Stopping Cox’s money party from getting started, if we can help it.

Stop the Cap! today formally declares war on Cox’s usage cap experiment in Cleveland, Ohio and will coordinate several protest actions to educate consumers about the true nature of usage-based billing and how they can effectively fight back against these types of Internet Overcharging schemes.

Time Warner Cable quickly learned it was deeply mistaken telling customers that a 40GB monthly usage allowance was more than 95% of customers would ever need when introducing a similar concept April 1, 2009 in test markets including Rochester, N.Y., Austin and San Antonio, Tex., and Greensboro, N.C. The company repeatedly suggested only about five percent of customers would ever exceed that cap.

Six years later, it is likely 95% of customers would be paying a higher broadband bill to cover applicable overlimit fees or be forced to upgrade to a more expensive plan to avoid them. Before Time Warner realized the errors of its way, it claimed with a straight face it was acceptable to charge customers $150 a month for the same unlimited broadband experience that used to cost $50.

Cox’s talking points for customers and the media frames usage caps as a fairness enforcement tool. It is a tired argument and lacks merit because nobody ever pays less for usage-capped broadband service. At best, you pay at least the same and risk new overlimit charges for exceeding an arbitrary usage allowance created out of thin air. At worst, you are forced by cost issues to downgrade service to a cheaper plan that comes with an even lower allowance and an even bigger risk of facing overlimit fees.

Industry trade journal Multichannel News, which covers the cable industry for the cable industry does not frame usage caps in the context of fairness. It’s all about the money.

“If you’re a cable operator, you might want to strike [with new usage caps] while the iron is hot,” said MoffettNathanson principal and senior analyst Craig Moffett, a Wall Street analyst and major proponent of investing in cable industry stocks.

Multichannel News warned operators they “must tread carefully in how they deliver the usage-based message.” Instead of getting away with punitive caps, Time Warner Cable had to “rethink” its definition of fairness, keeping prices the same for heavy users of bandwidth but offering discounts to customers whose usage was lighter. No money party for them.

So how did Cox frame its message in the pages of an industry trade journal to fellow members of the cable industry? Was it about fairness or collecting more of your money. You decide:

Customers will be notified of their data usage and any potential overages beginning in mid- June but won’t have to pay for overages until the October billing cycle, a Cox spokesman said. That gives customers the chance either to alter their usage or step up to a more data-intensive plan.   The additional charges serve as a temporary step-up plan for certain consumers, the spokesman said — they can keep their current level of service and pay the additional fee during months when usage spikes, like when their kids come home from college.

The Government Accounting Office, charged with studying the issue of data caps, found plenty to be concerned about. Consumers rightfully expressed fears about price increases and confusion over data consumption issues. In short, customers hate the kind of usage-based pricing proposed by Cox. It’s a rate hike wrapped in uncertainty and an important tool to discourage consumers from cutting their cable television package.

It’s also nakedly anti-competitive because Cox has conveniently exempted its television, home phone, and home security products from its usage cap. Subscribe to Cox home phone service? The cap does not apply. Use Ooma or Vonage? The cap does apply so talk fast. If a customer wants to use Cox’s Home Security service to monitor their home while away, they won’t eat away their usage cap. If they use ADT to do the same, Cox steals a portion of your usage allowance. Watch a favorite television show on Cox cable television and your usage allowance is unaffected. Watch it on Netflix and look out, another chunk is gone.

While Cox starts rationing your Internet usage, it isn’t lowering your price. A truly fair usage plan would offer customers a discount if they voluntarily agreed to limit their usage. But nothing about Cox’s rationing plan is fair. It’s compulsory, so customers looking for a worry-free unlimited plan are out of luck. It’s punitive, punishing customers for using a broadband connection they already paid good money to buy. It’s arbitrary — nobody asked customers what they wanted. It doesn’t even make sense. But it will make a lot of dollars for Cox.

Cox claims it only wants usage caps to help customers choose the “right plan.”

The right plan for Cox.

To escape Cox’s $10 overlimit fees, a customer will have to pay at least $10 more to buy a higher allowance plan — turning a service that costs less to offer than ever into an ever-more expensive necessity, with few competitive alternatives. Will Cox ever recommend customers downgrade to a cheaper plan? We don’t think so. Customers could easily pay $78-100+ for broadband service that used to cost $52-66.

Back in 2009, the same arguments against usage caps applied as they do today. Industry expert Dave Burstein made it clear usage caps were about one thing:

“Anybody who thinks that’s not an attempt to raise prices and keep competitive video off the network — I have a bridge to sell them, and it goes to Brooklyn,” Burstein said.

Phillip “Comcast lost its case for usage caps” Dampier

With today’s announcement Comcast intends to bring unlimited 2Gbps broadband to as many as 18 million homes across its service area, one thing is clear — if Comcast is not worried about the impact of that many potential customers consuming 2Gbps of bandwidth, there is absolutely no justification to impose usage caps and allowances on any Comcast customer.

A frequent justification for usage caps and usage billing is to guarantee fair access for all customers on a shared, congested network. Another is to help defray the cost of broadband expansion. But Comcast’s new super-speed tier will have no usage cap and customers are invited to use it as much as they like for a fixed price. Clearly, a customer maxing out a 2Gbps connection to upload and download enormous amounts of content, say on a peer-to-peer network, will have a far greater impact on Comcast’s infrastructure than a user with a basic 25Mbps Internet connection. Yet today in Atlanta, Comcast is asking its 25Mbps customers to stay within a 300GB usage allowance, if they want to avoid an overlimit penalty of $10 for each 50GB block of additional usage.

Comcast does not like Stop the Cap! calling Comcast’s “data usage trials” what we believe them to be: “usage caps.”

In response to our testimony before the New York Public Service Commission last year regarding its application to acquire Time Warner Cable, Comcast objected to our claim it was placing usage allowances or limits on its broadband customers.

“Comcast does not have ‘data caps’ today,” Comcast told the PSC in its filing. “Comcast announced almost two years ago that it was suspending enforcement of its prior 250GB excessive usage cap and that it would instead be trialing different pricing and packaging options to evaluate options for subscribers—options that reflect evolving Internet usage and that are based on the desire to provide flexible consumption plans, including a plan that enables customers who want to use more data the option to pay more to do so as well as a plan for those who use less data the option to save some money.”

Yet Comcast’s desire to offer “flexible” usage plans becomes very inflexible when customers ask for unlimited service. Comcast has refused to offer such an option in several trial markets where usage caps are once again being tested.

Last May, Comcast vice president David Cohen emphatically stated usage caps and usage-based billing were all about “fairness,” telling investors: “People who use more should pay more, and people who use less should pay less.”

Those signing up for 2Gbps service will be in a position to use far more bandwidth and data than any other Comcast customer subscribing to a lower speed broadband tier, yet will not be asked to pay more for using more or pay less for using less. They will be signing up for a simple to understand unlimited usage plan most Comcast customers want that will carry no billing surprises. At the moment, that is the only unlimited tier residential plan a Comcast customer in Atlanta will be able to buy.

Also turned on its head is the idea that customers who use the most bandwidth or cost Comcast the most should be contributing more to help Comcast pay for network upgrades, but once again this will not be the case for 2Gbps customers in Atlanta. They will cost Comcast a fortune as the company rips out its existing HFC (coaxial cable) infrastructure and replaces it with fiber to the home service. Yet the 25Mbps customer still using decades-old coaxial cable is effectively being asked to limit their Internet usage to avoid additional charges while the 2Gbps modern fiber customer is not.

It clearly makes no sense, but will rake in dollars for Comcast as usage continues to grow.

If Comcast’s network can sustain up to 18 million 2Gbps users with no usage cap, it has more than enough capacity to take the limits off every Comcast broadband customer. Comcast must shelve its usage billing trials immediately and remove all usage allowances from residential broadband customers in various test markets where they have been in place for more than a year. Google, Verizon, Time Warner Cable, Cablevision, Charter, and many other broadband providers have found no defensible reason to slap usage limits on their broadband customers. If they can provide comparable speeds and service without a cap, so can Comcast.

Comcast should clearly state it is in the business of providing the best possible customer experience using 21st century infrastructure more than robust enough to sustain usage demands, and compulsory usage caps and consumption billing are incompatible with the company’s goal to provide top-quality, worry-free Internet access.

If Comcast wants to test voluntary discount programs for light users, we have no objection. But customers should always have access to an affordable unlimited option without having to watch usage meters or worry about bill shock.

Comcast needs to do the right thing today and end all compulsory data usage trials across the country and commit to providing unlimited, allowance-free broadband service.

The National Cable & Telecommunications Association (NCTA), the nation’s largest cable lobbying group, has outdone itself with a brand new fact-challenged video truth-seekers will quickly discover is little more than industry propaganda.

“For nearly 20 years, cable has been building Internet networks that are empowering everyone from innovators and entrepreneurs to kids in the garage,” says the NCTA in its introduction of its new video “The Infinite Internet.” “The Internet propels business, education, entertainment – whatever we want. It’s a platform of possibilities and the fast growing technology in history. Cable is proud of the part we’ve played in advancing America’s future and we’ll continue to make it faster and more accessible.”

Except many NCTA member companies want to introduce usage caps and consumption billing that limit those possibilities on an already absurdly profitable service. The same broadband duopoly of cable and phone companies also holds America’s broadband rankings back, and has demonstrated its real priority is to charge more money for less service.

We’ve reviewed the video and found credibility problems with almost every claim:

Claim: “America’s ISPs have invested trillions of dollars and laid 400,000 miles of fiber optics.”

Our finding: FIB Even industry mouthpieces like the Progressive Policy Institute and NCTA members themselves have a problem with “trillions.” The chief executives of AT&T, Bright House Networks, Cablevision, CenturyLink, Charter, Comcast, Cox, Frontier, Suddenlink, Time Warner Cable, 15 other companies, and industry groups such as the National Cable & Telecommunications Association itself, the Telecommunications Industry Association, and the CTIA Wireless Association claimed in the spring of 2014 that the entire telecommunications industry (not cable alone) spent a combined $1.2 trillion on communications infrastructure. A considerable percentage of that investment was to build out cellular networks, first for mobile phone calls and only later for wireless data. The cable industry spent far less than $1 trillion on its own infrastructure and at the time of its most rapid growth, it was intended primarily to deliver cable television, not broadband.

Stop the Cap! also found the NCTA cheating in its claims of increasing investment in broadband. The trade group was citing cumulative spending, not actual year-to-year spending. A careful review shows broadband investments are generally flat or in decline and are nowhere near comparable to the investments the industry made in the late 1990s.

Although it may be true the cable industry has deployed 400,000 miles of fiber optics, the overwhelming majority of cable customers cannot directly access any of it. Virtually all the cable industry’s fiber is deployed between the company’s headquarters and individual communities where it is connected to the same coaxial cable platform that has been around since the 1960s. Most of the rest is laid for commercial purposes, notably providing backhaul connectivity for cell towers. Time Warner Cable alone deployed fiber to its 10,000th cell tower back in 2013. It’s a lucrative business, earning that cable company more than $61 million a quarter.

BroadbandNow found no cable company appearing on the list of top fiber broadband providers. In fact, as of 2012 only 23% of Americans have access to fiber broadband ranking the United States 14th among western countries in fiber optic penetration according to the OECD.

Claim: “High speed connections reach nearly every home with blazing fast speeds that power our lives.”

Our finding: HIGHLY MISLEADING The NCTA fails to define its terms here. What exactly constitutes a “high-speed connection.” The FCC currently defines broadband as providing speeds of 4Mbps or better. Is that “blazing fast?” The FCC is currently considering redefining broadband to mean speeds of at least 25Mbps, well below many cable company entry-level broadband tiers. The NCTA also likes to claim that 99% of households have access to high-speed Internet, but they include wireless technology at any speed in those figures. If you can get one bar from AT&T’s 3G wireless Internet network, you’ve got high-speed broadband in their eyes.

In fact, when it comes to stingy coverage areas, cable is notoriously not available outside of the biggest cities and suburbs, as the government’s own National Broadband Map depicts:

Map showing cable companies offering at least DOCSIS 3.0 cable broadband service.

Claim: “ISP’s want access for everyone.”

Our finding: TRUE, WITH MISSING FINE PRINT What company would not want to offer its products and services to everyone. The real question is whether they plan on doing that or simply wishing they had. The cable industry has no intention of implementing sweeping changes to the Return On Investment (ROI) formula that determines whether your home gets access to cable or not. Some companies like Time Warner Cable and Frontier Communications are expanding their cable and DSL networks, but only when the government steps in with broadband deployment grant funding.

Assuming service is available, the next hurdle is cost. BBC News reported in 2013 home broadband in the U.S. costs far more than elsewhere. At high speeds, it costs nearly three times as much as in the UK and France, and more than five times as much as in South Korea. Today it costs even more when you count the growing number of providers charging modem rental fees as high as $10 a month and often cap usage or force customers into usage-based billing schemes.

Claim: “With over 300,000 public Wi-Fi hotspots, the Internet of Things is emerging.”

Cox Cable sells their customers on accessing over 300,000 Wi-Fi hotspots, with a prominent asterisk. Access is only available for free if you are a current cable broadband customer.

Our finding: MISLEADING The NCTA is referring to collaboration between Bright House Networks, Cox Communications, Optimum, Time Warner Cable and XFINITY that allow each other’s high-speed Internet customers to use to each company’s Wi-Fi hotspots. They key word is “customers.” The hotspots may be technically reachable by the public, but unless you are a current cable broadband subscriber, using them typically requires the purchase of a daily use pass.

Claim: “Cable will continue to invest, building this platform of possibilities, if we preserve the freedom that created the Internet.”

Our finding: EMPTY CLAIMS The NCTA’s commitment that the cable industry will continue to invest is fulfilled if one cable operator spends just $1 on their network infrastructure. Notice the NCTA does not commit its members to stopping the ongoing decline in broadband investment, much less move to increase it. It also has no explanation for the annual rate increases and new fees and surcharges customers are paying, as the gap between broadband pricing abroad and at home grows even larger. 

“Preserve the freedom” is code language for maintaining the deregulation that the industry has used to its advantage to raise prices in a broadband market most Americans will find is either a monopoly or duopoly. Although the NCTA implies it, the cable industry did not create the Internet. It was a government project (gasp!) initially developed through contracts with the Department of Defense and soon broadened to include educational institutions. The first significant commercial ISPs emerged only in the late 1980s. Cable industry broadband finally showed up around a decade after that. The industry’s claims are akin to boasting Lewis and Clark discovered Kansas City… in 1966.

If the cable industry gets some oversight of its broadband service and enforced protection of Net Neutrality, does that mean investment will flee? First, providers are already spending a lower percentage of capital on broadband expansion in the current deregulatory environment. Second, as broadband becomes the cable industry’s top earner, it provides an endless supply of revenue without the headaches of negotiating programming contracts, dealing with cable television network rate increases, and the growing phenomenon of cord-cutting. In other words, without significant new competition, it remains a license to print money.

[flv]http://www.phillipdampier.com/video/NCTA The Infinite Internet 1-20-15.mp4[/flv]

The NCTA is trying to make hay with its new video, “The Infinite Internet” which purports to share how Big Cable’s vision of the Internet is making new things possible. They don’t mention many of their member companies want to place a usage cap on that innovation, even as they continue to raise prices way out of proportion of the cost of delivering the service. It’s classic cable industry propaganda. (1:08)

Phillip Dampier

Welcome to 2015!

This is the seventh year Stop the Cap! has fought for better broadband across North America and beyond. Whether your provider is Comcast, Time Warner Cable, Rogers, Bell, AT&T, Verizon or a (dwindling) number of other cable and telephone companies, there is plenty of room for improvement.

When we began in the summer of 2008, Frontier Communications was contemplating a usage cap of just 5GB a month on their broadband service. A year later Time Warner Cable market tested caps as high as 40GB a month. For almost as long as we’ve existed, Comcast has believed 250GB a month was all most customers ever needed. Rogers’ most popular Internet package today offers 60GB a month, despite the fact Canadians on average watch more online video than anyone else. AT&T thinks 150GB a month is fine for DSL and 250GB is all you’d need as a U-verse customer. Verizon doesn’t see a need for limits on either its DSL or fiber optic networks. Neither does Cablevision.

Usage caps and so-called “usage-based billing” continue to be one of the most under-reported stories in the tech press. Touted as “fair pricing,” these plans are in fact little more than profit-padding for a service that already earns companies as much as 90% gross margin. There is nothing fair about usage-based billing in North America. Customers face the same prices they have always paid for unlimited service, but now endure an arbitrary usage allowance that usually includes a stiff overlimit fee. Those providers charging usage pricing do not offer the fastest service, have not made significant improvements above and beyond other providers that still charge flat rate prices, and frequently also charge excessive modem rental fees.

The duopoly most Americans have for broadband service has become quite fat and happy collecting ever-increasing amounts of money for service that only seems to improve after an upstart competitor like Google arrives ready to offer better service at a lower price. Customers in Kansas City, Austin, and a handful of other communities are getting the best upgrades and are empowered to negotiate a lower price for service. The rest of the country is not so lucky. A handful of often-under capitalized fiber competitors have arrived in some areas, but their market share generally remains a fraction of what the cable and phone companies have locked up.

We have always believed broadband was destined to become the next must-have utility service, following clean water, electricity, gas and some form of telephone service. Unfortunately, Washington policymakers continue to treat Internet access as an optional extra, allowing one or two companies to dominate access in most communities. Policymakers and regulators have done very little to protect consumers from the effects of marketplace concentration, allowing cable and phone companies to merge and raise prices, remain uncommitted to protecting the Open Internet with strong Net Neutrality protections, and not taking the effects of usage caps seriously.

One of the most effective ways a community can combat bad service and high prices is to support launching its own public broadband network. Throughout the United States, local town and counties enduring “good enough for you” broadband (or no service at all) are constructing their own fiber optic networks to better meet the realities of the 21st century digital economy. They face industry-funded opposition in at least 20 states where lawmakers have banned or severely curtailed these networks to protect private telecom giants from the effects of serious competition.

In 2015, Stop the Cap! will continue to fight for consumers looking for a better deal:

• We continue to oppose industry consolidation. Mergers and buyouts benefit executives and shareholders. They almost never benefit customers who soon find rate increases, fewer choices, and often worse service as a result. Connecticut residents know that first hand enduring Frontier Communications’ recent bungled transition from AT&T service. Customers that dislike Time Warner Cable will likely loathe Comcast if that merger wins regulator approval. AT&T’s buyout of DirecTV leaves one less competitive choice for customers living in AT&T’s service areas looking for an alternative to U-verse television. Imagine if the government had approved AT&T’s attempted buyout of T-Mobile, the one wireless carrier now willing to throw a monkey-wrench into the current dominance of almost-identical expensive wireless service plans from AT&T and Verizon.
• Usage caps and consumption billing remain unjustified, particularly for wired broadband. Despite industry claims that usage caps and usage billing stimulate investment, in most cases the costs of delivering broadband service and the amounts companies invest in network upgrades continue their relentless decline on a per customer basis. Usage billing is no prescription for congestion problems either. Most congestion problems occur during peak usage levels — when light and heavy users alike are most likely to be online. A truly fair usage pricing scheme would charge a fair price for actual usage and nothing else. But such a pricing scheme would likely cut broadband bills and profits. So providers offer pre-determined compulsory usage allowances at current prices instead, and do not offer a flat rate option or rollover unused usage to a future month. As a result, customers often pay more for less service and constantly have to check their usage to make sure they do not get an unexpected surprise on their bill.
• Strong Net Neutrality protection is the best guarantee of preserving the Internet as it exists today – where success or failure of an online venture is based on what it offers customers, not on the size of its bank account. A nationwide end to laws restricting the development and expansion of community broadband is also essential to give communities self-determination of their broadband future.
• We will continue to educate consumers on how to negotiate a better deal with your provider and avoid expensive surcharges like modem rental fees. We will also continue to enlighten you about the pervasive influence of Big Telecom money on non-profits, state and federal governments, and researchers that support the various agendas of some of the largest telecom corporations in the country.

Broadband is improving at an incredible pace around the world, but back home prices continue to rise while Internet speed improvements are often met by usage cap road bumps. Internet affordability remains as much of a problem as rural broadband access. The more you know, the more effective you can argue for a change in telecom policies, where the public interest is better-balanced against corporate profits and duopoly prices.

Thank you for being a part of our efforts to make things better.

Time Warner Cable today recommitted itself to providing unlimited broadband service to any customer that wants it, promising customers they won’t be forced into a tiered usage plan as long as Time Warner Cable remains an independent company.

“We have no intention of abandoning an unlimited product we think that something that customers value and are willing to pay for,” said Time Warner Cable CEO Robert Marcus. “The way we’ve approached usage-based pricing is to offer it as an option for customers who prefer to pay less because they tend to use less. And we’ve made those available at 5 gigabytes per month and 30 gigabytes per month levels.”

Marcus told Wall Street analysts on an afternoon conference call that the average Time Warner Cable customer now generates 35GB of traffic per month, and that a significant percentage of light users might realize some savings choosing a 30GB optional usage plan. But Marcus also admitted that few do.

Marcus

“I think that’s a testament to the value they place on unlimited,” said Marcus.

Marcus’ decision to stay away from compulsory usage-capped Internet was questioned by Marci Ryvicker from Wells Fargo Securities, LLC., a Wall Street investment firm. Ryvicker tied the growth of online video consumption to the implementation of usage caps as way of protecting video revenue and regaining money lost from lost cable television subscriptions.

“I guess the underlying question is do you think you can monetize the pipe enough through high-speed data pricing to offset video decline,” asked Ryvicker.

“We haven’t really viewed usage-based pricing quite the way you’re postulating,” responded Marcus. “I think there’s a separate question as to whether or not we have the ability to offset video declines with [broadband]. I think it’s fair to say we’re very bullish on the high-speed data business and think we can continue to grow it based on both subscriber volume and incremental ARPU per [broadband] customer.”

Marcus added that Time Warner can continue to boost revenue by raising broadband prices and encouraging customers to upgrade to faster speed tiers at a higher price.

Comcast has a very different philosophy about usage caps — it embraces them. Comcast continues to test mandatory usage caps in several markets, leading to howls of complaints from customers and bill shock. One customer complained their cable bill frightens them every time they receive it, not knowing how much Comcast would charge them for that month of service. The family’s last cable bill, including Internet, exceeded $560, primarily due to Comcast’s overlimit usage fees. Comcast has also received complaints about its usage meter’s accuracy, but the company adamantly bills customers according to the readings of their meter.

“I’ll tell you what really isn’t fair,” wrote one customer. “That is that in ‘test markets’ like mine, Atlanta, we have the 300GB [cap] enforced with the penalty overage charge and we pay the SAME rates as people in other markets that aren’t yet one of the ‘test markets.’

Most analysts expect Comcast will eventually roll out usage caps to all of its customers, including any it acquires from Time Warner Cable. Customers cannot choose an unlimited use option in Comcast’s usage cap test markets.