Six college towns will benefit from the nation’s first multi-community broadband gigabit deployment, thanks to $200 million in capital funding to get the broadband networks off the ground.

The Gigabit Neighborhood Gateway Program leverages local government, universities, private capital, and the public to jointly support and foster the development of new fiber optic networks.

The new program claims it will offer competitively-priced super-fast broadband through projects that will cover neighborhoods of 5,000-10,000 people and communities up to 100,000 in size.  Selection of the six winning communities will be announced between this fall and next spring.

“Gigabit Squared created the Gigabit Neighborhood Gateway Program to help select Gig.U communities build and test gigabit speed broadband networks with speeds from 100 to 1000 times faster than what Americans have today,” the company said in a statement.

“The United States is behind in the world for Internet speed,” said Mark Ansboury, Gigabit’s president and co-founder. “The goal is to help get us out front for a platform of innovation.”

That platform is certainly not forthcoming from the country’s largest broadband providers, who according to Ansboury have been pulling back on wired infrastructure upgrades in recent years, shifting focus to more profitable wireless networks.

Gigabit Squared defines the next generation of broadband Internet in terms of speed, declaring 2,000Mbps (2Gbps) as the target to achieve.

The winning projects will be sponsored by Gig.U members, which include:

• Arizona State University
• California Institute of Technology
• Case Western Reserve University
• Colorado State University
• Duke University
• Florida State University
• George Mason University
• The Georgia Institute of Technology
• Howard University
• Indiana University
• Michigan State University
• North Carolina State University
• Penn State University
• University of Alaska – Fairbanks
• University of Arizona
• University of Chicago
• University of Colorado – Boulder
• University of Florida
• University of Hawaii
• University of Illinois
• University of Kentucky
• University of Louisville
• University of Maine
• University of Maryland
• University of Michigan
• University of Missouri
• University of Montana
• University of Nebraska – Lincoln
• University of New Mexico
• University of North Carolina at Chapel Hill
• University of Oklahoma
• University of South Florida
• University of Virginia
• University of Washington
• Virginia Tech
• Wake Forest University
• West Virginia University

Blair Levin, executive director at Gig.U, believes private American telecom companies will always be constrained from delivering world class broadband comparable to South Korea or Japan because of Wall Street opposition to the investment required to construct them. In the eyes of investors, today’s slower networks, in their estimation, do just fine.

Gig.U believes that they have a solution, at least for towns with a sizable university system that can serve as host of the next generation broadband network:

First, any community that wants its residents to have access to a network that delivers world-leading bandwidth can do so. The barrier is not technology or economics. The barrier is organization; specifically, organizing demand and improved use of underutilized assets, such as rights of way, dark fiber, or in more rural areas, spectrum. The responses identified a multitude of ways local communities can improve the private investment case by lowering investment and risk, and increasing revenues for private players willing to upgrade or build new networks without budget outlays from the local government.

Second, the responses confirmed that university communities have the easiest organizing task and greatest upside. Their density, demographics and demand make the current economics more favorable for an upgrade than other communities. For example, the high percentage of the population in university communities living in multiple dwelling units makes the economics of an upgrade far more favorable than for communities composed largely of single-family homes. With the growing importance of Big Data for the economy and the society, university communities are the natural havens for such enterprises to be born and prosper. Through the Gig.U process, our communities are already exploring more than a half-dozen paths to achieve an upgrade; paths that will be replicable for others and will deliver a major step forward in providing America a strategic broadband advantage.

Outside of a handful of upstart private competitors like California-based Sonic.net, most fiber broadband expansion come from private companies like Google — building an experimental fiber-to-the-home network in Kansas City, community-owned broadband services coordinated by local town or city government, co-op telecommunications companies owned by their subscribers, or municipal utilities.

While those efforts are typically committed to the concept of “universal service” — wiring their entire communities — the Gig.U project targets funding only for networks in and around university campuses.

The New America Foundation builds on Gig.U’s premise in its own recent report, “Universities as Hubs for Next Generation Networks,” which argues affordable expansion of broadband can win community support when the public has the right to also benefit from those networks. While Gig.U’s approach suggests the project will target fiber broadband directly to the homes qualified to receive it, the New America Foundation supports the construction of mesh wireless Wi-Fi networks to keep construction costs low for neighborhoods targeted for service.

An earlier project in Orono and Old Town, Maine may afford a preview of Gig.U’s vision, as that collaboration between the University of Maine and private fiber provider GWI is already in its construction phase. For those lucky enough to live within range of the fiber project, broadband speeds will far exceed what incumbents Time Warner Cable and FairPoint Communications deliver. FairPoint has fought similar projects (and GWI specifically) for years.

Will private providers object to the Gig.U effort to win local governments’ favor in the six cities eventually chosen for service? History suggests the answer will be yes, at least to the extent local cable and phone companies demand the same concessions for easy pole access, reduced pole attachment fees, and easing of zoning restrictions and procedures Gig.U project coordinators expect.

Levin has stressed Gig.U projects are based on university and private funding sources, not taxpayer dollars. That may also limit how much objection commercial providers may be able to raise against the projects.

WABI in Bangor previews the new gigabit broadband network being constructed in Orono and Old Town, Maine.  (2 minutes)

Consumer Reports today released its 2012 list of America’s best phone, broadband, and pay television providers (subscription required), giving top scores to fiber-to-the-home and cable broadband and exposing some familiar phone and cable companies which year-after-year deliver “bottom of the barrel” scores.

Nearly 70,000 readers of the consumer magazine participated in rating their local telecommunications providers for value, reliability, customer service, and broadband speed.  No provider scored higher than “average” for value, but wide discrepancies in broadband speed and the quality of service made choosing winners and losers easy.

Top-rated WOW! (formerly WideOpenWest), is the 15th largest cable provider in the United States, but regularly wins top scores from Consumer Reports readers for the quality of its services. WOW! currently serves mostly suburban subscribers in a handful of cities in Illinois, Ohio, Michigan and Indiana. But the provider will soon be coming to several new locations thanks to its April purchase of cable overbuilder Knology, which provides service in multi-dwelling units and administers some community-owned broadband networks around the country.  This could provide relief for customers dealing with onerous usage caps in cities like Lawrence, Kan., where Knology’s buyout of Sunflower Broadband kept that company’s Internet Overcharging scheme in place. WOW! has no usage limits on their broadband service.

Verizon’s FiOS fiber to the home network is also a consistent winner in the ratings, especially for its fast broadband service.

AT&T’s U-verse also scored high in the ratings for broadband.  AT&T’s fiber-to-the-neighborhood service still works with existing copper phone wiring inside the home and delivers 20+Mbps broadband, a major improvement over AT&T’s traditional DSL service, which usually tops out at 7Mbps.

Among top-rated cable companies you have heard of, Bright House Networks scored a major coup, winning third place for its broadband service.  Ironically, consumers gave very high marks to Earthlink delivered over Time Warner Cable, scoring it fourth place for broadband. But Earthlink’s performance on Time Warner Cable is actually slightly less than the cable company’s own broadband service. Although both services share exactly the same network, Time Warner adds “speedboost,” a temporary speed increase for downloads. But the cable company got no respect from customers, who put TWC in 19th place.

Other findings of interest:

• TDS, an independent phone company serving primarily rural areas scored a very high fifth place in broadband, despite offering only traditional DSL service (except in limited areas where it has built fiber networks to stay competitive with community-owned providers and cable companies).  But the company won high marks for service reliability;
• Frontier Communications’ inherited FiOS fiber to the home services in Indiana and the Pacific Northwest were that company’s only bright spots for broadband, putting both systems in sixth place.  Everywhere else… forget about it. The company’s traditional DSL service was rated a lousy value and delivered mediocre speeds, earning 24th place.
• Satellite fraudband providers Wildblue and HughesNet continue to torture their customers, scoring dead last for lousy value, speeds, reliability, and everything else.
• Still awful after all these years: Mediacom, Charter, and FairPoint Communications all continue their dubious distinction scoring at the bottom of the barrel for broadband. It’s nothing new for any of them, and it appears nothing is likely to change those rankings in the immediate future.

Americans still hate the big boys.  Outside of AT&T and Verizon’s shorter history delivering triple-play-packages of cable, phone, and Internet service, the legacy of lousy pricing and service from the country’s largest cable operators still hold them back in the ratings.  Comcast managed only 24th place, dragged down by terrible customer service and worse value.  Cablevision did better at 16th place with higher marks for everything but value.  It was the same story for 12th place Cox Cable.

What was the top choice for telephone service in 2012?  Ooma, a Voice over IP phone company that works with an existing broadband connection.  Phone companies that have been in the business of phone service for decades (or longer) were all bottom-rated: AT&T, Verizon, FairPoint, and Frontier Communications.  Only Mediacom, a cable operator, kept Frontier from scoring dead last.  And they wonder why Americans can’t wait to disconnect traditional landline service?

In fact, Consumer Reports says no other industry alienates consumers more than America’s telephone and cable companies.

But you can fight back and score a better deal.  Stop the Cap! was quoted in the magazine piece with our advice to play hardball with cable and phone companies who charge too much and deliver too little.

“The magic word is ‘cancel,’ ” says Phillip Dampier, of the website Stop the Cap! He suggests you schedule your disconnection date for a week or two in the future. “When you’re on their disconnect list, they are going to start calling you offering very aggressive deals,” he says.

Top-rated WOW! only delivers service in a handful of cities in the midwest, but is getting larger after acquiring Knology in April 2012.

Indeed, Consumer Reports found most providers willing to deal… eventually, but they have gotten wise to halfhearted negotiation tactics by consumers looking for a better deal. If a provider suspects you won’t follow through on a threat to change providers, they often stubbornly refuse to deal. That’s why we recommend requesting to be placed on a “pending disconnect” list — proof you are prepared to leave in a week or two if they won’t negotiate.

We’ve followed investor conference calls for most major providers over the past two years. Every provider has gotten more aggressive with customer retention offers, in part because of the poor economy and increased competition. Customers are paring back cable packages and cutting out extra channels and services they can no longer afford. Some have become expert at bouncing between new customer promotional offers. Cable operators like Time Warner Cable have tried to keep customers, even those coming to the end of promotions, with slightly less aggressive discounting.

“We have a very well-choreographed program for moving people from the most heavily discounted promos into the rational next-step pricing packages,” Rob Marcus, president of Time Warner Cable told the magazine. “Over time, that discount will decrease, but you’d probably still save 20 to 30 percent off the rack rate,” or regular price.

But we found consumers who get back on the disconnect list usually do much better than Time Warner’s “next-step” pricing, some even earning a better retention offer than what they received in 2011. The more serious customers are about their willingness to leave, the better the offer in return.

Dead last place for cable companies... again.

The magazine also offers solace for customers who literally have nowhere else to go for service:

Alan Curtis of Manchester, N.H., whose condominium is served only by Comcast, says his rates go up each year but he pushes back. “If you say, ‘We’ll have to buy less,’ occasionally they’ll come up with a cost-cutter that will apply to you,” he says. Similarly, a staffer who lives in a New York City apartment served only by Time Warner Cable more than offset a $5 increase in his overall bill by negotiating an $8-a-month cut in his DVR rental fee for 12 months.

Consumer Reports also warns customers to choose broadband providers wisely, because the speeds they advertise may never materialize. Case in point, Frontier Communications’ dreadful DSL service, which the magazine found met the company’s speed marketing claims only 67% of the time. Frontier has been struggling with a vastly oversold broadband network, causing speeds to slow dramatically during peak usage times, particularly in states like West Virginia.  The magazine recommends fiber to the home providers and cable operators for more consistent broadband performance that comes closer to the broadband speeds advertised.

At all costs, avoid satellite broadband, which remains slow, expensive, and heavily usage-capped.

Won 1.1 million new customers in 2011

Comcast and Time Warner Cable collectively picked up more than 1.5 million new customers in 2011, with most of the growth coming from dissatisfied DSL subscribers seeking better broadband speeds.

Leichtman Research Group, Inc. (LRG) found the eighteen largest cable and telephone providers in the US — representing about 93% of the market — acquired 3 million net additional high-speed Internet subscribers in 2011. Annual net broadband additions in 2011 were 88% of the total in 2010.

The top broadband providers now account for 78.6 million subscribers — with cable companies having over 44.3 million broadband subscribers, and telephone companies having over 34.3 million subscribers.

Stalled growth

Despite AT&T’s position as the second largest Internet Service Provider in the country, the company only picked up 117,000 new customers in 2011.  In contrast, Time Warner Cable, with 6 million fewer customers, added almost a half-million new broadband subscriptions last year.

Frontier Communications, which made broadband a primary target for expansion, has not seen considerable growth either.  The company only added just short of 38,000 new broadband customers last year, almost all getting DSL, often at speeds of 1-3Mbps.

Other key findings include:

• The top cable companies netted 75% of the broadband additions in 2011;
• The top cable companies added 2.3 million broadband subscribers in 2011 — 98% of the total net additions for the top cable companies in 2010;
• The top telephone providers added 750,000 broadband subs in 2011 — 68% of the total net additions for the top telephone companies in 2010;
• In the fourth quarter of 2011, cable and telephone providers added 765,000 broadband subscribers — with cable companies accounting for 82% of the broadband additions in the quarter.

Now serving 10.3 million

“Despite a high level of broadband penetration in the US, the top broadband providers added 88% as many subscribers in 2011 as in 2010,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “At the end of 2011, the top broadband providers in the US cumulatively had over 78.6 million subscribers, an increase of nearly 25 million over the past five years.”

Americans are increasingly treating broadband as an essential “utility” service, as fundamental as electricity or clean water.

The majority of consumers who lack the service either consider it irrelevant in their lives (a factor that increases with the age of the surveyed respondent), cannot obtain service from their provider because of their location, or cannot afford the service.

Sources: The Companies and Leichtman Research Group, Inc.
* LRG estimate
** Includes LRG estimates for Bright House Networks, and RCN
^ Totals prior to Time Warner Cable’s acquisition of Insight completed on 2/29/2012
^^ LRG estimate does not include wireless subscribers
Company subscriber counts may not represent solely residential households
Totals reflect pro forma results from system sales and acquisitions
Top cable and telephone companies represent approximately 93% of all subscribers

Noted online petitioner Change.org will be promoting a petition to stop bandwidth capping this week.

Perhaps best known for hosting an appeal which influenced Bank of America to drop their proposed $5 monthly ATM card fee, Change.org will be presenting the ‘no data capping’ petition on various social media sites in an attempt to gain signatures.

The petition’s letter, directed to AT&T, Comcast, the Federal Communications Commission, and all Internet Service Providers (ISPs) who practice data capping, demands that they return to a billing model of unlimited access for a reasonable monthly fee.  Telecommunication providers have a responsibility to improve service, not lower it, the authors argue, particularly in light of the fact that taxpayer-funded broadband pipelines already exist, which the providers are not using.

Petition author David K. Smith argues that data caps contradict the Internet’s inherent purpose.  In the petition page’s linked article, “Why Data Caps Are Censorship,” he states that as the Internet is exponentially growing, one can always access more information than any data cap could allow, resulting in censorship from “the Big Picture.” The article maintains that exclusion from the total amount of information available results in “leashed” users having an incomplete perspective due to restricted access, and that incomplete, fragmentary information is useless.

“Now is a great time to be signing and sharing this petition,” said Smith.  “We have Change.org’s attention, and more and more articles are appearing to protest bandwidth injustices.  I feel this is a critical fight for our freedom to information.”

Change.org online help assets suggest that one of the most effective ways to gain signatures is for advocates to place a link to the petition under appropriate news and technical articles, along with a paragraph describing its relevance to the subject discussed.

[Stop the Cap! encourages readers to sign this (and other) petitions which declare the practice of Internet Overcharging unacceptable.  Whether it's data caps or throttled speeds, customers deserve an unlimited, unthrottled Internet experience they pay good money to receive.  As financial reports show, today's unlimited pricing formula delivers enormous profits to broadband providers, even as their costs to provide the service continue to decline.]

"Hey, we're #19!"

The United States may be a leader in many things, but broadband isn’t one of them. The country has now fallen two more positions — to 19th place, behind South Korea, Sweden, Denmark, the United Kingdom, and even Iceland, since the Berkman Center for Internet and Society released its last rankings in 2009.

In 2004, President George W. Bush complained about the U.S. falling to 10th place, which he declared was “ten spots too low.”

Now eastern Europe and former Soviet Republics in the Baltics threaten to overtake the United States, and countries in southeast Asia already have.  Innovation in the United Kingdom, Australia and New Zealand means deploying fiber to the home service to the vast majority of the population.  Innovation in North America means conjuring up new pricing schemes to raise prices on broadband service and engage in competition-busting mergers and acquisitions.

But a USA Today editorial this week also places much of the blame on corporate influence inside Washington, which has promulgated legislative policies that favor telecommunications companies and throw customers under the bus.

“The simple answer is that other countries have policies that promote competition and innovation,” the editors write. “In contrast, policies here have allowed a few dominant players that control the least interesting parts of the broadband landscape (the cables and the wireless spectrum) to dominate.”

Indeed, a series of telecommunications laws enacted by Congress, combined with short-sighted policies at the Federal Communications Commission, have allowed a handful of super-sized players to own and control broadband service in America, resulting in providers establishing non-competing fiefdoms that avoid head-on competition.

The worst policy of all allowed broadband providers to keep competitors from reaching customers over existing broadband networks.  During the days of dial-up, you could purchase Internet access from the phone company, a large provider like MSN or AOL, or thousands of smaller regional and local service providers.  Simply dial a local access number and you were connected to the provider of your choice.  Now, U.S. law gives broadband network operators the right to restrict these independents from selling service over their networks.  Comcast need not sell anything other than Comcast Internet.  Frontier Communications can make a killing selling its own DSL service, while protecting that revenue from other Internet Service Providers who might sell the service over Frontier’s network for half the price.  Time Warner Cable voluntarily allows Earthlink and a handful of other companies to sell cable broadband service over its infrastructure, but at prices equal to or higher than what Time Warner charges itself.

Broadband providers argue that allowing competitors to sell service on their network would discourage future investment and rob shareholders a return on investments already made.  Today, major cable operators and phone companies are falling all over themselves denying they are in anything but the broadband business.  It has become an enormously lucrative enterprise, more profitable than television or telephone service.

USA Today compares the broadband landscape back home with that in South Korea — perennially the world’s fastest, and considerably less expensive than what North Americans pay for service:

South Korea has made broadband a national priority, mandating deployment and in some cases giving private companies incentives to build out. It has also prevented major players from monopolizing their businesses, encouraging competition and innovation. In South Korea, consumers can get broadband service from a cable or telecom company. But they may also choose among myriad independent providers that are given access to the physical infrastructure. This competition keeps prices down and the quality of service high.

[...] But over time, cable and telecom companies worked the courts and Congress to make sure that this competitive world would never come to be [in the United States]. [...] Wireless is a bit better. But the market has remained a near duopoly, with none of the smaller players emerging as a strong competitor to AT&T and Verizon.

The same open network concept has fought its way forward in Canada (where Bell has worked furiously to sabotage the business plans of independent providers) and in the United Kingdom, Australia and New Zealand where all three governments have decided the best solution would be to scrap the ancient landline network and start fresh with an open-to-all-comers fiber to the home service.

Back home in the States it is business as usual with increasing broadband prices and the looming prospect of usage-limiting schemes designed to cut capital costs, monetize broadband usage, and stop cord-cutting.

The opposing point of view comes courtesy of dollar-a-holler, corporate-backed think tank The Heartland Institute, who is stuck quoting notorious industry-funded studies and think tanks like the Discovery Institute and the Technology Policy Institute:

The idea that European and Asian countries are lapping America in the race for broadband speed and penetration is a fallacy created with statistics comparing “persons” instead of “households.” Once you make that correction, the USA is firmly planted among the top of industrialized nations, as economist Scott Wallsten pointed out when he was a staffer at the Federal Communications Commission in 2009.

And as tech researcher Bret Swanson of Entropy Economics points out, if you measure Internet usage by gigabytes used per month — a better measure of the speed and utility of networks — the USA has nearly lapped Western Europe once and Asia twice.

Heartland Institute: "By not disclosing our donors, we keep the focus on the issue."

If you measure how many mouse clicks customers in New York make on a Thursday afternoon, we could be number one as well!  Gigabytes used per month does not measure the speed or price of service on broadband networks, considerations that actually do impact broadband rankings.

Mr. Wallsten is a familiar favorite go-to-guy for The Heartland Institute.  He’s also the choice of Time Warner Cable, who paid him $20,000 for a 2010 essay: “The Future of Digital Communications Research and Policy.”

There is big money to be made writing corporate-funded research reports.  Bret Swanson knows that very well, having been involved with the Discovery Institute, a “research group” that delivers paid, “credentialed” reports to telecommunications company clients who waive them before Congress to support their positions.  Swanson is also a “Visiting Fellow” at Arts+Labs/Digital Society, which counted as its “partners” AT&T and Verizon.

The gentleman from Heartland also quotes from the misnamed “Progressive Policy Institute,” which counts among its funding partners, AT&T.

It would have been probably easier (but ineffectively transparent) to simply quote from AT&T and Comcast directly.

The Heartland Institute, unsurprisingly, believes letting existing broadband providers deliver service exactly the way they want is the best option:

The digital economy — one of the only vibrant economic sectors left — doesn’t need more government “investment” or regulation. It needs only for government to butt out and let the market work the magic that continues to bring us the marvels of the modern age.

That magic will cost you $50 a month and rising.  If some providers have their way, while the rest of the world abandons usage caps, American providers can’t wait to slap them on, reducing the value of your service even further.

Rogers Cable lets their customers purchase this cable box outright to avoid rental charges.

Stephen Simonin first came to our attention in January 2010 when he proposed charging cable operators room and board for their expensive cable set top boxes they require subscribers to rent.  Now, the chairman of the Litchfield (Conn.) Cable Advisory Council is back with another salvo — demanding an end to mandatory rental charges for cable TV equipment and access to competing providers:

The biggest industry in the US that has money for jobs is the entertainment industry. Federal law requires Cable to carry local broadcast and public channels in the clear for all. If we contact our Federal representatives and ask them to add: “Must carry adjacent competitors programming” We would add a million USA jobs immediately. Paid for by corporate cable and NOT tax dollars!

Cable has forced all of us to RENT cable boxes. We are not allowed to buy them because this is guaranteed free revenue forever for them. A box costs less than $100 and we pay nearly $10 a month for rental and power each month. Cablevision makes over $1,000,000,000 a year on set top box rentals alone. This is only one company! They have compressed TV to less than 20% of the transport. They use the other 80% for business and not covered under TV franchise (Wi-Fi, data, phone business). However, they use the TV franchise for this monopoly access to our front doors.

Adding this must carry clause will allow up to 5 different cable providers at our front doors for lower costs, higher quality and real competition. Cable will not want to give up that fat 80% business revenue they have today and will need to add a new fiber/co-ax transport across the country on their nickel! Think how many local jobs $1,000,000,000 can pay for. Now remember that we have several cable companies here in CT!

These are American jobs! Please help us get this passed! Call our Federal Congressman and Senators today. Remind them of the details I have sent them on behalf of the People.

Simonin’s proposal, sent to Stop the Cap!, enjoys some precedent… in Canada.

Sky Angel, a Christian television distributor, abandoned satellite in favor of IPTV several years ago. Their subscribers watch Sky Angel's channel lineup over a broadband connection.

Consumers there can purchase cable boxes in stores like Best Buy ranging from $80 for a refurbished unit that works with Shaw Cable to $500 for a cable box with DVR designed for Rogers Cable customers.  Buying your own box puts an end to rental fees, often $7+ per month, which never stop, even after the box is effectively paid for in full.  But for those seeking a built-in DVR, the initial price tag is on the steep side.  The practice of buying boxes has also generated some surprising competition between Rogers and itself.  When customers call to inquire about new service, Rogers often includes discounts including free box rentals, making it unnecessary to purchase the box at all (as long as you remember to re-negotiate an extension of the promotion when it ends).  That’s a savings of nearly $100 a year for some customers.  Buying DVR equipment guaranteed to work with your current provider also makes it easy to upgrade the device with larger capacity hard drives that can store more programming.  Since the failure point for most DVR’s is the hard drive, occasional replacements and upgrades can keep a box running for years.  Many pay providers in the United States charge higher rental prices for higher capacity equipment, with no option to buy.

Simonin’s proposal to open up cable networks to other providers is more novel, and probably a lawyer’s dream come true for the endless litigation it offers.  It’s highly unlikely the courts will side with the notion of forcing cable operators to open their infrastructure to competing providers, and considering the amount of informal collusion between companies today, it’s probably not going to deliver much savings.

A bigger hope on the horizon is the ongoing march to IPTV — television programming delivered using Internet technology.  With strong Net Neutrality policies in place (and a strong position against Internet Overcharging with usage caps or usage-based billing), dozens of new virtual “cable companies” could be launched, delivering their lineups over the Internet, direct to computer and television screens.  That could deliver consumers an endless choice of providers, assuming regulatory oversight is in place to make sure programming is available to all at fair and reasonable prices and that broadband providers are not allowed to block or impede access to the offerings that result.

It’s much easier to do an end run around Big Cable than trying to find a way to get them to change their business plans.

Are you using too much Internet service?  If your service provider thinks you are, it can alert you by barging in on your web-browsing sessions with forced notification messages warning you are about to be the latest victim of Internet Overcharging.

PerfTech, a maker of browser messaging systems has teamed up with Active Broadband Networks to deliver providers a way to notify up to two million subscribers about their broadband usage from just a single rack-based system.

“Feedback from ISPs who have deployed usage-based Internet tiers has confirmed that two factors are key to success: accurate usage measurement and quick, proactive notifications,” PerfTech vice president of sales Jane Christ said in a statement.

Most browser message injection systems are used to warn customers when they are approaching monthly usage limits or excessive use charges.  Some can even redirect web users to a single ISP-administered website to alert them their service has been suspended or request payment for additional usage with a credit card.

So far, only smaller U.S. providers are using PerfTech’s system, including WideOpenWest, BendBroadband in Oregon, and Buckeye Cable in Ohio.

• WideOpenWest doesn’t appear to limit usage except for newsgroups.  According to their FAQ, users may download up to 5GB per month of newsgroup content;
• Bend Broadband has a 100GB monthly limit on all but its highest speed Internet plan, which carries a 150GB monthly limit.  The overlimit fee is $1.50 per gigabyte.
• Buckeye Cable favors “network management” techniques, which can slow down customers deemed to be using too much, at its discretion.  But the company does have a 3GB strict usage cap on newsgroup access.  Exceeding it is very costly.  The overlimit fee is a whopping $45 per gigabyte.

While Australian officials promote the noble aspects of its new fiber-based National Broadband Network to power commerce, health care, and education, one content and applications developer says the prospect of improved “adult entertainment” options will drive demand for fiber broadband adoption in Australia, just as it has in many other countries.

Jennifer Wilson, project director for The Project Factory, took discussions about the decidedly-adult topic of online content private to be certain it did not overshadow the more virtuous-aspects of the fiber network.

“The single most important factor is the porn factor because pornography has always been at the cutting edge of technology,” Wilson said. “If we cannot get porn on the NBN than we will have trouble getting consumer acceptance and uptake.”

Australia is just starting a debate about the appropriateness of adult entertainment on a publicly-owned network — a debate familiar to community broadband providers who face scrutiny over adult video content often found on municipally-owned cable systems.

Access to adult content and keeping it away from children is now evolving into a secondary debate about the NBN, and some politicians are considering placing adult content controls on the network.

For Wilson, that would be a major mistake.

Speaking at an Australian Computer Society (ACS) forum in Sydney, Wilson said giving parents the tools to control viewing options was perfectly appropriate, but a national policy banning pornography on the NBN would be a disaster.  Wilson believes adult content has always “stimulated” digital growth, and even, in her view, forced a final decision on which high definition DVD format would become the primary standard — Blu-Ray or HD.

“The main reason Blu-Ray took off was because the adult entertainment industry chose the format over HD,” Wilson said. “No one is going to install the NBN on the basis that one day they might need e-health services but they will use that as a justification for getting the service in order to download movies and watch TV.”

Australian technology evangelists of all kinds favor an agnostic approach to content, keeping government out of the viewing rooms of individual NBN subscribers.  Some have gone as far to say adult content will represent an enormous revenue opportunity — one that will help pay off the expense of constructing the network.

That moral dilemma — porn accelerating profit for the NBN, has politicians in a quandary over whether that represents government promotion of adult content for financial reasons.

“Which is exactly why the government needs to stay as far away from this debate as possible,” Jeffrey Maindonald, a Unitarian Universalist tells Stop the Cap! “Give people the tools to make personal decisions for themselves and their families, but stay out of the content and leave that to the authorities when it crosses the legal line.”

Maindonald, a retired minister, accepts adult content has driven everything from home video recording, film cameras, the Internet, and now the possibilities of what can be done with fiber broadband.  For him, it’s an extension of the inevitable debate between “good” and “evil” mankind deals with everywhere else.  Enforcing self-defined moral laws online is a highly subjective business, Maindonald says, one that will simply lead to endless debate and clashes.

“Thankfully, the new network has virtues that extend far beyond a virtual red light district,” Maindonald says, hoping the debate won’t derail the country’s fiber broadband future.

“A colleague of mine, an Anglican archdeacon, told me he was amazed that the most modern technology was being used to still obsess over God’s miracle of the human body,” Maindonald adds. “It won’t stop with the NBN.”

New Zealand’s Commerce Commission is planning to study Internet Overcharging schemes from Internet Service Providers as part of a review of the government’s planned investment of $1.35NZD billion to construct a state-subsidized fiber broadband network.

At issue is whether the government’s investment in broadband will not deliver value for money if broadband providers sell heavily usage-capped broadband services over the country’s new network.

The Commerce Commission serves as New Zealand’s antitrust regulator, charged with finding marketplace abuses and correcting them, especially in the absence of competition.  Included in the wide-ranging review:

• Network peering: Allowing broadband traffic to flow freely between Internet Service Providers without interference or punitive expense;
• Data caps: Whether ISPs will continue to limit broadband usage on a network paid for by public funds, pocketing the proceeds;
• Net Neutrality: Ensuring that content over the network is treated fairly and equally.

“Our aim is to promote competition in telecommunications markets for the long-term benefit of end-users of telecommunications services in New Zealand,” Telecommunications Commissioner Ross Patterson said in a statement. “The study will result in a report which will identify any factors which may inhibit the uptake of ultra-fast broadband services.”

Most of the investigation will likely target New Zealand’s dominant phone company – Telecom New Zealand.  The former state-owned monopoly has rebuilt part of its market dominance pitching broadband service across the country over its landline-based DSL network, by which most New Zealanders obtain broadband.  While the company competes with other providers who resell service over Telecom phone lines, many critics charge the phone company position as the owner of the infrastructure gives it a powerful position in the market.

The New Zealand government hopes to retire its aging copper-wire telephone network and replace it with a combination of fiber optics in cities and towns and fixed wireless service in rural areas.  A discussion paper is expected from the commission by June, with a final report due in December.

Phillip Dampier

In response to one of our pieces today about AT&T, I replied to a reader’s question about why providers are not subject to oversight when it comes to their traffic meters.  The answer is, providers want all of the benefits their monopoly/duopoly status deliver, with none of the oversight and regulation that is supposed to come along with the deal.

When I am asked by reporters if our group would support the concept of usage-based billing if prices were lower, I know some education is in order before answering.

Frankly, what providers define as “usage-based billing” isn’t really usage-based at all.  It’s simply a double-tiered pricing scheme.  Consumers already pay for broadband service based on speed, which informally includes a usage limit of sorts — your maximum amount of consumption is governed by the speed of the connection you purchase.  Not satisfied with the enormous profits already earned selling broadband that way, some companies want to monetize Internet use by inserting usage limits or inserting a new tier of service based on usage allowances, which generally increase with higher-priced levels of service.

When broadband providers attempt to use the argument consumers already pay for usage of essential services like water, gas, and electricity, they are trying to conflate broadband traffic much the same way.  But apart from the fact broadband carries no generation costs and represents a limitless resource, the “fairness” argument falls apart when you consider the provider is effectively double-charging customers by implementing a use-based pricing scheme on top of a speed-based pricing model.

The equivalent would be charging you today’s prices for gas, electric, or water service, but then adding a surcharge or tax based on how fast or when you are using the service. Here’s the kicker: they are not lowering the price of their speed-based tiers, they are simply layering a use tax on top.  In short, it extra-bills customers for what they already paid for.

A true usage-based billing scheme would carry a monthly minimum charge for infrastructure costs (maintenance of the delivery system, meter measurements, etc.) and a traffic cost.  In a regulated utility environment, most providers are required to sell service at a price verified by regulators to cover costs and a small profit.  No gouging.  No provider dares sell service under these terms because it would dramatically slash the cost most consumers pay for the service.  Instead, they sell “usage tiers” that include arbitrary “allowances” that provide no rollover or discount for unused traffic.

Imagine what would happen if AT&T or Comcast sold broadband like electricity?

CartelCountry Broadband & TV

From coast to coast, we put the cartel in cable!

• Monthly Minimum Charge: $9.95
• Broadband traffic delivery $0.05/GB
• Amount consumed 20GB = $1.00

• Payment Due: $10.95

Thank you for your prior payment of $9.95. We hope you enjoyed your vacation. No broadband traffic consumed equals no broadband traffic charges.

That is why there is no such thing as true usage-based billing. Providers wouldn’t dare because they would lose the enormous income they earn from those “98 percent” of “light users” they keep suggesting are in the majority.

Even “heavy users” probably would not object to this kind of pricing. A 500GB per month user would pay $34.95 at these prices, and providers would STILL be making a profit.