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Net Neutrality: President Obama Calls on FCC to Reclassify Wired/Mobile Broadband Under Title 2

tollIn a major victory for net roots groups, President Barack Obama today announced his support for the strongest possible Net Neutrality protections, asking the Federal Communications Commission to quickly reclassify broadband as a “telecommunications service” subject to oversight and consumer protection regulatory policies that would prohibit paid fast lanes, the blocking or degrading of websites for financial reasons, and more transparency in how Internet Service Providers handle traffic.

“For almost a century, our law has recognized that companies who connect you to the world have special obligations not to exploit the monopoly they enjoy over access in and out of your home or business,” said the president. “That is why a phone call from a customer of one phone company can reliably reach a customer of a different one, and why you will not be penalized solely for calling someone who is using another provider. It is common sense that the same philosophy should guide any service that is based on the transmission of information — whether a phone call, or a packet of data.”

“’Net neutrality’ has been built into the fabric of the Internet since its creation — but it is also a principle that we cannot take for granted,” President Obama added. “We cannot allow Internet Service Providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas. That is why today, I am asking the Federal Communications Commission (FCC) to answer the call of almost four million public comments, and implement the strongest possible rules to protect Net Neutrality.”

The president’s call will likely force FCC chairman Thomas Wheeler to abandon efforts to reclassify only certain types of Internet traffic under Title 2 regulations while leaving consumers vulnerable to paid fast lanes and other traffic monetizing schemes. Wheeler was rumored to be working on a limited Net Neutrality plan that would protect large online video content distributors like Netflix and Amazon from unfair compensation deals with ISPs. The plan would have given the FCC authority to review agreements between your Internet provider and some of the net’s biggest traffic generators.

President Obama’s statement goes beyond Wheeler’s tolerance for “individualized, differentiated arrangements” that could let cable and phone companies offer compensated “preferred partnership” deals with websites and applications, granting them special treatment or exemptions from speed throttles or usage caps not available to others.

The president’s four principles for a free and open Internet represent “common-sense steps that reflect the Internet you and I use every day, and that some ISPs already observe:”

  • netneutralityNo blocking. If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it. That way, every player — not just those commercially affiliated with an ISP — gets a fair shot at your business;
  • No throttling. Nor should ISPs be able to intentionally slow down some content or speed up others — through a process often called “throttling” — based on the type of service or your ISP’s preferences;
  • Increased transparency. The connection between consumers and ISPs — the so-called “last mile” — is not the only place some sites might get special treatment. So, I am also asking the FCC to make full use of the transparency authorities the court recently upheld, and if necessary to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet;
  • No paid prioritization. Simply put: No service should be stuck in a “slow lane” because it does not pay a fee. That kind of gatekeeping would undermine the level playing field essential to the Internet’s growth. So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect.

The president also expressed a desire to see the same rules applied to mobile networks. That is a significant departure from the policies of the FCC under Wheeler’s predecessor Julius Genachowski, who served as chairman during the Obama Administration’s first term in office. His Net Neutrality policies exempted wireless carriers.

“The rules also have to reflect the way people use the Internet today, which increasingly means on a mobile device,” said the president. “I believe the FCC should make these rules fully applicable to mobile broadband as well, while recognizing the special challenges that come with managing wireless networks.”

http://www.phillipdampier.com/video/111014_NetNeutrality_Final.mp4

President Barack Obama recorded this message supporting strong Net Neutrality protections for the Internet. (1:56)

Republicans in Congress and large telecommunications companies both immediately pounced on the president’s Net Neutrality plans.

Cruz Control

Cruz

“Net Neutrality is Obamacare for the Internet,” tweeted Sen. Ted Cruz (R-Tex.) “The Internet should not operate at the speed of government.”

Cruz’s spokeswoman,  Amanda Carpenter, added that Net Neutrality would place the government “in charge of determining pricing, terms of service, and what products can be delivered. Sound like Obamacare much?”

The National Cable and Telecommunications Association expressed surprise over the president’s strong public support for Net Neutrality action.

“We are stunned the President would abandon the longstanding, bipartisan policy of lightly regulating the Internet and call for extreme Title II regulation,” the NCTA wrote. “The cable industry strongly supports an open Internet, is building an open internet, and strongly believes that over-regulating the fastest growing technology in our history will not advance the cause of Internet freedom. There is no dispute about the propriety of transparency rules and bans on discrimination and blocking. But this tectonic shift in national policy, should it be adopted, would create devastating results.”

“Heavily regulating the Internet will lead to slower Internet growth, higher prices for consumers, and the threat of excessive intervention by the government in the working of the Internet,” stated the NCTA release. “This will also have severe and profound implications internationally, as the United States loses the high ground in arguing against greater control of the Internet by foreign governments. There is no substantive justification for this overreach, and no acknowledgment that it is unlawful to prohibit paid prioritization under Title II. We will fight vigorously against efforts to impose this backwards policy.”

Cablevision Calls Deal-Hunters and the Credit-Challenged “Shoplifters;” ‘Go Call Verizon Instead’

Phillip Dampier November 6, 2014 Cablevision, Competition, Consumer News, Verizon 1 Comment

Shoplifting-Is-Crime-Sign-S-7247Beggars can be choosers if you are running Cablevision, the northeast’s largest non-conglomerate cable company, still run by the Dolan family.

In a conference call with Wall Street analysts, company officials noted Cablevision had noticeably tightened its credit standards during the third quarter and has implemented incentives for slow-pay and no-pay customers to take a hike and not come back, even at the risk of subscriber losses.

“Certain of our promotional eligibility policies have put pressure on our net subscriber results,” reported Cablevision CEO James Dolan. “However, we believe that these policies are consistent with our goal of growing long-term shareholder value. For instance, during the third quarter, we tightened certain of our customer credit and payment policies. While these policy changes effectively reduce the number of available sales, they are expected to contribute a stronger base of customers over time.”

For more than a year, Cablevision has restricted promotional pricing and retention offers to keep customers from coming back for better deals when their existing promotion expires. Now it is stripping eligibility for promotional pricing for late-paying customers as well. Subscribers are leaving as a result. Video customers declined by 56,000 during the third quarter, high-speed data customers declined by 23,000, and voice customers declined by 33,000.

“We’re no longer marketing [to] subscribers who have a history of non-pay, so we’re not inviting them back in if they’re not good actors,” said Cablevision’s chief operating officer Kristin Dolan. “We’re requiring full payment in a number of areas where homes have a history of bad debt. And then we’re not doing promotions [for] those customers either. So if you have a history of bad debt with us, you can’t come back in on a promotional offer. [We’re] not letting people back into the bucket that are going to end up being problematic later on in their relationship with us.”

Mr. Dolan was scathingly critical of his biggest competitor, Verizon FiOS, claiming the company will stop at nothing to poach Cablevision’s customers.

“Verizon, in our opinion, continues on a path of pursuing the destruction of their own capital,” said Dolan. “We don’t believe that they’re profitable on any level in our service area. They just rabidly pursue us in an attempt to try and get customers. And I think our strategy is actually working quite well because we’re giving them all the customers that we think are the most expensive customers and the ones that provide the least free cash flow to us.”

Mrs. Dolan told analysts Cablevision is particular about the kinds of customers it wants to win back from competitors.

“I think if it’s a win back that we want to have, that’s a differentiator,” she said. “We’re not going to just chase subscriber numbers. We don’t want to invite people into our store if they’re going to shoplift.”

Comcast Boosting Speeds in Pacific Northwest to Fend Off CenturyLink, Frontier, and Google

Phillip Dampier November 5, 2014 Broadband Speed, Comcast/Xfinity, Competition No Comments

Comcast-LogoAfter raising prices for Internet service and imposing the nation’s highest modem rental fee, Comcast customers in Oregon and southwest Washington are finally getting some good news: speed boosts.

Comcast will double Internet speeds for “the vast majority” in the Pacific Northwest between now and the end of the year, bringing 100Mbps service to Comcast’s “Blast” Internet plan and 50Mbps to “Performance” tier customers. Comcast says it is the 13th speed increase in the last dozen years in the region, but that isn’t all that has increased.

Comcast raised prices for its broadband plans last month: $66.95 for standalone Performance service ($53.95 if you bundle), $78.95 for Blast ($65.95 for those also taking cable TV or phone service). The modem rental fee remains a steep $10 a month.

Customers will receive e-mail when the faster speeds become available in their area, and a modem reset (unplug it briefly) will be required to get the new speeds.

Comcast is facing competition from CenturyLink, which is installing fiber optics in the area and Frontier, which inherited Verizon’s FiOS network when it acquired landlines in the region. Google Fiber is also expected to eventually make an appearance in the Portland area. Comcast prices are on the high side in comparison to the competition. CenturyLink’s introductory rate is as low as $50 a month for fiber service and Frontier charges $35 a month for 30Mbps service on its FiOS network.

For now, Comcast broadband service remains uncapped in the region, but Comcast is continuing market trials elsewhere that include a 300GB usage cap and an overlimit fee for those exceeding it.

Wall Street Investors Suckered By Broadband, Wireless Myths on Usage Pricing, Network Investment

verizon-protestBig Telecom companies like Verizon and AT&T use phony numbers and perpetuate myths about broadband traffic and network investments that have conned investors out of at least $1 trillion in unnecessary investments and consolidation.

Alexander Goldman, former chief analyst for CTI’s American Recovery and Reinvestment Act grants, is warning Wall Street and investors they are at risk of losing millions more because some of the largest telecom companies in the country are engaged in disseminating bad math and conventional wisdom that relies more on repetition of their talking points than actual facts.

Goldman’s editorial, published by Broadband Breakfast, believes the campaign of misinformation is perpetuated by a media that accepts industry claims without examining the underlying facts and a pervasive echo chamber that delivers credibility only by the number of voices saying then same thing.

Goldman takes Verizon Communications CEO Lowell McAdam to task for an editorial published in 2013 in Verizon’s effort to beat back calls on regulators to oversee the broadband industry and correct some of its anti-competitive behavior.

McAdam claimed the U.S. built a global lead in broadband on investments of $1.2 trillion over 17 years to deploy “next generation broadband networks” because networks were deregulated.

Setting aside the fact the United States is not a broadband leader and continues to be outpaced by Europe and Asia, Goldman called McAdam’s impressive-sounding dollar figures meaningless, considering over the span of that 17 years, the United States progressed from dial-up to fiber broadband. Wired networks have been through a generational change that required infrastructure to be replaced and wireless networks have been through at least two significant generations of change over that time — mandatory investments that would have occurred with or without deregulation.

Over the past 17 years, the industry has gotten more of its numbers wrong than right. An explosion of fiber construction in the late 1990s based on predictions of data tsunamis turned out to be catastrophically wrong. University of Minnesota professor Andrew Odlyzko, the worst enemy of the telecom industry talking point, has been debunking claims of broadband traffic jams and the need to implement usage-based pricing and speed throttling for years. In 1998, when Wall Street was listening intently to forecasts produced by self-interested telecom companies like Worldcom that declared broadband traffic was going to double every 100 days, Odlyzko was telling his then-employer AT&T is was all a lot of nonsense. The broadband traffic emperor had no clothes, and statistics from rival telecom companies suggested Worldcom was telling tall tales. But AT&T executives didn’t listen.

fat cat att“We just have to try harder to match those growth rates and catch up with WorldCom,” AT&T executives told Odlyzko and his colleagues, believing the problem was simply ineffective sales, not real broadband demand. When sales couldn’t generate those traffic numbers and Wall Street analysts began asking why, companies like Global Crossing and Qwest resorted to “hollow swaps” and other dubious tricks to fool analysts, prop up the stock price and executive bonuses, and invent sales.

Nobody bothered to ask for an independent analysis of the traffic boom that wasn’t. Wall Street and investors saw dollars waiting to be made, if only providers had the networks to handle the traffic. This began the fiber boom of the late 1990s, “an orgy of construction” as The Economist called it, all to prepare for a tidal wave of Internet traffic that never arrived.

After companies like Global Crossing and Worldcom failed in the biggest bankruptcies the country had ever seen at the time, Odlyzko believes important lessons were never learned. He blames Worldcom executives for inflating the Internet bubble more than anyone.

A bubble of another kind is forming today in America’s wireless industry, fueled by pernicious predictions of a growing spectrum crisis to anyone in DC willing to listen and hurry up spectrum auctions. Both AT&T and Verizon try to stun investors and politicians with enormous dollar numbers they claim are being spent to hurry upgraded wireless networks ready to handle an onslaught of high bandwidth wireless video. Both Verizon’s McAdam and AT&T’s Randall Stephenson intimidate Washington politicians with subtle threats that any enactment of industry reforms by the FCC or Congress will threaten the next $1.2 trillion in network investments, jobs, and America’s vital telecom infrastructure.

Odlyzko has seen this parade before, and he is not impressed. Streaming video on wireless networks is effectively constrained by miserly usage caps, not network capacity, and to Odlyzko, the more interesting story is Americans are abandoning voice calling for instant messages and texting.

8-4WorldcomCartoonThat isn’t a problem for wireless carriers because texting is where the real money is made. Odlyzko notes that wireless carriers profit an average of $1,000 per megabyte for text messages, usually charged per-message or through subscription plan add ons or as part of a bundle. Cellular voice calling is much less profitable, earning about $1 per megabyte of digitized traffic.

Wireless carriers in the United States, particularly Verizon and AT&T, are immensely profitable and the industry as a whole haven’t invested more than 27% of their yearly revenue on network upgrades in over a decade. In fact, in 2011 carriers invested just 14.9% of their revenue, rising slightly to 16.3 percent in 2012 when companies collectively invested $30 billion on network improvements, but earned $185 billion along the way.

While Verizon preached “spectrum crisis” to the FCC and Congress and claimed it was urgently prioritizing network upgrades, company executives won approval of a plan to pay Vodafone, then a part owner of Verizon Wireless, $130 billion to buy them out. That represents the collective investment of every wireless provider in the country in network upgrades from 2005-2012. Verizon Wireless cannot find the money to upgrade their wireless networks to deliver customers a more generous data allowance (or an unlimited plan), but it had no trouble approving $130 billion to buy out its partner so it could keep future profits to itself.

Odlyzko concludes the obvious: “modern telecom is less about high capital investments and far more a game of territorial control, strategic alliances, services, and marketing, than of building a fixed infrastructure.”

That is why there is no money for Verizon FiOS expansion but there was plenty to pay Vodafone, and its executives who walked away with executive bonuses totaling $89.6 million.

As long as American wireless service remains largely in the hands of AT&T and Verizon Wireless, competition isn’t likely to seriously dent prices or profits. At least investors who are buying Verizon’s debt hope so.

Goldman again called attention to Odlyzko’s latest warning that the industry has its numbers (and priorities) wrong, and the last time Odlyzko had the numbers right and the telecommunications industry got its numbers wrong, telecommunications investors lost $1 trillion in the telecommunications dot.com bust.

As the drumbeat continues for further wireless consolidation and spectrum acquisition, investors have been told high network costs necessitate combining operations to improve efficiency and control expenses. Except the biggest costs faced by wireless carriers like Verizon are to implement strategic consolidation opportunities like the Vodafone deal, not maintain and grow their wireless network. AT&T is putting much of its spending in a proposed acquisition of DirecTV this year as well — at a cost of $48.5 billion. That could buy a lot of new cell towers and a much more consumer-friendly data plan.

Voice to text substitution (US)

year voice minutes billions texts billions
2005 1,495 81
2006 1,798 159
2007 2,119 363
2008 2,203 1,005
2009 2,275 1,563
2010 2,241 2,052
2011 2,296 2,304
2012 2,300 2,190

Cell phone network companies (if you can believe their SEC filings) are incredibly profitable, and are spending relatively little on infrastructure:

year revenues in $ billions capex in $ billions capex/revenues
2004 102.1 27.9 27.3%
2005 113.5 25.2 22.2
2006 125.5 24.4 19.4
2007 138.9 21.1 15.2
2008 148.1 20.2 13.6
2009 152.6 20.4 13.3
2010 159.9 24.9 15.6
2011 169.8 25.3 14.9
2012 185.0 30.1 16.3

Federal Trade Commission Suing AT&T Over Unfair Speed Throttles for Unlimited Data Customers

throttleThe Federal Trade Commission today filed a lawsuit against AT&T for its practice of subjecting grandfathered unlimited data customers to speed throttles that dramatically cut speeds up to 90 percent after customers use more than 3GB of data on AT&T’s 3G network or 5GB on its 4G network. Thus far, according to the FTC, AT&T has throttled at least 3.5 million unique customers a total of more than 25 million times.

The FTC’s complaint alleges that the company failed to adequately disclose to its customers on unlimited data plans that, if they reach a certain amount of data use in a given billing cycle, AT&T reduces – or “throttles” – their data speeds to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video –  become difficult or nearly impossible to use.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez. “The issue here is simple: ‘unlimited’ means unlimited.”

FCC chairman Thomas Wheeler publicly complained about Verizon’s plans to start a similar throttling program on its wireless network, questioning the fairness of cutting speeds for certain customers while exempting others. Both Verizon and AT&T have claimed speed throttles are part of a fair usage policy that allows all customers to share its wireless resources. Broadband providers have often painted a picture of a “bandwidth hog” taking a disproportionate share of network resources away from other customers, but there is no evidence heavier users are creating conflicts for other users, especially as wireless carriers encourage customers to use more data.

throttle att

From AT&Ts website

The logic of rationing Internet use for unlimited customers while providing unlimited access to those willing to pay usage-based charges escaped the FTC, which is what brought the suit.

According to the FTC’s complaint, AT&T’s marketing materials emphasized the “unlimited” amount of data that would be available to consumers who signed up for its unlimited plans. The complaint alleges that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program. When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.

The FTC alleges that AT&T, despite its unequivocal promises of unlimited data, began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 gigabytes of data in a billing period. According to the complaint, the throttling program has been severe, often resulting in speed reductions of 80 to 90 percent for affected users.

According to the FTC’s complaint, consumers in AT&T focus groups strongly objected to the idea of a throttling program and felt “unlimited should mean unlimited.” AT&T documents also showed that the company received thousands of complaints about the slow data speeds under the throttling program. Some consumers quoted the definition of the word “unlimited,” while others called AT&T’s throttling program a “bait and switch.” Many consumers also complained about the effect the throttling program had on their ability to use GPS navigation, watch streaming videos, listen to streaming music and browse the web.

The complaint charges that AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.

FTC staff worked closely on this matter with the staff of the Federal Communications Commission.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of California, San Francisco Division.

Tesco Grocery Chain Offers 16Mbps Broadband to UK Residents Free for a Year (After Line Rental)

Phillip Dampier October 27, 2014 Broadband Speed, Competition, Consumer News, Tesco (UK) No Comments

tesco broadbandOne of the largest grocery chains in the United Kingdom is giving away free unlimited 16Mbps broadband for a year, including a free wireless router, as long as customers cover the usual monthly line rental fees.

The service is offered without a voice dialing plan, which means customers will pay for any voice minutes they use, except when those calls are to or from Tesco Homephone customers. Internet customers also receive a free year of Tesco Internet Security and UK-based phone support. The optional phone service also includes Caller ID, Caller ID blocking, and Directory Inquiries.

In fact, Tesco’s offer will actually be a money-maker for customers who already have home phone service because Tesco also includes Clubcard points on every bill, which can be redeemed on purchases made at the chain.

After 12 months, the price reverts to Tesco’s current standard offering: 16Mbps for $9.68 a month.

Tesco’s line rental charge, required on all landlines and DSL service costs $24.83 a month.

In comparison, CenturyLink charges $39.95 a month for 10Mbps service for a year before the price increases. But customers will pay considerably more than that, as that price does not include taxes, fees, and surcharges, including a Carrier Universal Service charge, National Access Fee surcharge, a one-time, High-Speed Internet activation fee, and state and local fees that vary by area and certain in-state surcharges. A monthly modem rental fee also applies.

 

Half of AT&T’s Customers Are Paying $100 for 10GB Data; Unlimited Customers Still Throttled After 3-5GB

Speed bump

Speed bump

More than half of AT&T’s wireless customers are paying at least $100 a month for 10GB or more of wireless data on AT&T’s Mobile Share Plans at the same time AT&T continues to throttle its legacy unlimited data customers who use more than 3GB of data on its 3G network or 5GB of data on its 4G LTE network.

AT&T claimed in 2012 it implemented its “fair usage policy” for unlimited customers to assure all could receive reasonable service during peak usage times when cell towers become congested.

AT&T also blames “a serious wireless spectrum crunch” for the speed throttling, implying access to more spectrum could help ease the problem. But there is a much faster way to overcome AT&T’s “spectrum crunch:” agree to pay them more money by ditching that $30 unlimited plan for a tiered plan.

John Stephens, AT&T’s chief financial officer, told investors Wednesday that nothing boosts revenue more than pushing customers into usage-cappped data plans that customers are regularly forced to upgrade.

“On the ARPU (average revenue per user/customer) story, I think the biggest issue with the improvement is people buying the bigger [data] buckets and buying – upping plans,” said Stephens. “We had over 50% of the customer base at the 10GB or bigger plans.”

Stephens added that AT&T benefited from customers upgrading to 4G LTE devices that are handled more efficiently by AT&T’s mobile data network.

Increased usage and upgraded data plans delivered a 20% increase in data billings over the last quarter.

Since 2012 AT&T has paid out more than $50 billion to shareholders through dividends and share buybacks. The company benefited from nearly $20 billion a year in free cash flow and asset sales over the last two years and is expected to repeat those numbers this year. Consolidated revenue at AT&T grew to $33 billion, up $800 million since the same time last year.

Miraculously, despite the “alarming spectrum crunch,” AT&T found more than enough spectrum to award its best customers with a “double data” promotion that turns a 15GB data plan into a 30GB plan, a 20GB plan to 40GB, a 30GB plan to 60GB, a 40GB plan to 80GB, or a 50GB plan to 100GB. Importantly, AT&T boasts its double data promotion won’t “explode” — their language for “expire” — on customers until their contract ends.

Lowering the bar on "unlimited use" customers.

Lowering the bar on “unlimited use” customers.

“Those exploding offers — customers hate those offers,” said AT&T Mobility CEO Ralph de la Vega at a recent investor conference. “Unless they change their mind, we won’t offer those kinds of promotions.”

But de la Vega doesn’t mind leaving the company’s most loyal legacy customers in the penalty box if they cling to their grandfathered unlimited data plans. The throttles stay and the allowances have remained unchanged since first announced, despite the bountiful spectrum obviously ready and available to serve AT&T’s deluxe customers. Unlimited customers are regularly reminded they can easily avoid the throttle — just abandon that unlimited data plan. According to Stephens, more than 80% of AT&T’s customers already have.

The excuses for wireless speed throttles and killing off unlimited data plans at AT&T and Verizon Wireless don’t seem to wash with FCC chairman Thomas Wheeler, who demanded Verizon offer the “rationale for treating customers differently based on the type of data plan to which they subscribe, rather than network architecture or technological factors,” after it announced it was planning speed throttles for its remaining unlimited data plan customers. Verizon canceled the plan after Wheeler began scrutinizing it, but the throttles are still in place at AT&T.

AT&T’s 10GB Mobile Share Plan starts with a $100 data plan. Customers also pay:

  • $10 a month for each auto-based smart-locator;
  • $10 a month for each tablet, camera or game device;
  • $15 a month for each basic phone;
  • $20 a month for each wireless home phone replacement;
  • $20 a month for each connected Internet device;
  • $40 a month for each connected smartphone.

A family of four with four smartphones, a tablet, and AT&T’s wireless home phone replacement would be billed $290 a month before at least $39 in taxes, fees, and surcharges — well north of $300 a month for most.

T-Mobile: AT&T Gouges Us With Data Roaming Rates 150% Higher Than Average

bill shockT-Mobile has asked the Federal Communications Commission to investigate AT&T’s “artificially high roaming rates” charged when its customers travel outside of T-Mobile’s home service area.

T-Mobile is heavily reliant on AT&T for roaming service outside of major cities and the country’s smallest national wireless carrier complains AT&T is using their market power to put it at a major disadvantage, which could force new limits on roaming access in some areas.

T-Mobile provided examples of the damage already done by AT&T’s roaming rates:

“Limitless Mobile has severely restricted its customers’ access to AT&T’s network ‘for the sole reason that AT&T’s data roaming rates are too high and by continuing roaming access, Limitless could not maintain a commercially competitive retail wireless data offering to the general public,’” T-Mobile told the FCC.

The Rural Wireless Association noted that competing carriers “cannot sustain the provision of data roaming services if [they] must provide that service at a loss.”

The problem of data roaming rates is getting larger as carrier agreements are due for renewal at many mobile providers. Independent cellular companies are finding AT&T unwilling to renew at prices and terms comparable to their existing contracts. Instead, they face renewal rates that average a minimum of 10 and as much as 33 times higher than the national carriers’ retail rates.

For example, T-Mobile’s agreement with AT&T includes a data roaming rate that is now 150 percent higher than the average domestic rate that T-Mobile pays for data roaming.

This is one thousand percent higher than the data roaming rate negotiated between Leap Wireless and MetroPCS prior to their respective acquisitions, wrote T-Mobile.

With the stark price increases, carriers have begun imposing limits, including speed throttling and data caps, on customers when roaming on AT&T’s network.

t-mobile-set-recordBecause of AT&T’s artificially high roaming rates, T-Mobile wireless customers roaming in South Africa have a better user experience than customers roaming on AT&T’s network in South Dakota, argues T-Mobile. Their speed is twice as fast, and their data usage is unlimited.

T-Mobile is asking the FCC to intervene by establishing some type of standard about what constitutes “commercially reasonable” roaming rates as part of its 2011 Data Roaming Order, designed to protect competition.

This year, carriers dependent on Verizon Wireless or AT&T to help deliver “nationwide coverage” are negotiating roaming access to the companies’ 4G LTE networks for the first time. Most roaming agreements used to only cover 3G service, delivered at a slower speed.

If carriers like Sprint and T-Mobile are unable to negotiate fair terms, both companies will be at a major competitive disadvantage, relegated to providing only regional coverage or charging higher prices for roaming service.

AT&T vice president of regulatory affairs Joan Marsh said T-Mobile’s request bordered on being illegal, in direct violation of the Telecommunications Act. Marsh argued T-Mobile and other carriers should be incentivized to build their own networks instead of relying on cheap roaming access from companies like AT&T. Marsh added any move by the FCC to set rates or benchmarks would be beyond the FCC’s mandate. Wireless carrier rates are deregulated and not subject to common carrier regulation.

Comcast Invites Customers to Upgrade to New $10 Modem Fee, Or Else Watch Your Speed Degrade

Some Comcast customers with older cable modems are receiving letters from the cable company warning they will need an upgraded modem to “get the most out of your XFINITY Internet service.”

comcast upgrade

Customers are asked to “properly dispose” of old equipment while contemplating either buying a new modem or leasing one from Comcast. Sticking with cable company-provided leased equipment is the choice of more than 90 percent of cable Internet subscribers, despite the fact cable operators charge hefty rental fees. In parts of the Pacific Northwest, Comcast has introduced its newest price for rented cable modems: $10 a month, which amounts to $120 a year — more than the cost of buying a modem outright.

Comcast’s letter may be premature for customers with DOCSIS 2 equipment subscribed to speeds under 38Mbps (the top-rated speed for DOCSIS 2 equipment). Although DOCSIS 2 is not fast enough for Comcast’s 50Mbps Blast Internet plan, it’s more than adequate for the 25Mbps Performance Internet plan and other lower speed plans.

Customers in Illinois are also getting the letter, arriving as the company boosts speeds. Most are being sent to customers using cable modems more than 3-4 years old. Customers can find a new compatible modem on Comcast’s Approved Device List. We strongly recommend customers buy a modem and avoid renting one from Comcast. Monthly modem rental fees, now $8 and likely to increase to $10 across the country in the future, are a major earner for Comcast, bringing in $275-300 million quarterly.

AT&T Adds Atlanta, Chicago and Decatur for GigaPower Gigabit Fiber Most Won’t See Anytime Soon

Notice the word "may"

Notice the word “may”

AT&T has promised an undisclosed number of customers in Chicago, Ill., and Atlanta, Decatur, and Newnan, Ga., will eventually get GigaPower upgrades to AT&T’s U-verse service, after moving customers to an all-fiber network that will deliver up to 1Gbps service.

“As a city that prides itself on creating a favorable environment for investment and innovation, I am happy to see AT&T bringing its ultra-high speed fiber network to the City of Atlanta,” said Atlanta Mayor Kasim Reed. “This is a great opportunity for our residents, businesses and visitors, who all stand to benefit from this new service. The City of Atlanta is one of the fastest growing tech hubs in the United States and a hotbed for entrepreneurial activity.  U-verse with AT&T GigaPower service will complement this engine of economic growth and help pave the way for future opportunities.”

But before the mayor gets too excited, he should consider AT&T’s track record for GigaPower upgrades in other cities where the service is offered. Customers complain the gigabit upgrade is difficult to get in single family homes, with most of the upgrades targeting multi-dwelling units like large condos or apartment blocks or new housing developments.

Customers in Austin complain to Stop the Cap! AT&T GigaPower looks more like a demonstration project than a serious effort at expanding super fast fiber broadband. Although pockets of service are established in some upscale areas, nobody at AT&T is willing to answer customers’ questions about exactly when service will arrive in unserved neighborhoods. Technicians are privately telling readers it will take more than a year for serious expansion efforts to begin across Austin.

While AT&T drags its feet on fiber expansion, it has no trouble hurrying out press releases suggesting cities including Atlanta, Augusta, Charlotte, Chicago, Cleveland, Fort Worth, Fort Lauderdale, Greensboro, Houston, Jacksonville, Kansas City, Los Angeles, Miami, Nashville, Oakland, Orlando, San Antonio, San Diego, St. Louis, San Francisco, and San Jose will soon see GigaPower in their areas. But AT&T isn’t putting much money where its mouth is, failing to significantly increase capital spending to upgrade the U-verse network.

In fact, AT&T executives have repeatedly reassured investors the company has no plans for a significant uptick in wireline capital spending — exactly what would be required to complete the gigabit expansion effort AT&T promises in press releases. In contrast, AT&T’s 2012 $14 billion Project Velocity IP (or VIP) was the company’s most visible and ambitious network build out initiative in wired service since the introduction of U-verse. Project VIP delivered a clear expansion of U-verse into new areas and brought new fiber connections to buildings, many that are now in use to offer GigaPower service in Austin.

Fiber broadband expansion is not cheap, and even after AT&T committed $14 billion to its expansion effort two years ago, the results are modest for U-verse because a considerable portion of the funds spent were invested in AT&T’s wireless network instead — always a priority:

State / City Investment amt. (wireless & wireline) U-verse locations Business connections On-net buildings Total investment (2010-2012)
California $1.15 billion 127,700 30,400 800 $7 billion
 — San Diego 15,950 2,900 90 $750 million
Texas $1 billion 138,300 24,200 600 $7 billion
Georgia $675 million $2.5 billion
 — Atlanta 12,100 11,450 400
Florida $425 million 25,050 18,450 550 $2.8 billion
Indiana $325 million 18,000 1,300 60 $1.3 billion
Michigan $275 million 35,550 2,150 70 $1.55 billion
Missouri $250 million 27,300 3,650 150 not reported
North Carolina $250 Million 9,900 1,800 50 $1.5 billion
Ohio $225 million 31,200 1,100 40 $1.5 billion
Alabama $200 million 6,600 600 20 $1.4 billion
Louisiana $175 million not reported 2,100 35 $1.2 billion
Mississippi $175 million 5,800 175 4 $975 million
Tennessee $175 million 13,600 325 9 $1.4 billion
Connecticut $140 million 6,600 1,100 40 $750 million
South Carolina $140 million 21,100 250 9 $850 million
Wisconsin $140 million N/A 525 20 $725 million
Oklahoma $120 million 13,850 875 25 $700 million
Kansas $110 million 10,150 650 30 $725 million
Nevada $110 million not reported 200 7 $600 million
Arkansas $90 million 8,750 1,000 25 $700 million

Chart courtesy: FierceTelecom

Data compiled from publicly released company information.

Reflecting on the numbers, it would take an investment at least equal, if not greater, than AT&T spent on Project VIP for AT&T to significantly upgrade the communities it claims will soon have access to GigaPower. Instead, it is more likely AT&T will introduce a handful of gigabit show projects and then incrementally upgrade selected neighborhoods over the next 3-5 years.

Existing competition makes all the difference as to what customers will pay for gigabit service from AT&T, assuming they can buy it at any price. As Google Fiber tears up the streets of Austin, it is clear Google will deliver real competition in that city, forcing AT&T to price its gigabit service at $70 a month (for customers willing to have their online activities tracked by AT&T). In nearby Dallas, where competition isn’t as robust, customers will have to pay at least $120 a month for the service.

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