete with a live stand-up shot in front of Austin’s City Hall.

[Update 6:22pm EDT -- If you are in the Austin area and you have had your service cut off for "over use," please contact me immediately using the Contact form on the top of your screen.  Thanks!]

First Time Warner (via TWCAlex on Twitter) told customers who fought back the caps that the company was reneging on the DOCSIS upgrade, at least for now, and was taking their toys home with them.

But now the hissy fit might be extending into a usage crackdown in at least one of the “test” cities.  Because the promised “listening tour” of customer concerns is nowhere in sight, and the company has instead relied on a Re-Education campaign involving astroturfing lobbyists and propaganda, StoptheCap! launches a new feature this morning for any and all ISPs who throw tantrums when customers rebel and don’t allow providers to do whatever they want.

HissyFitWatch reports on ISPs who suddenly develop a bad attitude when things just don’t appear to be going their way.

Austin StoptheCap! reader Ryan Howard kicks off our premiere edition with a report that his Road Runner service was cut off yesterday without warning.  According to Ryan, it took four calls to technical support, two visits to the cable store to try two new cable modems (all to no avail), before someone at Time Warner finally told him to call the company’s “Security and Abuse” center.

“I called the number and had to leave a voice mail and about an hour later a Time Warner technician called me back and lectured me for using 44 gigabytes in one week,” Howard wrote.

Howard was then “educated” about his usage.

“According to her, that is more than most people use in a year,” Howard said.

Howard questioned the company representative about what defines an acceptable amount of usage so he doesn’t get cut off again.  He pays extra for Road Runner’s premium Turbo tier, so he already hands more money to Time Warner than average subscribers for his broadband service.

“All she would commit to is less — perhaps half or as quarter as much,” he said.

Time Warner is taking their DOCSIS 3 toys home with them after customers reject Caps 'n Tiers.

Convenient, considering that amounts to 40-60 gigabytes a month, which falls right in line with the now-temporarily-shelved tier pricing.

Ryan felt concerned that the Time Warner representative had such detailed information in front of her about his usage, although the representative reiterated repeatedly that they were not monitoring what he was doing with his account, just how much and when he was using it.

Ryan was upset over the entire ordeal, not only because a Time Warner representative lectured him (and 44 gigabytes, while a considerable amount, is not even close to the terabytes of usage Time Warner usually complains about when they speak about heavy users “abusing” their network), but also because he wasted more than seven hours of his day yesterday making several trips and calls trying to troubleshoot a technical problem that was anything but.

Of course, Time Warner’s own policies for using Road Runner allow them to crackdown on whatever they define represents “abusive use” of their service:

Road Runner Terms of Service — Austin, Texas

The Internet is known as a “shared resource,” and Road Runner accounts operate using these resources. Excessive use or abuse of these shared network resources by one customer may have a negative impact on all other customers. Misuse of network resources in a manner, which impairs network performance, is prohibited by this policy and may result in termination of your account.

You are prohibited from excessive consumption of resources, including CPU time, memory, disk space and session time. You may not use resource-intensive programs, which negatively impact other customers or the performance of Road Runner systems or networks. Road Runner reserves the right to terminate or limit such activities.

Time Warner’s Acceptable Use Policy also allows them to limit and/or throttle service at will:

The ISP Service may not be used to engage in any conduct that interferes with Operator’s ability to provide service to others, including the use of excessive bandwidth.

The ISP Service may not be used in a manner that interferes with Operator’s efficient operation of its facilities, the provision of services or the ability of others to utilize the ISP Service in a reasonable manner. Operator may use various tools and techniques in order to efficiently manage its networks and to ensure compliance with this Acceptable Use Policy (“Network Management Tools”). These may include detecting malicious traffic patterns and preventing the distribution of viruses or other malicious code, limiting the number of peer-to-peer sessions a user can conduct at the same time, limiting the aggregate bandwidth available for certain usage protocols such as peer-to-peer and newsgroups and such other Network Management Tools as Operator may from time to time determine appropriate.

Of course, the company always had these terms and conditions at its disposal to control the “abusers.”  One of the benefits of the DOCSIS 3 upgrade, that they have apparently now taken back, is that it dramatically reduces the possibility that a heavy bandwidth consumer will impact anyone else’s service.  Why put several cities through the ordeal of forced tier pricing experiments, when they’ve always had the power to manage the traffic on their network?  It’s just another reason why we’ve been skeptical about usage caps and forced tier pricing all along.

If Ryan’s experience is an example of what is forthcoming for more customers in the Austin area, we’re concerned.

KVUE-TV is Austin examined the impact Time Warner’s proposed usage caps would have on younger users, part of the “Internet generation.”  Disproportionately heavier users of the net, these “heavy users” are often the ones who will be the first to lose the innovative net services they have depended on, because of the exhorbitant charges Time Warner was proposing to access them.  But the impact doesn’t stop there.  Innovative broadband applications that become unaffordable to use cause job losses, hurt the economy, and allow the United States to fall behind other countries that charge lower prices for faster Internet access.

A straightforward and honest package from KVUE, focusing on the “younger user” angle, and how usage caps impact them in their daily lives.  “Worried,” is the common reaction among younger users accustomed to flat rate Internet.  Many students spend more time online than they do watching television, a factor that obviously concerns a cable operator that sells packages of video channels they may choose to reject.

John McElhenney, MeterThis.net

One of the reasons why the Internet is much more important than the “go outside and do something else” crowd would have you believe, is the power of netizens to get involved in their government and local communities, and effect change.  The online world is unique for organizing and advocating change.  It requires almost no money to get started, and you are not subject to the corporate media filter, the high cost of publishing and distribution, or the requirement of expensive advertising to become noticed.  The Internet lets you leverage the quality of your information to garner success, instead of having to try and buy it with mass blast advertising.

With just $10 and free software, John McElhenney joined a growing number of online activists voicing their concern with Time Warner Cable’s plans to implement a tier-based billing structure for Internet users in four cities, including San Antonio and Austin.  MeterThis.net has given a local voice to the movement opposing usage caps down in high-tech Austin.  One person can make a difference, as you’ll hear in this report from David Ruif:

I have been getting news tips {thanks Carsten, J, and others) about newspapers in Texas reporting that the Texas Internet Rationing Plan from Time Warner has been “postponed” until October, and this represents some sort of consumer victory.

Hardly.

First, this is not exactly breaking news.  Landel Hobbs, Time Warner’s COO, already made mention the cap plan would begin implementation in Austin and San Antonio in October, presumably with a trial period.  It sounds like Mr. Hobbs, bless his heart, already knew about the “consumer victory” that comes “as a result of complaints” before the Time Warner folks on the ground down in Texas knew, because they only started speaking about it this week.

Trials will begin in Rochester, N.Y., and Greensboro, N.C., in August. We will apply what we learn from these two markets when we launch trials in San Antonio and Austin, Texas, in October, but we will guarantee at least the same level of usage capacity in these trials.

Now, actual billing starts in January, up until they change their minds again.

A trial program intended to charge varying rates depending on usage was slated to begin this summer. The decision to delay the meter program was prompted mostly by customer reaction, said Gavino Ramos, Time Warner’s vice president of communication for South Texas.

“What happened as we’re continuing to listen was we worked in some of the comments and ideas that got sent to us,” Ramos said. “We came to the realization, let’s do this in October.”

Meanwhile, Rochester is the big “lucky winner,” joining Greensboro in starting the Internet Rationing Plan in August.  I suppose it was inevitable our two cities come closer together, considering a whole lot of people exiting Rochester end up moving to North Carolina.  Sooner is better in cities with fewer competitive choices anyway.

If Time Warner was truly responsive to its customers, it would drop this Titanic-like disaster of a rationing plan today.

There is no consumer victory here, and this company is still not listening.  Instead, by putting off the abuse for a few months, they hope you will fall complacent and not continue to engage in a united effort to resist unwarranted capping of your Internet access.  The first step of coping with an abusive relationship with your Internet provider is recognizing you are in one.  Being told you are not going to get hit with punitive caps today, but in a few months, doesn’t change that.  Don’t be a victim.