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Canada Talks TV: Preparing for A-La-Carte Cable TV; Providers Threaten Rate Hikes

alacarte

Does Canada’s Food TV need special protection when it made 53% gross profits on the backs of cable subscribers that pay for the network whether they watch it or not?

“If you cut your cable, then your Internet is going to go up,” predicts Gary Pelletier, president of the Canadian chapter of the Cable & Telecommunications Association for Marketing.

That is just one of several predictions many Canadian cable and phone companies are claiming will come from the “disastrous decision” to allow consumers the freedom to pick and pay for only the cable channels they want to watch. Amidst claims that over 10,000 jobs will be lost, chaos and bankruptcy will stalk minority and niche cable networks, consumers will pay much higher bills, and American programming will boycott Canada fearing a-la-carte could make its way into the United States, Canada is at least having an adult discussion about the future of television and where it fits in the country’s identity.

Big changes are coming as a result of the latest great soul-searching made by our good neighbors to the north, always concerned about the potential of the Canadian Experience being overrun, if not decimated by the United States’ entertainment hegemony. In a moment of clarity, regulators have just realized what the rest of English-speaking Canada already knew: protectionist content regulations don’t work on the Internet. Canadians routinely bypass geographical restrictions and Canadian content laws with virtual private networks that relocate them, online at least, to a home address in the U.S. so they can binge-watch the unrestricted American versions of Netflix, Hulu and other online video services.

Regulators have now adopted the attitude – “if you can’t beat ’em, join ’em,” encouraging Canadian entertainment producers to create fewer, but better shows that will not only attract Canadian audiences, but those abroad.

Only the exchange is supposed to be mutual. High quality Canadian television productions like Orphan Black, Schitt’s Creek, X Company, The Book of Negroes, This Life, 19-2, Vikings, Killjoys, Rookie Blue, and Murdoch Mysteries are all among Canadian critics’ top favorites. But relatively few Americans know these shows exist or assume they are co-productions owned by some American entertainment conglomerate. Only a brief glimpse of a Canadian flag during the warp speed end credits might clue viewers this isn’t the case.

Despite protectionist media policies that have endured since 1970, the Canadians are now boldly going where Americans have so far feared to tread. They are having the conversation about the future of television and online entertainment in all forms while American media barons remain in denial.

For average consumers, the biggest change will begin next spring when the era of Canadian a-la-carte cable television arrives, allowing consumers to take an ax to the expensive 120-300 channel television package once and for all. Starting March 1, all Canadian providers will be required to offer consumers a basic cable package priced at no more than $25 a month, containing Canadian and U.S. over the air stations and networks, educational, and public channels. If you want more, you can have it by buying channels or mini-packages of networks individually to create a personalized cable TV lineup of networks you actually care to watch.

Programmers across Canada, particularly those catering to sports fans, foreign audiences, religious viewers, and minorities are horrified by the idea. So are media critics that fear the change could help bring an end to Canada’s unique multilingual and multicultural identity.

special reportCustomers like James Rehor of Hamilton explains why.

“Why would I pay for it? Why do I get it? Why does it come on my TV?” asks the 60-year-old construction worker. He’s ready on day one to purge the large number of French and other non-English channels from his Cogeco Cable lineup. Rehor offers comfort to sports programmers, however. He’s a big fan of the Toronto Maple Leafs, so Leafs TV, Sportnet, and TSN will stay.

Non-sports fans are another matter. They can’t wait to ditch the sports networks that are always the most expensive channels in a Canadian cable package.

“Clearly the most expensive (channels) will always be sports,” Pelletier tells the Canadian Press. “At the end of the day, for sports watchers, their cable bill will probably stay the same or increase, maybe … In the case of someone who doesn’t watch any sports at all, their bill will probably decrease.”

An Age of Abundance: Canadian telecom regulators are transforming media regulations in Canada, recognizing the way Canadians watch television has changed. Quality, not quantity, is now most important. CRTC chairman Jean-Pierre Blais discusses the new reality. (6:08)

Pelletier and his industry friends are on a mission to convince Canadians to leave well enough alone and not drop the current all-for-one price cable television package for a-la-carte — not realizing the potential consequences.

catnipSome in the cable industry have tried other scare tactics to no avail.

One industry-backed study predicted pick-and-pay could cost the economy 10,000 jobs. Consumers could care less. Unifor, a union that represents many in the television sector, seemed to agree Canada’s cultural heritage will be at risk with lowest common denominator programming dominating from St. John’s to Vancouver, much of it shoveled from the United States. But Canadians still want their House of Cards and Homeland.

Howard Law, a media spokesman for Unifor, predicts less profitable Canadian channels will fold under a pick-and-pay pricing model.

“The introduction of pick and pay will, in itself, lead to a major loss of revenues to Canadian broadcasting system, which ultimately plays out in less Canadian content and less Canadian jobs and less Canadian broadcasting,” he said in an interview on CBC’s The Exchange with Amanda Lang.

Minority interest and religious channels are also worried about their future. Most of those networks are classified as “specialty channels” by the Canadian Radio-television and Telecommunications Commission (CRTC). Legacy networks that have been around since at least the 1990s have been sitting pretty, protected by their designation as a “Category A” specialty station. Unlike in the United States, Canadian cable networks are licensed to operate by the CRTC, and at least 60 of those Category A networks also enjoy “genre protection,” a CRTC policy that guarantees their channel carriage on Canadian cable, satellite, and telco TV systems and protection from other cable networks that want to run the same kind of programming.

For decades, protectionist Canadian content regulations made certain Canadian television reflected its audience. But online video and the Internet has allowed Canadians to bypass traditional cable television to watch they want, not what the government hopes they will. New CRTC rules reflect that reality as Canadian TV rethinks how to get the viewer’s attention. From CBC-TV’s The National (4:16)

CRTC policies have allowed Canadian specialty channels to flourish despite operating in a smaller marketplace with fewer viewers than their American counterparts. That means networks like FoodTV and HGTV in Canada have profit margins ranging from 53-58 percent. Fashion Television and BookTV made an improbable $2.7 million in pre-tax profit, not so much from viewers but from the licensing fees every Canadian cable customer pays for the four networks whether they watch them or not.

From its inception, Canadian TV has always faced a looming shadow from the south. Protecting Canada's identity has been a priority for decades.

From its start, Canadian TV has always faced a looming shadow from the south. Protecting Canada’s identity has been a priority for decades.

“If you’re a specialty channel that’s lived within the protective cocoon of bundling for years, you’ve gotten used to having a full-time job with benefits,” independent technology analyst Carmi Levy told CBC News. “Contrast that with living outside the protective cocoon, you’re essentially a freelancer, you fight for every contract, you have no benefits, there are no guarantees that money will be coming tomorrow or next week.”

It probably won’t be coming from subscribers like Mr. Rehor, who won’t hesitate to drop channels if they go unwatched.

The CRTC is also doing some dropping of its own, starting with genre protection, which could lead many specialty networks to follow American cable networks that today depend on chasing ratings to justify their licensing fees. The unintended result in the United States has been questionable lineup changes like the appearance of Law & Order rerun marathons on WEtv, a network supposedly dedicated to women’s entertainment. Ovation, a fine arts independent cable network that is about a niche as a network can be, depended on weekend binges of PBS’ Antiques Roadshow reruns in 2012 just to attract enough viewers to show up in the ratings.

Lesser known networks like OutTV, Canada’s only network dedicated to lesbian, gay, bisexual, and transgender viewers, may face an uncertain future if it can’t charge a premium price to make up for expected subscriber losses from pick and pay. Other niche channels may have to merge with other networks or more likely relaunch with an online platform and deliver a reduced menu of content to audiences.

crtcLarge Canadian mainstream networks and programmers don’t expect too much change from pick and pay, as most Canadians will likely still demand a package with their programming included. But distributors – cable, satellite, and telco TV platforms, do expect some major changes. The average Canadian now pays around $50 a month for basic cable, a price that will be cut in half next spring.

Rogers Cable already knows what is coming. It ran a trial in 2011 in London, Ont., with 1,000 customers who were given the choice of picking and paying for the channels they wanted. It didn’t take long for the cable company to discover customers loved it and TV stations and cable programmers hated it.

“We found that customers like bundles, but want to build their own. They want a basic package and an extra package they create,” Rogers spokesman Kevin Spafford told the Toronto Sun. “We did get push back from TV stations. There was concern about offering this service. They did not want us to proceed with that model.”

After the trial ended, Rogers allowed the pilot project participants to keep their pick and pay packages, something they’ve held tightly for over four years.

Rogers’ pilot offered something like what the CRTC is demanding be available to all Canadians:

rogers logoROGERS PICK AND PLAY PILOT

  • $20 a month for “skinny basic” TV package of Canadian stations. (The CRTC plan mandates no more than $25.)
  • 15-channel package for $27 a month. Other packages of 20 and 25 stations also offered, for more money. (The CRTC wants networks to offer channels individually or in mini-bundles.)
  • U.S. major networks offered for $3 a month. (Under the CRTC policy, these stations may appear under the basic or a-la-carte tiers.)

REGULAR ROGERS

  • Basic: $40 a month, 190 channels
  • Digital Plus: $63, 220 channels
  • Sports packages: $77, 230 channels
  • VIP TV: $77, 270 channels
  • VIP Ultimate: $119, 320 channels

The upcoming changes are probably the biggest in Canadian cable television history, but they still may not be enough to attract cord-nevers — those who have never subscribed to cable TV. Most are under 30 and already watch all their favorite shows online. Some budget-minded Canadians who want to cut their cable bill may consider joining them by cutting the cord altogether or slimming down their cable packages, but Pelletier warns that cable operators will not leave their money on the table.

cablecordSupplementing a slimmer cable package with a streaming service or two could increase data charges, Pelletier warns. Plus, you may have to surrender any discounts you get from bundling cable with home phone, Internet and/or wireless service.

Usage capped Internet is also still an effective deterrent for cord-cutting and whether your television entertainment comes over the cable or online, providers will still make a run for your wallet. Some observers predict providers will dramatically increase the retail prices of a-la-carte networks to limit potential savings while also continuing to raise broadband prices.

A 2014 national PIAC poll found 90 per cent of 1,000 consumers polled were willing to pay an additional $1 a month per channel, while 54 per cent would be willing to go $3 a month, and 21 per cent would be willing to pay $5 a month for an extra channel of their choosing. Many don’t realize under the current system the wholesale rate for many channels is under 50 cents a month. Considering what Canadians are willing to pay, it is likely cable companies will price channels according to what the marketplace will tolerate, which could be around $3 for each channel a month.

Suspicion about any cable company offering a New Deal is something Americans and Canadians have in common. Mr. Rehor is already keeping a wary eye.

“I think it’s a good idea, I just don’t know how they’re going to really work it,” he says, fearing it could ultimately end up costing the same amount he pays now.

CBC News offers this extended discussion about the implications of “pick and pay” cable television. (10:11)

The Peaceful War Against Comcast’s Data Caps: Don’t Like ‘Em? Get Off Your Butt

Licensed to print money

Licensed to print money

In 2008, Stop the Cap! was launched because the telephone company that serves our hometown of Rochester, N.Y., decided on a whim that it was appropriate to introduce a usage allowance of 5GB per month for their DSL customers. Frontier Communications CEO-at-the-time Maggie Wilderotter defended the idea with the usual claim that the included allowance was more than enough for the majority of Frontier customers. DSL customers already have to endure a lot of issues with Internet service and data caps should certainly not be one of them.

Stop the Cap! drew media attention and focus on the issue of data capping, organized customers for a coordinated pushback, and sufficiently hassled Frontier enough to get them to make the right decision for their customers by quietly rescinding the “allowances.”

As it would turn out, Frontier’s correct decision to suspend usage caps would prove an asset to them less than one year later when Time Warner Cable made it known it would trial its own usage caps in Austin and San Antonio, Tex., Greensboro, N.C., and yes… Rochester, N.Y. starting in the summer of 2009.

Time Warner Cable was slightly more generous with its arbitrary allowance — 40GB of usage for $55 a month. Customers already paying a lot for Internet access would now also have an arbitrary usage allowance and overlimit penalty fees with no service improvements in sight. Frontier’s decision the year before to rescind data caps played to their advantage and the company quickly launched advertising in Rochester attacking Time Warner Cable for its data caps, inviting customers to switch to cap-free Internet with Frontier.

Data caps are here!

Data caps are here!

Time Warner Cable’s experiment lasted less than two weeks and was permanently shelved, never to return. Four years later, Comcast began its own usage cap trial that not only continues to this day, but has expanded to cover more than 1,000 zip codes. Capped service areas typically live with a 300GB usage allowance with an overlimit fee of $10 per 50GB.

Yesterday at the investor-oriented UBS Global Media and Communications Brokers Conference, Comcast chief financial officer Mike Cavanagh assured Wall Street and shareholders Comcast’s desire to boost revenue from monetizing broadband usage remained an “important contributor” to the company’ goal of “demonstrat[ing] value and derive value from that pricing.”

Cavanagh said the company is using the line ‘heavy users should pay more’ to justify its caps.

“It’s been an experiment that we are using that the key data point behind it is kind of intuitive – ‘10% of our client base uses 50% of capacity.'”

While not ready to announce Comcast’s cap plan would be introduced nationwide, Cavanagh assured investors the experiments will continue as Comcast makes sure that over time it is “compensated for the investments that today’s marketplace requires us to make.”

The difference that makes it possible for Comcast to carry its usage cap experiments forward while Time Warner Cable had to quickly end theirs comes down to one thing: organized customer pushback. Time Warner Cable got heat from relentless, organized opposition in the four cities where caps mattered the most to consumers. Comcast, for the most part, is getting about as much heat as it usually does from customers. It’s time to turn the heat up.

protest

In fighting this battle for the last seven years, I can share with readers what works to force change and what doesn’t:

In 2009, Time Warner Cable faced protesters opposed to usage limits at this rally in front of the company's headquarters in Rochester, N.Y.

In 2009, Time Warner Cable faced protesters opposed to usage limits at this rally in front of the company’s headquarters in Rochester, N.Y.

Generally Useless

  • Complaining about usage caps in the comment sections of websites;
  • Signing online petitions;

Impotent But Potentially Useful in Large Numbers

  • Calling the provider to complain about usage caps;
  • Complaining about usage caps to a provider’s social media team (Facebook, Twitter, etc.);
  • Writing complaints on a company’s open support forum;

Useful, But Unlikely to Bring Immediate Results

  • Writing a letter or making a call complaining to elected officials about usage caps;
  • Advocating for more competition, especially from public/municipal broadband;
  • Filing formal complaints with the FCC and Better Business Bureau;
  • Complaining to state telecom regulators and your state Attorney General (they have no direct authority but can attract political attention);
  • Canceling or downgrading service, blaming usage caps for your decision.

Gasoline on a Lit Fire

  • Organizing a protest in front of the local cable office, with local media given at least a day’s notice and invited to attend;
  • Contacting local newsrooms and asking them to write or air stories about usage caps, offering yourself as an interview subject;
  • Sending local press clippings or links to media coverage to your member of Congress and two senators. Suggest another media-friendly event and invite the elected official to attend and speak, which in turn generates even more media interest.
In 2009, Time Warner Cable planned to implement mandatory usage pricing starting in Rochester, N.Y., Greensboro, N.C., and San Antonio and Austin, Tex.

In 2009, Time Warner Cable planned to implement mandatory usage pricing starting in Rochester, N.Y., Greensboro, N.C., and San Antonio and Austin, Tex.

In the battle with Time Warner Cable, we did all the above, but especially the latter, which quickly spun the story out of control of company officials sent to distribute propaganda about usage cap “fairness” and “generous” allowances. We were so relentless, we managed to get under the skin of at least one company spokesperson caught on camera being testy in an on-air interview, which backfired on the company and angered customers even more.

In the case of Comcast, very few of these techniques have been used in the fight against their endless data cap experiment. Customers seem satisfied writing angry comments and signing online petitions. Some have filed complaints with the FCC which are useful measures of hot button issues on which the FCC may act in the last year of the Obama Administration. But there is no detectable organized opposition on the ground to Comcast’s data caps. That may explain why Comcast’s CEO has repeatedly told investors your reactions to Comcast’s caps have been “neutral to slightly positive.” Many Wall Street analysts obviously believe that, because some are advocating the time is right to raise broadband prices even higher. After all, if your reaction to data caps was muted, raising the price another $5 a month probably won’t cost you as a customer either.

It would be very different if these analysts saw regular news reports of small groups of angry customers protesting in front of Comcast offices in different areas of the country. That would likely trigger questions about whether broadband pricing has gotten out of hand. Coverage like that often attracts politicians, who cannot lose opposing a cable company. Once Congress gets interested, the fear regulation might be coming next is usually enough to get companies to pull back and reconsider.

comcast sucksIf you are living with a Comcast data cap and want to see it gone, you can do something about it. Consider organizing your own local movement by tapping fellow angry customers and recruiting local activist groups to the cause. In Rochester, there was no shortage of angry college students and groups ready to protest. Google local progressive political groups, technology clubs, and technology-dependent organizations in your immediate area. Some are likely to be a good resource for building effective public protests, sign-making, and other TV-friendly protest techniques. Contact town governments, the mayor’s office of your city, technology-oriented newspaper columnists, radio talk show/computer support show hosts, etc., to build a mailing list for coordinated announcements about your efforts. Many local officials also oppose data caps.

If a local news reporter has covered tech or consumer issues in the past, many station websites now offer direct e-mail options to reach that reporter. If you give them a good TV-friendly story to cover, they will be back for more coverage as your local protest grows. We helped coordinate and share news about efforts against Time Warner in the cities that were subject to experiments, which also gave us advance notice of their talking points and an ability to offer a consistent response. Several stations carried multiple stories about the cap issue, supported by calls to TV newsrooms to thank them for their coverage and to encourage more.

We realize Comcast’s responsiveness to customers is so atrocious it approaches criminal, but Comcast does respond to Wall Street and shareholders who do not want the company under threat of fact-finding hearings, FCC regulatory action, or Congressional attention. They also don’t want any talk of municipal broadband alternatives. Sidewalk protests in front of the local cable office on the 6 o’clock news is a nightmare.

In the end, Time Warner Cable didn’t want the hassle and got the message — customers despise data caps and want nothing to do with them. Time Warner hasn’t tried compulsory usage caps again. If you want Comcast to get the same message, those living inside Comcast service areas (especially customers) need to lead the charge in their respective communities. We remain willing to help.

Ookla Dumps Net Index in Favor of Misleading, Often Inaccurate “Speedtest Award”

When New is Not Improved

When New is Not Improved

It is disappointing to see a company priding itself on independently measuring America’s broadband performance throw accuracy to the wind and start handing out misleading awards for America’s top broadband providers that their own speed tests often disprove.

Municipal and independently owned Internet providers have relied on Ookla to prove to the world they can offer superior broadband service over what is on offer from the local cable and phone company. Net Index was a useful, independent resource to track broadband speeds and trends based on millions of consumer-run Internet speed and health tests. A provider claiming “up to 10Mbps” service could quickly and easily be verified as a truth-teller or teller of tall tales. As of today, that is no longer as easy to verify:

Ookla Net Index has been discontinued

Ookla is devoted to providing world-class products and services. Sometimes that means saying goodbye to old sites, like Net Index, and hello to new ones…

ookla

Those “new and improved” products include:

  • SPEEDTEST AWARDS: Provides insights to consumers on where to find the Fastest ISPs & Mobile Networks worldwide, based on data from millions of Speedtests taken in the first half of 2015;
  • SPEEDTEST INTELLIGENCE: Designed for enterprises, governments and analysts to understand worldwide internet performance, based on the millions of Speedtests run each day.

While there is nothing objectionable about handing out awards for good performance, it turns out only the nation’s biggest telecom companies need apply, because unless you are Comcast, Time Warner Cable, Cox, Charter, or Verizon, you are too small to matter.

fastest ispAmong those that do, Comcast’s Xfinity takes first prize:

Comcast XFINITY is the nation’s largest traditional cable operator and largest home ISP. It offers an extremely wide variety of technologies and speeds, peaking at a fiber-based “Extreme 505” tier. That service isn’t widely available, though; you’re more likely to see top speeds of 105Mbps or 150Mbps using traditional DOCSIS 3 cable technology.

Ookla explains away why better performing ISPs are not qualified for one of their awards:

For a given location – either nationwide or a given state or city – we aim to include only ISPs or mobile networks that provide service for a significant number of customers in that geographic area. So, while Google Fiber is the fastest broadband in states like Kansas or Missouri, they are not suitable to be included in the fastest ISPs nationwide because they only serve a very small portion of the United States. To be included in a given geographic area, an ISP or mobile network must meet a minimum threshold based on the number of unique devices testing each day over a six month period.

In other words, accuracy matters a lot less than coverage area. Ookla’s methodology is further invalidated on the local level by their own website.

The prominent first place national award given to Comcast for having the fastest Internet access could mislead you to believe they are the best provider. But Ookla’s own speed tests show that in states like Minnesota, Comcast only comes in third place. Inexplicably, America’s always-lowest rated cable operator — Mediacom, scores first. Charter comes in second. Ookla does not bother to rank municipal-owned broadband providers that outperform all the above.

Not consistently including public, municipal utility, or co-op broadband providers in states like North Carolina and Colorado does an even bigger disservice to anyone depending on Ookla for independent and accurate results. Many of those providers just don’t show up in Ookla’s listings.

In other cases, providers that offer commercial-only broadband make Ookla’s list while even faster providers that sell to consumers don’t. In Rochester, N.Y., Ookla gives first place among local providers to Sutherland Global Services, a provider of business process and technology management services — not a residential ISP. Greenlight Networks delivers gigabit fiber to the home service to select residents in the area and does not appear on Ookla’s list.

Ookla’s own results show the largest companies deliver uneven results across the country, which comes perilously close to invalidating the usefulness of a “national” award. The fact Ookla intentionally leaves out ISPs that can dramatically outperform the competition drives the final nail into the credibility coffin, rendering Ookla’s “new and improved” results meaningless and very misleading. In short, consumers might find using a Ouija board to choose their next ISP about as useful.

It appears the more meaningful data consumers need to make an informed choice has been shifted to Ookla’s premium “Speedtest Intelligence,” designed to provide the granularity stripped away from Net Index. Based on an inquiry form, it seems Ookla is now selling this information to private clients, leaving consumers stuck with Ookla’s overgeneralized “awards” and incomplete regional test results that exclude too many residential providers to be useful and accurate.

Owner of Vermont Wireless ISP May Have Fled the Country to Avoid SEC Investigation

Garza is front of one of several of his Ferraris.

Garza shows off his wealth.

Rural Vermont residents relying on a wireless Internet provider experiencing service problems appear to be collateral damage after a series of scandals and criminal investigations may have prompted the alleged owner to flee to a middle eastern country with no extradition treaty with the United States.

Houston native Homero Josh Garza, 30, had his hands in as many as a dozen business ventures in Vermont, Delaware, and Massachusetts, including Brattleboro’s Great Auk Wireless. But the wireless ISP founded in 2004 apparently is no longer high on Garza’s list of priorities after the entrepreneur discovered the prospect of big profits mining Bitcoins.

GAW’s 1,000 wireless customers are trying to maintain their Internet service, which is experiencing a growing number of service failures. Recently, customers began having trouble sending and receiving email, with nobody answering a support line to help. Last week, the company’s website appeared to be down for several days. Vermont officials considered it another example of why they believe GAW has proven itself a subpar provider with troublesome service.

That could be worrisome in underserved areas like western Massachusetts, where wireless ISPs like GAW have been promoted as less costly alternatives to fiber to the home service. In 2012, Garza gave up on building broadband access in Ashland, Mass., despite being offered a $40,000 government broadband grant, according to the Christian Science Monitor.

Platterpus Records proprietor Dave Witthaus suggests residents and businesses might want to think twice about firms like GAW. Witthaus told Coindesk businesses dependent on the wireless service provider encountered “routine issues with connectivity and customer service.” He told the online publication some businesses switched providers after a two week phone outage in February.

“They could have done well in this area but the customer service has just been awful,” Witthaus said. “And now, two weeks without phone is just unacceptable.”

Is GAW Wireless operating on autopilot?

Is GAW Wireless operating on autopilot?

Garza’s performance in the Bitcoin world has been given similar reviews after his mining venture rose to prominence and then collapsed, leaving investors and regulators looking for answers.

Bitcoin, a digital currency, is not issued by any central banking authority. Instead, new coins are issued to those running complex software that verifies the alternative currency’s public ledger of earlier transactions. The process protects the virtual currency from tampering or other illicit acts like re-spending by its original owner. In return for volunteering computer time to help support the security of the Bitcoin, the software pays users transaction fees and a subsidy of newly minted coins.

The prospect of getting “free money” just by running software encouraged the start of a virtual Gold Rush. Instead of mining in the ground looking for precious metals, prospectors eventually sought investors to fund powerful computers dedicated entirely to “mining” for Bitcoins. The Bitcoin system only releases so many coins at a time, and that number has been dwindling by design and will eventually reach zero. As a result, individual enthusiasts running the Bitcoin software during their spare time have seen their awards deteriorate as large-scale “mining operations” capture a growing percentage of the newly issued currency. To combat this trend, mining pools share resources to compete with the larger players and private contractors sell individuals and clubs time and access on powerful computers in return for a “mining contract.”

gawEnter GAW, which stands for “Geniuses At Work.” Garza’s business depended on a steady stream of clients investing in his enormous mining operation. GAW Miners claimed it has 200,000 customers and $120 million in revenue in just six months. GAW also reportedly collected 28,000 Bitcoins worth over $10 million in just two months.

Garza was never modest showing off his success, appearing in a tuxedo flying around in a private jet, showing off a collection of expensive Ferraris, and living in a $600,000 5,300-square foot stone house outside of Springfield, Mass.

But even as Garza’s company began moving hundreds of “mining rigs” (high-powered computers) into its newly leased 150,000-square foot warehouse in Park Purvis, Miss., some disgruntled ex-clients and investors began complaining Garza’s record was heavy on promises and light on delivery. Bitcoin news sites also began expressing concern about Garza’s operation. At around the same time back in Vermont, Great Auk Wireless customers experienced a very serious service outage that disrupted their phone and Internet service. While the rumor mill swirled about Garza’s ethics, the Mississippi Power Company was investing hundreds of thousands of its dollars to upgrade power to Garza’s warehouse. In return, GAW committed to stay for at least one year. It left after just a few months, folding operations and leaving the utility with $220,000 in unpaid electric bills and over $73,000 in damages and costs. The utility sued and was ignored by GAW.

“Mississippi Power filed a motion for default judgment because GAW failed to answer or otherwise defend the lawsuit,” the power company said in a statement. “We are asking the court to give us a final judgment on the amount that’s owed on this account.”

GAW Miners' data center in Mississippi.

GAW Miners’ data center in Mississippi.

Collecting any judgment may prove difficult because most of GAW’s employees and management have reportedly fled, resigned, or been terminated.

With GAW Miners largely defunct, the Securities and Exchange Commission has taken an interest, questioning whether Garza’s ventures involved unregulated securities, a big no-no with the feds. The SEC is also sharing its wealth of information with the Federal Trade Commission, which is investigating GAW Miners for potential false advertising. The Department of Homeland Security also wants to know if Garza was engaged in money laundering, and the IRS is pondering whether Garza reported all of his capital gains for tax purposes.

To get these answers, Garza’s firm was subpoenaed in February to turn over relevant documents. As of late May, Bitcoin traders suspect Garza has left the country and federal investigators behind and relocated to Dubai, in the United Arab Emirates, which has no extradition treaty with the U.S.

Taxpayers may also be victims.

GAW Wireless collected $18,018 in state grant money to expand wireless broadband service in 2014. The company never delivered the service, according to Vermont officials. A Maidstone couple also alleges GAW never paid them the $3,000 they agreed upon for leasing property in East Maidstone. Guy and Gail Giampaolo were to receive free Internet service and a $300 annual payment in return for the lease agreement. They reportedly received neither.

The VTDigger reported several other instances of service problems from the wireless venture in a detailed article published earlier this month. Even the state Attorney General has been unable to contact the company after an earlier letter was returned by the post office with no forwarding address. The Department of Public Service is asking customers who use GAW Wireless to call the Consumer Affairs Line at 1-800-622-4496. The department will provide customers with information about alternative wireless Internet service providers.

Stop the Cap! Still Collecting Names of Those Interested in Fighting Cox Usage Caps in Cleveland

wews coxThis weekend will end the first phase of our campaign to fight Cox usage caps being tested in Cleveland, Ohio. We’re collecting the names and e-mail addresses of interested citizens that would like to participate in the fight to get Cox to drop its usage-based billing and overlimit fee scheme. If you are interested, use the link at the top to “Contact Us” as a volunteer and include your name and a valid email address.

Next week we will have an initial outline for an action plan with hopes of building a team of Cleveland-area Cox customers to lead the fight. Local participation and involvement is essential to win these battles, and we will expect the city’s Internet enthusiasts to run this effort themselves, with support from Stop the Cap! It’s your fight to preserve your uncapped broadband, so please get involved!

WEWS in Cleveland ran a story on Cox’s usage caps and interviewed Stop the Cap! about why usage-based pricing is typically a giant ripoff for customers. (2:12)

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  • John Purell: I was paying $95-$97 per month for internet & cable from TWC. An even then TWC was screwing me by taking away channels while charging more. So I ...
  • Patricia L Nichols: First, I would like to say that I was a 24 year employee with GTE/Verizon/Frontier until I was laid off in 12/2016. For the most part, I enjoyed my ca...
  • Racerbob: The $5 fee appeared on my "recent activity" in the My Services website and I called them and they promptly removed it. They also removed a $56.61 (wit...
  • Angela Ehlers (Former Employee): Wow, talk about pointing the finger! Employees are the backbone of your business, without them, you don't have a successful company. How about looking...
  • Frontier Employee: As a frontier employee in Florida, I can honestly say our problems began way before Frontier came along. In my opinion, it started with Verizon, and...
  • Brandon: I am a current employee in Residential Sales in Deland Fl and it is getting harder and harder to meet the sales goals... any former employees , can y...
  • Former Employee: I was let go back in 2013 after working for Frontier for a little over 7 years. The only reason why I stayed for so long is because I needed to suppo...
  • Jennifer: Don't like Frontier? Share my letter I wrote last Fall to the CFO. They never responded or acknowledged. Nor did they ever send the promised $300 g...
  • Cindy: How has class action lawsuits never been filed against them? I dumped them 2 weeks ago, it's so nice to actually have internet again! Frontier would s...
  • Arlene Hughes: the plans are the amts for new signed up customers, the loyal customers get nothing and they pay for all the perks for the new customers. i for one i...
  • David Bystrack: What about all the problems in Ct ??? They still can't get my bill fixed and billed me $476.00 for there mistake.They just took the money from my cred...
  • Disagree with McCarthy: I was an employee of a real Telco corporation and my state was sold to Frontier. There is no training for employees. We have to teach ourselves and ...

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