Time Warner Cable customers in Austin, Tex. excited to learn DOCSIS 3 speed upgrades have finally arrived in the state capital are less than thrilled to learn the rug has been pulled out from under some of the high speeds the company was promising customers just one week earlier.

At issue is Road Runner Extreme, the DOCSIS 3 upgrade that delivers faster speeds at a “sweet spot” price of just $10 more than Road Runner Turbo.  In most Time Warner Cable markets, Road Runner Extreme delivers 30/5Mbps service, and so it was to be for Austin customers as well:

Captured from Time Warner Cable website - July 1, 2011 (click for screenshot of entire web page)

But Broadband Reports reader “SunnysGlimps,” who signed up for Extreme expecting those speeds, discovered “bait and switch” broadband instead, as the resulting speed test (and subsequent advertising) showed a much less impressive 20/2Mbps result.

“I was actually getting faster speeds with the Turbo then I am now with the capped Extreme package,” says Sunnysglimps. “My speed clearly hits a cap when it goes to 20/2Mbps on speedtest.net.”

This reader feels Time Warner Cable is engaged in false advertising in Austin.

“You cannot advertise 30/5Mbps, sell the service, charge more, and then change your advertising a few days later and say it won’t be what you just purchased.”

Captured from Time Warner Cable website - July 5, 2011 (click for screenshot of entire web page)

Sen. Al Franken (D-Minn.) delivered comprehensive remarks at today’s South By Southwest (SWSW) gathering in Austin, Tex.  Franken declared the fight for Net Neutrality is by no means over, and claimed corporate opponents and some members of Congress are “using a rhetorical technique called ‘making stuff up’” to fight the rules guaranteeing a free and open Internet.  Franken added an open Internet does not mean open season for online content piracy, but preserving today’s online experience is crucial for entrepreneurs working in the 21st century digital economy, as well as for the creative talent attracted to SXSW.  (45 minutes)

Average measured connection speed (All graphics courtesy: Akamai)

America is marching backwards with a gradual decline in broadband speeds, according to a new report issued today.

Akamai’s State of the Internet Report for the final quarter of 2009 (report only available with permission from Akamai) rates America 22nd fastest in broadband connections, averaging 3.8Mbps, and declining.  Speeds dropped 0.9 percent for the quarter, 2.5 percent for the year.

Still on top are South Korea, Hong Kong, and Japan, now joined by former Soviet bloc countries Romania, Latvia, and the Czech Republic — all rapidly improving broadband speeds by double digit percentages.

Within the United States, among the top 10 individual states — five rated increased speeds and five measured lower speeds.  Some attribute this to network congestion, others suspect some customers have downgraded service in a poor economy.  But the biggest reason for the speed drop comes from wireless broadband.  Some Americans are increasingly relying on broadband service delivered to smartphones or other wireless devices over slower speed networks.

Overall, 31 states saw average connection speeds increase in the fourth quarter – up from 25 in the prior quarter. Notable gains included South Dakota’s 18 percent jump to 4.5 Mbps. Fourth quarter decreases in average connection speeds were seen in 19 states and the District of Columbia, and included Virginia’s 13 percent drop to 4.0 Mbps. Akamai believes that the significant decline in Virginia was likely due, in part, to increased traffic seen from lower-speed mobile connections that entered the Internet through gateways within those states.

Increased speeds year over year were seen in 29 states, with Hawaii growing 33 percent to 4.7 Mbps.

South Korea’s introduction to the iPhone drove their average speeds down by a whopping 24 percent.  KT (formerly Korea Telecom) is at fault here — the national wireless carrier has slow wireless Internet speeds.

Stop the Cap! readers  in Rochester and Austin should notice both cities made the top ten fastest list, measured by Akamai.

[Thanks to Stop the Cap! reader Rob who sent us details.]

Fastest American Broadband Cities by Unique IP

Fastest Broadband States

Best Average Measured Connection Speeds (not suprisingly most are college towns)

Top 10 States

Today marks the first anniversary of news that Time Warner Cable planned to expand an Internet Overcharging scheme being tested in one Texas city to four additional cities within its service area.

Residents of Rochester, New York, the Triad Region surrounding Greensboro, North Carolina, as well as Austin and San Antonio, Texas first learned of the planned expansion of so-called “metered broadband” from a Business Week article dated March 31st, which has since accumulated more than 450 comments to date:

Web users, the meter is running. In a strategy that’s likely to rankle consumers but be copied by competitors, Time Warner Cable is pressing ahead with a plan to charge Internet customers based on how much Web data they consume. Starting next month, the company will introduce tiered pricing in several markets.

In April, Time Warner Cable will begin collecting information on its customers’ Internet use in the Texas cities of Austin and San Antonio and in Rochester, N.Y. Consumption billing will begin in those cities later this summer. In Greensboro, N.C., the billing changes will begin sooner. Spun off from Time Warner this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont, Tex., since last year.

Proposed pricing models created by Time Warner Cable would have tripled broadband bills to an unprecedented $150 a month for consumers seeking the same level of broadband service they enjoyed a month earlier.  For a cable industry that was used to pushing through rate increases well above the annual rate of inflation, such an enormous rate increase was unprecedented, even for them.

For consumers willing to ration their broadband use, the news was slightly better — you’d still pay more for less service, and be exposed to overlimit fees and penalties should you exceed your monthly allowance, which was as low as a 1 GB per month for one proposed plan.

While residents of Beaumont, Texas had to endure these prices for several months prior to the announced expansion of experimental Overcharging, once news hit tech-savvy cities in Texas, New York, and North Carolina, an all-out consumer rebellion began.  Residents in Austin met with city officials to discuss alternatives to a cable company that threatened Austin’s high tech status.  For residents in Rochester, already coping with a 5 GB usage allowance for Frontier Communication’s DSL service, it was a clear-cut case of monopolistic greed.  In North Carolina, working to transition its way towards a digital economic future, an Internet rationing plan would hurt the economy of the entire Triad region.  San Antonio residents were equally unimpressed with the cable operator as well, demanding alternative providers.

Former Congressman Eric Massa (D-NY)

Consumers banded together on Stop the Cap! and other consumer-oriented websites to coordinate the pushback effort.  Protests were held, the media was engaged, and at least in New York, the politicians were not going to sit back in Time Warner Cable’s favor.  Former Rep. Eric Massa expressed outrage at the company for its new pricing plan and Senator Chuck Schumer personally called Time Warner Cable CEO Glenn Britt.

A few lapdogs in the trade press and “dollar a holler” astroturf groups praised Time Warner Cable’s price gouging plans.  One even went as far as to suggest Time Warner Cable “took one for the team” — referring to a cable industry just waiting to test some Internet Overcharging of their own.

Time Warner Cable dispatched some of their social media minions to try and explain away the outrageous price increases, offering to “listen” to consumers with suggestions about how to “improve the plan.”  One, like TWCAlex offered “proof” consumers wanted this kind of pricing.  The disingenuousness of the effort rivaled Lord Haw Haw’s Germany Calling propaganda broadcasts on the Reichssender Hamburg.  Company officials ignored the overwhelming consensus that consumers didn’t want metered or capped service and then weeks later those who did submit comments were notified they were “deleted without being read.”

Meanwhile, Rep. Massa’s office began drafting legislation to ban the unprecedented pricing schemes, culminating in a bill introduced in 2009 to ban unjustified usage caps and metered billing.

On April 9th, Landel Hobbs, Chief Operating Officer of Time Warner Cable, issued a recitation of the reasons why Time Warner Cable felt justified in exposing customers to up to 150 percent rate hikes — reasons we’ve managed to debunk over the past year’s coverage:

With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially. That’s a good thing; however, there are costs associated with this increased Internet usage. Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40% a year. As a facilities based provider, we’ve built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself.

As we’ve since proven, Hobbs statements to the public obscure the facts in his own company’s financial reports which are remarkably consistent quarter after quarter: revenues for broadband service are increasing while the costs to provide it are falling.  In fact, broadband is rapidly becoming the most important element of the cable industry’s quest for fat profits.  Time Warner Cable, as well as others, have plenty of financial resources from the billions in profits they earn from broadband every year to provide cost-effective upgrades that benefit them as well as consumers at today’s flat rate prices.

Just a few weeks ago, Hobbs told investors consumers are so devoted to their broadband service, the company could raise broadband prices anytime they like.  Funny how “increasing costs” never came into the discussion there.

This is a common problem that all network providers are experiencing and must address. Several other providers have instituted consumption based billing, including all major network providers in Canada and others in the U.K., New Zealand and elsewhere. In the U.S., AT&T has begun two consumption based billing trials and other providers including Comcast, Charter and Cox are using varying methods of monitoring and managing bandwidth consumption.

As Stop the Cap! has illustrated repeatedly, such consumption billing schemes are despised by consumers -and- most countries see them as hampering their digital economy.  Australia and New Zealand have government initiatives to improve broadband service to the point where consumption billing and usage caps are a distant memory.  Canada’s usage based billing schemes come from market concentration, particularly from Bell which is by far the largest wholesale supplier of bandwidth in the country.  Their quest for profits, along with a compliant regulatory body (the CRTC) has made such ripoff pricing commonplace.  The result on Canada’s broadband rankings are clear as the country continues to fall further behind other OECD nations.  Canadians do not want such pricing, but when a duopoly is allowed to exist unfettered by appropriate oversight, the end result is always the same – higher prices for poorer service.  In the United Kingdom, several flat rate plans are available, with more on the way as the UK embarks on its own Digital Economy plan.

There are other reasons why such consumption billing schemes are in place in other countries – namely insufficient international capacity to move traffic back and forth outside of the region.  That too is being addressed.

That other cable operators are overcharging consumers or limiting their usage is hardly a surprise considering insufficient competition in the marketplace makes that possible.  However, Comcast’s 250 GB limit is far more generous than anything Time Warner Cable proposed, Cox rarely enforces their limits, and Charter recently announced it had abandoned theirs.

For good reason. Internet demand is rising at a rate that could outpace capacity within a few years. According to industry analysts, the infrastructure may not be able to accommodate the explosion of online content by 2012. This could result in Internet brownouts. It will take a lot of money to fix the problem. Rather than raising prices on all customers or limiting usage, we think the fairest approach is to move to a tiered model in which users pay more if they use more.

Hobbs’ reliance on the “exaflood” or the “zettabyte” theory of Internet brownouts comes courtesy of the prostituting, industry-backed Discovery Institute — the people who will cough up bought and paid for “research studies” that say anything the buyer wants them to say and Cisco, which makes a handsome buck off selling broadband network equipment to providers they panic with stories of Internet data tsunamis and brownouts.

Hobbs

Two weeks after the Business Week article, Senator Schumer flew to Rochester and joined a few of our local Stop the Cap! members and myself to announce the end of the nightmare — no more Internet Overcharging consumers in any of the three states. Even Beaumont was soon freed from the ripoff pricing experiment.

But Time Warner Cable promised that one day, they could be back with the same schemes, after “educating their customers.”  Stop the Cap! has spent the last year assembling an extensive record of just how unjustified these pricing schemes really are, and we’ve been educating consumers about how an duopolistic broadband industry is seeking to monetize and control as many aspects of America’s online experience as possible.

We’ve exposed dozens of astroturf and other industry-backed groups trying to peddle the broadband industry agenda, often trying to hide who is paying the bills.  Whether it’s scare stories about broadband brownouts, fear that oversight and regulation will drive away investment and reduce service, or the need to stop Net Neutrality — it’s all designed to protect provider profits, not help consumers.

There is nothing fair about Internet Overcharging schemes.  There has never been a true consumption billing scheme that charged consumers nothing if they didn’t use the service, and the prices being charged for consumption above one’s allowance are often several thousand percent above actual cost.  Indeed the CEO of Crown Fibre Holdings CEO Graham Mitchell, admitted the truth about such pricing schemes when he told Techday that where ISP’s engage in such pricing schemes, they don’t make their money in providing access to broadband; they make it out of data caps.

We have no illusion providers won’t be back for a second bite at your wallets, which is why the education effort continues.  Over the last year, we’ve expanded our coverage to promote better broadband, and to expose bad actors among the broadband cable, telephone, wireless, and satellite industry.  We’ll continue to expose lobbying efforts to legislate away oversight, consumer protection, and limit potential competition.  Stop the Cap! also continues to fight for improved rural broadband that moves beyond today’s satellite fraudband that delivers woefully slow, heavily limited and expensive service.  We’ll also coordinate efforts to push back whenever Internet Overcharging schemes appear on the horizon, and we won’t let go until such language is banished from customer agreements and Acceptable Use Policies, whether they are formally enforced or not.

One year later, America’s broadband users are safer from such schemes, but not yet safe.  Thanks to all of our readers for staying engaged.

AT&T Mobility doesn’t want a repeat of 2009′s wireless meltdown at Austin’s annual geek gathering South by Southwest (SXSW).  The wireless provider is bolstering coverage across Austin with temporary cell towers rising from trailers strategically placed around the convention center, as well as an indoor cell system inside the Austin Convention Center.

All this to avoid the embarrassment the company experienced last year when thousands of iPhone-wielding attendees slowed AT&T’s network to a crawl.  When smartphone customers notice slowdowns or dropped service, they become vocal.  That’s no good for a convention catering to the cool-kid techie.

Making a good impression at SXSW may represent a road back to credibility for many unhappy AT&T customers, who have repeatedly criticized the carrier for not keeping up with mobile demand in 2009.  In addition to “Cellular On Wheels” — the aforementioned AT&T cell tower trailers, the company has also beefed up its permanent cell sites with improved backhaul connections, which provides increased bandwidth.

Most of AT&T’s data demands come from its exclusive arrangement with Apple to provide iPhone service in the United States.  The deal brought millions of new customers to the company, which claims to have twice as many smartphones on its network that any other carrier.

The results of all the work seem to have paid off.  Many attendees report the network is performing better than expected.  Some have noted its working even better than the conference-provided Wi-Fi network.

KXAN-TV in Austin covers the opening of SXSW and AT&T’s service improvements throughout Austin (2 minutes)

Google plans to offer up to 1Gbps service on its direct to the home fiber network

Google has announced it is doing something about anemic, overpriced, and poorly supported broadband service in the United States.  It’s going to start providing service itself.

In a move that is sure to drive providers crazy, Google is looking for your nominations for communities that are stuck in broadband backwaters, desperate for an upgrade.  With so many suffering from “good enough for you” broadband speeds, threats of “inevitable” Internet Overcharging schemes like usage limits and consumption billing, or customer support that involves reaching more busy signals than helpful assistance, they won’t have to beg for nominations.

Google is planning to launch an experiment that we hope will make Internet access better and faster for everyone. We plan to test ultra-high speed broadband networks in one or more trial locations across the country. Our networks will deliver Internet speeds more than 100 times faster than what most Americans have access to today over 1 gigabit per second, fiber-to-the-home connections. We’ll offer service at a competitive price to at least 50,000 and potentially up to 500,000 people.

From now until March 26th, we’re asking interested municipalities to provide us with information about their communities through a Request for information (RFI), which we’ll use to determine where to build our network.

I can think of a few cities that were victimized by providers in 2009 who have little chance of seeing true fiber optic service any other way.  Rochester, New York, the Triad region of North Carolina, parts of San Antonio and Austin bypassed by Grande Communications’ fiber network, are all among them.  Rochester has the dubious distinction of being stuck with two providers itching to slap usage limits and consumption billing on their customers – Frontier and Time Warner Cable.  Since Verizon FiOS is popping up all over the rest of New York State, residents in the Flower City concerned about being left behind might want to make their voices heard.

Google plans to deliver 1Gbps… that’s a Gigabit — 1,000Mbps service to its fiber customers at a “competitive price.”

While some in the industry consider such speeds irrelevant to the majority of consumers, Google thinks otherwise:

In the same way that the transition from dial-up to broadband made possible the emergence of online video and countless other applications, ultra high-speed bandwidth will drive more innovation – in high-definition video, remote data storage, real-time multimedia collaboration, and others that we cannot yet imagine. It will enable new consumer applications, as well as medical, educational, and other services that can benefit communities. If the Internet has taught us anything, it’s that the most important innovations are often those we least expect.

What’s in it for Google?  Targeted advertising, guaranteed open networks, an improved broadband platform on which Google can develop new broadband applications, and calling out providers’ high profit, slow speed broadband schemes are all part of the fringe benefits.

For providers and their friends who have regularly attacked Google for “using their networks for free,” Google’s fiber experiment deflates providers’ hollow rhetoric, and could finally provide a warning shot on behalf of overcharged, frustrated consumers that the days of rationed broadband service at top dollar pricing may soon be over.

Google released this video announcing their Think Big With a Gig campaign (1 minute)

This isn’t Google’s first experience with being an Internet Service Provider.  The company has experimented with free Google Wi-Fi service in its hometown of Mountain View, California since 2006.

[Update 2:30pm EST: FCC Chairman Julius Genachowski applauded Google's experiment: "Big broadband creates big opportunities," he said in a statement. "This significant trial will provide an American testbed for the next generation of innovative, high-speed Internet apps, devices and services."

The Washington Post has a source that claims Google "doesn't currently have plans to expand beyond the initial tests but will evaluate as the tests progress."  That could mean the experiment also serves a public policy purpose to re-emphasize Google's support for Net Neutrality, and to deflate lobbyist rhetoric about Google's support for those policies being more a case of their own self-interest and less about the public good.  If Google can run its networks with open access, they essentially put their money where their public policy mouth is.]

Time Warner Cable and Fox are now into their final day of negotiations before the agreement expires governing Fox-owned affiliate stations and cable networks.

One thing that the dispute has accomplished is increasing media attention on both companies and a spotlight on the business models of television programming and distribution.  It used to be so simple – television programming would air on broadcast television, enjoy massive audiences and the lucrative ad revenue that comes from having top-rated programming.  Cable networks couldn’t survive on the much smaller ad revenue they earn from their smaller audiences, so they charged cable operators a small fee for every subscriber who could watch their channels.

With the advent of TiVo and other digital video recorders, online viewing, and the audience erosion that comes from both, what worked for more than 50 years didn’t work so well anymore.  Time-shifting viewers no longer felt committed to watching live television, satisfied with being able to watch when they want and fast forward past the increasing amount of advertising television stations crammed into programming.  With broadband, viewers could download or stream their favorite programs online, often for free and with limited (if any) commercials.  Cable networks that used to be content running older syndicated programming, movies, and low budget documentaries and specials began creating their own original programming, often just as good as anything the networks produced.  Subscription fees charged programmers increased accordingly to help finance these shows.

Today, some cable networks are coming close to rivaling the viewership of broadcast networks’ lesser-watched programming.  If the economic downturn didn’t challenge the advertising industry, the ongoing loss of network television viewers would have accomplished the same thing – lower ad rates for ABC, CBS, NBC, and Fox.

At the heart of the debate is a new discussion about whether “free over the air television” is a sustainable business model.  Networks like Fox evidently don’t think so, which is why they seek payment from the pay television industry, be it cable, FiOS, U-verse, or satellite.  Since the majority of Americans now watch television through one of these services or through their broadband connection, there is plenty to be made from such payments.  Of course, those costs are passed on to you.

The result?  You are now paying for “free television.”

The hardball game between Fox and Time Warner Cable will be replayed often between the other networks and programmers and pay television companies.

Today’s video reports include another update from the business side of the story, several additional reports from impacted Fox stations, and basic education about what television antennas are all about.

New York Times reporter Brian Stelter reports the two parties remain “pretty far apart” from an agreement in this report from Bloomberg News. (2 minutes)

CNBC discusses the business side of the Time Warner Cable-Fox dispute, and now Sen. John Kerry (D-Mass.) has put himself in the middle of the dispute as well. (1 minute)

http://www.phillipdampier.com/video/KXAN Austin Cable dispute could turn off bowl games 12-31-09.flv

In Austin, KXAN-TV reports Time Warner Cable has been telling Texas viewers they can watch most of the Fox Network programming on Hulu for free.  Some Austin residents are sick of hearing about the dispute and are abandoning Time Warner Cable for DirecTV.  “Football is everything in Texas,” say some who are watching the dispute with concern. (3 minutes)

http://www.phillipdampier.com/video/KDFW Dallas Watch FOX 4 without Time Warner 12-31-09.flv

Some local Fox stations are teaching their viewers how to receive their stations if Time Warner Cable no longer carries them on their lineup.  KDFW-TV in Dallas went to Best Buy where they’re only too happy to sell antennas and digital converter boxes to Metroplex residents. (2 minutes)

http://www.phillipdampier.com/video/WOFL Orlando Fox Orlando Affiliate Teaches Viewers About Antennas 12-30-09.flv

WOFL-TV in Orlando spent part of the newscast teaching people what a TV antenna is.  For many under 30, television viewing has always been through cable or satellite, never over-the-air, so the concept of rabbit ears is a new one for some. (1 minute)

Lots more to watch below the page break.  Click the link below to continue!

… Continue Reading

AT&T’s hybrid fiber-copper wire U-verse system added its 2,000,000th customer today and has announced a new speed tier in three of the company’s markets: Austin and San Antonio in Texas and St. Louis, Missouri.

The new High Speed Internet Max Turbo plan signals two things about AT&T’s broadband service — it can squeeze a bit more speed out of its more advanced VDSL network and it’s running out of clever names for its premium speed tiers.  The new plan is capable of achieving up to 24Mbps downstream and 3Mbps upstream, which is still not enough to compete with Time Warner Cable and Charter Cable’s DOCSIS 3 cable modem technology, but could be enough for many consumers.  The new plan is priced at $65 a month for residential customers who also receive other AT&T services, and $95 a month for business customers.  Many small business customers choose DSL service over cable modem technology because of installation costs, which can be prohibitive if an office park is not already wired for cable service.

AT&T added one million new customers in 2009 across 22 states where it provides service.  U-verse is still a work in progress in many areas where AT&T is slowly upgrading its facilities to deliver service. U-verse competes primarily with cable televisi0n, using a “bundled service” approach that tries to sign up customers for a complete line of telecommunications products.

Besides the alternative cable television service AT&T provides, more than 90% of customers also take U-verse’s broadband service.  It’s a major improvement over AT&T’s traditional DSL service, which is much slower and less reliable in providing promised speeds.

A U-verse installer wires up a new customer's home for service

AT&T counts these milestones for 2009:

• Launched 13 U-verse TV apps, bringing the total number of TV apps to 21 and giving U-verse TV customers control and interactivity with their favorite content. Two of the most recent app additions include Multiview, which lets you watch up to four channels at one time on your TV screen; and Santa Tracker, which lets families visit the North Pole to play holiday games, listen to sing-a-longs, follow Santa around the globe on Christmas Eve and more.
• Added more than 25 High Definition (HD) channels, bringing the U-verse TV HD channel lineup to more than 110 HD channels in every U-verse TV market. AT&T claims U-verse offers more HD channels than major cable providers in every U-verse TV market.
• Enhanced the company’s Digital Video Recorder to include Mobile Remote Access for the iPhone, an app that allows you to schedule and manage DVR recordings and search U-verse TV program listings from your iPhone. AT&T also added the capability to schedule and delete recordings from any U-verse connected TV in the home.
• Improved speeds on its broadband service by launching Max Turbo. AT&T also upgraded U-verse High Speed Internet Max customers by increasing speeds from up to 10 Mbps to up to 12 Mbps — a 20 percent speed increase at no extra charge.
• Expanded U-verse availability in the Southeast region. U-verse TV is now available in all 22 states of AT&T’s traditional footprint, and the advanced fiber network passes more than 20 million living units.
• Ramped U-verse Voice availability. U-verse Voice is now available in all 120 markets that offer U-verse TV, giving consumers another option for their home phone services and more quad-play integrated features.

Phillip Dampier

Today is Stop the Cap!‘s first anniversary.  One year ago today, this website was launched with the news that Frontier Communications, the local telephone company in Rochester, New York and in dozens of mostly rural communities nationwide, had quietly changed its Acceptable Use Policy to define appropriate maximum usage of their DSL service at a measly 5GB per month.

The  boneheaded, out of touch decision was called out for what it was: a profiteering provider pilfering wallets of their broadband customers.

All the signs of a Money Party among cable and DSL providers at consumer expense were apparent last summer.  Time Warner Cable was experimenting with a consumption billing plan in Beaumont, Texas.  In Canada, rhetoric about “bit caps” was already being circulated, trying to convince Canadians that broadband service was somehow as difficult to provide there as it is in Australia and New Zealand, where such caps were already in place.

To bring limits, rationing quotas, and consumption based billing to the United States would require consumers to ignore massive profits broadband providers were harvesting quarter after quarter at existing prices.  But demands for big profits from Wall Street meant they had to come from somewhere, and for cable companies with eroding profits from their cable TV divisions, and telephone companies dealing with disconnect requests for wired telephone lines, broadband was their choice.

It seems that what was insanely profitable a decade ago, when cable modem and DSL service started to introduce Americans to broadband, would now simply be ‘piles of  cash stacked like cord wood’-profitable as traffic increased. As the broadband adoption rate increased, bandwidth costs plummeted, and several providers also proudly trumpeted their reduced investments in their networks as a hallmark of keeping “costs under control.”

Consumers began actually using their service for… broadband-specific services, at the encouragement of providers’ marketing departments, touting their “always on” connection at “blazing fast speeds” to download music, movies, play games, and more.  Network utilization increased, and providers want someone to pay for a “bandwidth crisis” that isn’t a crisis at all.  Responsible investment in network infrastructure should be a given, in recognition that at least a small portion of those growing profits must be spent on maintaining and improving service.

One year ago, I laid out what was before us:

Cable operators have been discussing implementing usage caps in several markets to control what they refer to as a “broadband crisis.” The industry has embarked on a lobbying campaign to convince Americans, with scant evidence and absolutely no independent analysis of their numbers, that the country is headed to a massive shortage in bandwidth in just a few short years, and that a tiny percentage of customers are hogging your bandwidth.

Frontier, ever the rascally competitor, has decided to one-up Time Warner’s Road Runner product by slapping on a usage cap now for DSL customers before Road Runner considers doing the same. And in a spectacularly stupid move competitively, they have implemented a draconian cap that even the cable industry wouldn’t try to implement.

Time Warner Cable “took one for the team,” according to industry-friendly Multichannel News, when it introduced a ludicrous Internet Overcharging experiment of its own announced this past April, which would have “saved” customers money by getting them to “pay for what they use.”  In fact, their plan proved my point last summer, following the same roadmap of “bandwidth crisis” to “heavy downloaders” to trying to squeeze customers for more money for upgrades they could easily have done with the enormous profits they already earn.

Their proposal would have made a deliciously profitable $50 a month Internet service now cost consumers $150 a month with absolutely zero improvement in service, speed, or performance.  But Wall Street would have been happy with the higher returns.

Some 400+ articles later, we’ve educated consumers across North America about the reality of Internet Overcharging.  Despite industry propaganda “education” efforts, astroturfing groups we’ve exposed as having direct connections with the telecommunications providers paying them to produce worthless studies, fear-mongering about Internet brownouts by equipment vendors with solutions to sell, and a hack-a-thon of formerly respectable broadband pioneers and ex-government officials who sold their credentials for a paycheck to lobby and spout industry propaganda, most consumers continue to reject overcharging for their broadband service.  Consumers instinctively know a cable company with a rate change always means a rate increase, and plans to “save people money” actually means they will “protect industry profits.”

We have achieved victory after victory in 2008-2009:

• Fought back against Frontier’s boneheaded plan, and convinced them that DSL can compete best on price and flexibility — no usage cap has ever been enforced at Frontier, and today they are using Time Warner Cable’s blundering profiteering experiment against them in their marketing materials.  For rural Frontier customers with no other broadband provider, that’s a major relief from being stuck with one broadband option that rations their usage to ludicrously low levels.
• Stopped Time Warner Cable’s experiment before it got off the ground in several “test cities.”  The people of Austin, San Antonio, Rochester, and the Triad region of North Carolina did Time Warner Cable customers nationwide a tremendous service in halting this experiment before it spread.  Our efforts even brought a United States Senator, Charles Schumer, to the front lawn of Time Warner Cable in Rochester to announce the nightmare was, at least for now, over.  We managed to even see an end to the overcharging of customers in Beaumont, Texas who lived through a summer, winter, and spring, overpaying for their broadband service.
• We raised hell in the North Carolina state legislature, coming to the aid of Wilson and other communities in the state trying to get municipal broadband projects off the ground.  Communities across the state faced anti-consumer corporate protectionist legislation written by the telecommunications industry, introduced by willing elected officials who took big telecom money, and sold out their constituents.  We killed two bills, forced a sponsor of one such measure to repudiate his own bill, and gave major headaches to legislators that thought they could just cash those big checks, vote against your interests, and you’d never know.  Those days are over.
• We helped bring legislation up in Congress to draw attention to the issue of Internet Overcharging, and have called out providers who want to use their marketing departments to lie to customers about their broadband costs and profits, while being considerably more honest with their shareholders in their quarterly financial reports.  Congressman Eric Massa’s legislation would demand companies show proof of the need to implement consumption based billing.  Indeed, as consumers find out how profitable broadband service is at today’s prices, they’ll never tolerate the profit padding providers seek with tomorrow’s caps/limits, penalties and fees, and unjustified tiers.

As you can see, Internet Overcharging is not a dead concept.  An educated consumer will recognize a swindle when they see one, and providers continue to test overcharging schemes in focus groups in different parts of the country.  They’ll use any analogy, from a buffet lunch to a toll road traveled by big trucks and little cars.  They’re looking for anything they can find to sucker you into believing paying more for your broadband service is fair.

Broadband service must be fast, affordable, and competitive.  In too many communities in Canada and the United States, a monopoly or duopoly marketplace has guaranteed none of those things.  In our second year, we must remain vigilant in our core mission to fight Internet Overcharging, but we also need to fight for more competition, regulation where competition does not exist, oversight over providers, and support for projects that will enhance broadband and make it more affordable than ever.  With your help, we can stand toe to toe with any provider, because the facts are on our side, not theirs, when it comes to Internet Overcharging schemes.

Welcome to Year Two!

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.