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Verizon Wireless Bill Shock is Back; Customers Complaining About Sudden Usage Increases

bill shockSome Verizon Wireless customers are reporting data usage numbers spiked on their bills to unprecedented levels this summer, giving the cellular company’s bean counters a heaping helping of overlimit fees, charged when customers exceed their data allowance.

The phantom usage problem has become noticeable enough to win attention from the consumer reporter at Cleveland’s The Plain Dealer, who found her own family of four suddenly blowing past their shared 15GB a month, resulting in a $30 overlimit fee.

“My family’s data usage has mysteriously increased significantly every month since February, except for one month,” wrote Teresa Dixon Murray. “My family of four pays for 15GB a month. We’re grandfathered in the old More Everything family share plan. We typically were using no more than 10GB a month. But for the last six months, that has increased steadily — and inexplicably. 8.2. Then 9.7. Then 10.6. Then 12.7. Two months ago, we got alerts that we were nearing our allotment and managed to take care to avoid going over. Last month, despite our efforts, we went over by 1.057GB, and were charged an extra $30.”

Murray questioned why her family’s phones were burning through their data allowance in the middle of the night, while connected to the family’s home Wi-Fi.

A Verizon representative explained phones may be connecting to Verizon’s network because of a new feature installed on some phones, including the Apple iPhone, called “Wi-Fi Assist.” This feature, which could also be called “Verizon Profit Assist” automatically ignores the fact you are connected to Wi-Fi and switches back to the Verizon Wireless network if the phone determines your Wi-Fi connection is “poor.”

“So what’s the definition of poor? I guess Verizon and our iPhones decide that,” Murray questioned.

This feature can be switched off from your phone settings.

They are coming.

They are coming.

But that hasn’t always stopped the overlimit fees. Some customers report they still incur overlimit fees even after switching cellular data off when they reach a warning from Verizon they are about to exhaust their allowance. Verizon charges $10 in overlimit fees, even in instances where the offending extra usage amounts to .0001GB.

Verizon claims its usage meter only provides an estimate of usage, and there are instances where the warning comes too late for a customer to stop using data before they’ve already exceeded their plan allowance. Verizon’s solution is to sell a $5/month “family coverage” add-on that allows parents to monitor data usage before it gets out of hand. But Verizon doesn’t guarantee it will stop overlimit fees based on the measurements of usage it provides.

That add-on plan may or may not have helped Valarie Gerbus, who is now facing a $9,100 Verizon cell phone bill she is adamantly refusing to pay.

The suburban Tampa customer regularly paid $118/month for her cell phone plan, which included 4GB of data usage — an amount she never exceeded, at least until July. Gerbus was shocked to open her bill and discover her normal monthly bill now also included $8,535 in overlimit fees for using 569GB of data in a single month:

(Image: The Plain Dealer)

(Image: The Plain Dealer)

On July 21, Verizon sent her a text, notifying her that she had used nearly all of her 4 gigabytes of data. The text said she could get 4 more gigabytes for $20. Realizing that she had two weeks before the end of the month, Gerbus bought the additional data.

Within an hour of the purchase, she received another text that told her she only had 10 percent left on the data that she had just purchased. The next text message she received said she could change her plan to 8 gigabytes for an additional $20 a month. She said she bought that upgrade to ensure she didn’t have any data overages.

In a span of several hours, she estimates that she received 40 to 50 texts saying that she needed to purchase more data. She turned the notification off, believing that there had been a glitch in Verizon’s system.

Gerbus said she realizes now that she should have contacted the company at that point, but she didn’t, as she feared being placed on hold by a customer service representative.

She later went to work and planned on paying the bill online. When she found her online statement, it said she owed $6,480 for using 490 gigabytes of data. She was shocked.

“I told them that I won’t pay the bill,” Gerbus told the newspaper. “I can either wait until they take it to a collection agency or when they take it to court. Either way, my credit history will be ruined. I can go bankrupt here.”

Verizon said they are not aware of any widespread problem, but is looking into phantom phone usage at night and some of the more extreme examples of bill shock, where bills extend into the thousands of dollars.

Affected customers report the high bills are, in some cases, tearing families apart.

“It got to the point that we were battling in our family,” reported Lockport, N.Y. resident Tom Walker, who told the newspaper their data usage soared for no apparent reason. “We were really asking each other, ‘Have you been on Facebook too much? What have you been doing?’ We were trying to figure out who was using all this data.”

Gerbus is almost thankful to pay Verizon Wireless a nearly $600 fee to exit her contract early as she switches to T-Mobile. Verizon’s engineers have no explanation for Gerbus’ bill, other than noting her phone contacted Amazon.com at least 400 times over a few days.

Providers with usage caps and usage-based pricing often consider their usage meters more reliable than their own customers, and when customers complain, many representatives trust the meter and insist on payment. When a customer like Gerbus complains about usage that is considerably above average usage, customer service representative are not always receptive.

“I told them that there was no way that I could have gone from 490 to 560 in a day,” Gerbus said. “The [Verizon] person said, ‘Yes there is.'”

Unlimited Data is Back (With Fine Print): T-Mobile/Sprint Push Unlimited Data Plans for All

Tmo1LogoSeveral years after wireless unlimited data plans became grandfathered or riddled by speed throttling, America’s third and fourth largest carriers have decided the marketplace wants “unlimited everything” after all and is prepared to give customers what they want, at least until they read the fine print.

T-Mobile Announces “The Era of the Data Plan is Over”: T-Mobile ONE

T-Mobile CEO John Legere used a video blog to announce a major shakeup of T-Mobile’s wireless plans this morning, centered on the concept of “unlimited everything.”

“The era of the data plan is over,” said Legere. T-Mobile’s new plan — T-Mobile ONE — does away with usage caps and usage-based billing and offers unlimited calls, texting, and data on the company’s 4G LTE network. The plan becomes available Sept. 6 at T-Mobile stores nationwide and t-mobile.com for postpaid customers. Prepaid plans will be available later.

tmoone

“Only T-Mobile’s network can handle something as huge as destroying data limits,” said Legere. “Dumb and Dumber can’t do this. They’ve been running away from unlimited data for years now, because they built their networks for phone calls, not for how people use smartphones today. I hope AT&T and Verizon try to follow us. In fact, I challenge them to try.”

Legere

Legere

T-Mobile claims the savings with its unlimited plan are enormous compared to its bigger competitors AT&T and Verizon Wireless.

Verizon’s largest LTE usage-capped data plan would cost a family of four $530/month. That’s $4,440 more than T-Mobile ONE will charge.

T-Mobile ONE costs $70 a month for the first line, $50 a month for the second, and additional lines are $20 a month, up to 8 lines with auto pay (add $5 per line if you don’t want autopay). Customers can add tablets for an extra $20 a month.

T-Mobile does offer some caveats in the fine print which are relevant to customers:

  • All video streaming on this plan is throttled to support a maximum of 480p picture quality. Higher video quality is available with an HD add-on plan for $25/mo per line;
  • Tethering is included with T-Mobile ONE, but it is painfully speed-limited to 2G speeds — around 70kbps, just a tad faster than dial-up. At that speed, a web page that will take less than five seconds to load on a 4G network will take 17-25 seconds. A 60 second YouTube video will take nearly five minutes to watch, and downloading apps or sharing images is often impossible because of timeouts. If you want 4G tethering, that will be $15 a month for 5GB, please;
  • Customers identified as among the top 3% of data users, typically those who use more than 26GB of 4G LTE data a month will find themselves in the same data doghouse T-Mobile’s Simple Choice customers are in. That means during peak usage periods on busy cell towers, heavier users are deprioritized on T-Mobile’s network, but we’re not sure if that results in slight speed reductions or the kind of drastic 2G-like experience these kinds of “fair usage” policies often deliver.

Our analysis:

bingeonWhile we’re happy to see unlimited data plans return to prominence, T-Mobile is continuing to punish high bandwidth applications, tethering, and usage outliers with frustrating speed throttles.

T-Mobile’s biggest source of increasing traffic is coming from online video. About a year ago, Legere introduced T-Mobile’s Binge On program, which offers streaming video from T-Mobile’s partners without it counting against your usage allowance. This program had the potential of causing problems with the Federal Communications Commission’s Net Neutrality rules.

Legere seemed to avoid trouble by revealing enough information about Binge On to make it clear why the program exists — to reduce video traffic’s impact on T-Mobile’s network. That might seem counterintuitive until one looks at what it takes to be a Binge On partner — allowing T-Mobile’s Binge On-related traffic to be “optimized” to Standard Definition video (around 480p). No money changes hands between T-Mobile and its Binge On partners.

T-Mobile makes it easy to be a BingeOn participant.

T-Mobile makes it easy to be a Binge On participant.

Binge On was an important factor in freeing up bandwidth on T-Mobile’s network. Some analysts suggest two-thirds of T-Mobile’s video traffic load disappeared after Binge On was introduced. Video is likely the single biggest bandwidth consuming application on wireless networks today. If a customer is watching on a smartphone or even a small tablet, 480p video is generally adequate and has a lower chance of stopping to buffer.

slowAnother clue about the impact of online video on T-Mobile’s network is the same video throttling strategy is built into T-Mobile ONE and applies to all online video, whether the provider partners with T-Mobile or not. Also consider the extraordinary cost of the optional HD Video add-on, which defeats video throttling: a whopping $25 per month per device. That kind of pricing clearly suggests 1080p or even 4K video is a major resource hog for T-Mobile, and customers looking for this level of video quality are going to pay substantially to get it.

T-Mobile is also clearly concerned about tethering, relegating hotspot and tethered device traffic to 2G speeds, which will quickly deter anyone from depending on it except in emergencies. Again, traffic is the issue. Some semi-rural customers unserved by cable but able to get a 4G signal from a T-Mobile tower may think of using T-Mobile as their exclusive source of internet access. At speeds just above dial-up, they won’t consider this an option.

We’re also disappointed to see 26GB of usage a month as the threshold for potential speed throttling. T-Mobile ONE is not cheap, and without more detailed information about how often those exceeding 26GB face speed slowdowns, how much of a slowdown, and how quickly those speed reductions disappear when the tower gets less congested would be very useful. Until then, customers are likely to interpret 26GB as a type of soft usage allowance they will not want to exceed.

T-Mobile ONE also delivers a powerful signal to Wall Street because it raises the lowest price a T-Mobile postpaid customer can pay to become a customer from $50 to $70 a month for a single line. That’s quite a burden for some customers who will have to look to prepaid plans or resellers to get cheaper service. Other carriers rushed to meet T-Mobile’s $50 2GB plan when it was introduced, which has served as an entry-level price range for occasional data dabblers. If those carriers don’t immediately raise prices as well, they will undercut T-Mobile. That could provoke an increase in cancellations among customers buying on price, not plan features. T-Mobile is banking consumers will appreciate unlimited data enough to pay extra for peace of mind.

Jackdaw Research found customers enrolled in 2GB and 6GB T-Mobile plans, T-Mobile ONE represents a price increase. Those signed up for 10GB or unlimited service will pay the same or slightly less with T-Mobile ONE.

Jackdaw Research found customers enrolled in 2GB and 6GB T-Mobile plans will see a price increase with T-Mobile ONE. Those signed up for 10GB or unlimited service will pay the same or slightly less.

sprintlogoSprint: Unlimited Freedom: Two Lines of Unlimited Talk, Text, and Data for $100/month

Not to be outdone by T-Mobile, Sprint CEO Marcelo Claure today announced his own company’s overhaul of wireless plans, featuring the all-new Sprint Unlimited Freedom plan, which offers two lines of unlimited talk, text and data for $100 a month, with no access charges or hidden fees.

Starting Friday, Aug. 19, Sprint customers can sign up for the new plan, which costs $60 for the first line, $100 for two lines, and $30 for each additional line, up to 10. Sprint pounced on the fact its Unlimited Freedom plan for two is $20 less than T-Mobile charges.

Otherwise the two plans are remarkably similar — too similar for the CEOs of both companies that spent part of today engaged in a Twitter war.

T-Mobile CEO John Legere and Sprint CEO Marcelo Claure traded tweet barbs this morning.

T-Mobile CEO John Legere and Sprint CEO Marcelo Claure traded tweet barbs this morning.

“Sprint’s new Unlimited Freedom beats T-Mobile and AT&T’s unlimited offer – only available to its DirecTV subscribers – while Verizon doesn’t even offer its customers an unlimited plan,” read Sprint’s press release.

unlimited freedom“Wireless customers want simple, worry-free and affordable wireless plans on a reliable network,” said Marcelo Claure, Sprint president and CEO. “There can be a lot of frustration and confusion around wireless offers, with too much focus on gigabytes and extra charges. Our answer is the simplicity of Unlimited Freedom. Now customers can watch their favorite movies and videos and stream an unlimited playlist at an amazing price.”

Sprint has also essentially joined the T-Mobile optimization bandwagon, limiting streaming video to 480p, but it goes further with optimization of games — limited to 2Mbps, and music — limited to 500kbps. There does not seem to be any option to pay more to avoid the “optimization” and Sprint is not offering a tethering option with this plan.

“While we initially questioned using mobile optimization for video, gaming and music, the decision was simpler when consumers said it ‘practically indistinguishable’ in our tests with actual consumers,” said Claure. “In fact, most individuals we showed could not see any difference between optimized and premium-resolution streaming videos when viewing on mobile phone screens. Both provide the mobile customer clear, vibrant videos and high-quality audio. Mobile optimization allows us to provide a great customer experience in a highly affordable unlimited package while increasing network efficiency.”

sprint

boostAlso, beginning Friday, Aug. 19, Sprint’s leading prepaid brand, Boost Mobile introduces its own unlimited offer, Unlimited Unhook’d:

  • Unlimited talk, text and optimized streaming videos, gaming and music
  • Unlimited nationwide 4G LTE data for most everything else
  • $50 a month for one line
  • $30 a month for a second line up to five total lines

In addition to the Unlimited Unhook’d plan, Boost Mobile will also unveil the $30 Unlimited Starter plan, which includes unlimited talk, text and slower network data (2G or 3G) with 1GB of 4G LTE data. Customers looking for more high-speed data can add 1 GB of 4G LTE data for $5 per month or 2 GB of 4G LTE data for $10 per month. Multi-line plans are also available for families looking to save some money for an additional $30 a month per line.

“There’s a lot of confusion and clutter in prepaid, but is doesn’t have to be that way. Boost Mobile is offering the simplest solution with plans that are easy to understand,” said Claure. “Boost has something for everyone, whether you need a truly unlimited plan with 4G LTE data or want to save extra money with a low-cost plan.”

Consumer Groups to Tom Wheeler: Keep Pushing Forward on Real Reforms

Wheeler

Wheeler

One of the biggest surprises of the Obama Administration has been FCC chairman Thomas Wheeler, whose industry background made his appointment immediately suspect among consumer advocates, including Stop the Cap!

But over the last few years of his tenure, he has built one of the strongest pro-consumer records of accomplishments the commission has seen in decades. Not only has Wheeler outclassed Kevin Martin and Michael Powell — the two chairmen under the prior Bush Administration, he has also demonstrated strong conviction and consistency lacking from his immediate predecessor, Julius Genachowski. Wheeler has won praise from consumer groups after pushing through Net Neutrality, adding stronger terms and conditions to the Charter-Time Warner Cable-Bright House merger to extend a ban on usage caps for seven years, discouraging more wireless provider mergers, and several other pro-consumer measures dealing with persistent problems like phone bill cramming.

Many top telecom executives and lobbyists and many Republican members of Congress have been highly critical of Mr. Wheeler and have bristled at media reports suggesting he might not exit with the outgoing Obama Administration. More than a few have hinted they would like to see Wheeler depart sooner than later.

The Wall Street Journal is now questioning whether Wheeler can complete at least three more of his important agenda items before President Obama’s term ends early next year.

His “open standards” for set-top boxes reform is mired in a full-scale cable industry push-back, efforts to impose strong privacy rules on what cable and phone companies do with your private information apparently violates Comcast’s right to offer you a discount if you agree to let them monitor your online activity, and even an effort to clean up business telecommunications service rules has met opposition, mostly from the companies that are quite happy making enormous profits with the rules as written today.

“Chairman Wheeler has accomplished a lot during his tenure, but with the election fast approaching, he probably has time to get one more big thing done,” Rep. Frank Pallone of New Jersey, the top Democrat on the House Energy and Commerce Committee, told the newspaper.

Some Republicans in the Senate are holding up a vote on a second 5-year term for Democratic Commissioner Jessica Rosenworcel after hearing media reports Wheeler may be thinking of remaining as FCC chairman after the end of the Obama Administration. Wheeler’s term doesn’t expire just because the president that appointed him leaves office, but it would be unusual for Wheeler to stay. But then a lot of traditions in Washington are not necessarily good ideas and we see no reason to hurry Wheeler out of his chairmanship. The chances we will get someone as tenacious as Mr. Wheeler has proven to be from the next president is unlikely. Those blocking the vote on Ms. Rosenworcel are playing the usual Washington power games, simply looking for a commitment Wheeler will leave with President Obama.

Wheeler has few allies among Republicans, who don’t like his Net Neutrality policies, don’t want Wheeler’s open-standard set-top box plan, and believe he is a regulator more than a preferred deregulator. Rosenworcel has recently been wavering on support for Wheeler’s set-top box plan and his internet privacy plan, which worries us because her vote is critical to assure passage. Rosenworcel could be trying to be seen as an independent to improve her chances at winning reappointment, but she risks alienating consumer groups if she sides with the two Republican FCC commissioners, who have shown themselves to be engaged in almost open warfare against consumers. Rosenworcel would do better to vote with consumers and avoid any appearance she is more interested in protecting her position in Washington.

“Sure, there are headwinds, but that’s often a sign that they’re doing something right,” Todd O’Boyle, program director for the media and democracy reform initiative at Common Cause told the newspaper. “There’s reason to think that the FCC will advance all three reforms.”

As far as Mr. Wheeler, as long as he represents the interests of the American people over those of AT&T and Comcast, he should feel free to stay as long as his term allows.

Verizon 5G: Finally a “Fiber” Broadband Service Verizon Executives Like

verizon 5gIt wasn’t difficult to understand Verizon’s sudden reticence about continuing its fiber to the home expansion program begun under the leadership of its former chairman and CEO Ivan Seidenberg. Starting his career with Verizon predecessor New York Telephone as a cable splicer, he worked his way to the top. Seidenberg understood Verizon’s wireline future as a landline phone provider was limited at best. With his approval, Verizon began retiring decades-old copper wiring and replaced it with fiber optics, primarily in the company’s biggest service areas and most affluent suburbs along the east coast. The service was dubbed FiOS, and it has consistently won high marks from customers and consumer groups.

Seidenberg

Seidenberg

Seidenberg hoped by offering customers television, phone, and internet access, they would have a reason to stay with the phone company. Verizon’s choice of installing fiber right up the side of customer homes proved highly controversial on Wall Street. Seidenberg argued that reduced maintenance expenses and the ability to outperform their cable competitors made fiber the right choice, but many Wall Street analysts complained Verizon was spending too much on upgrades with no evidence it would cause a rush of returning customers. By early 2010, Verizon’s overall weak financial performance coupled with Wall Street’s chorus of criticism that Verizon was overspending to acquire new customers, forced Seidenberg to put further FiOS expansion on hold. Verizon committed to complete its existing commitments to expand FiOS, but with the exception of a handful of special cases, stopped further expansion into new areas until this past spring, when the company suddenly announced it would expand FiOS into the city of Boston.

Seidenberg stepped down as CEO in July 2011 and was replaced by Lowell McAdam. McAdam spent five years as CEO and chief operating officer of Verizon Wireless and had been involved in the wireless industry for many years prior to that. It has not surprised anyone that McAdam’s focus has remained on Verizon’s wireless business.

McAdam has never been a booster of FiOS as a copper wireline replacement. Verizon’s investments under McAdam have primarily benefited its wireless operations, which enjoy high average revenue per customer and a healthy profit margin. Over the last six years of FiOS expansion stagnation, Verizon’s legacy copper wireline business has continued to experience massive customer losses. Revenue from FiOS has been much stronger, yet Verizon’s management remained reticent about spending billions to restart fiber expansion. In fact, Verizon’s wireline network (including FiOS) continues to shrink as Verizon sells off parts of its service area to independent phone companies, predominately Frontier Communications. Many analysts expect this trend to continue, and some suspect Verizon could eventually abandon the wireline business altogether and become a wireless-only company.

With little interest in maintaining or upgrading its wired networks, customers stuck in FiOS-less communities complain Verizon’s service has been deteriorating. As long as McAdam remains at the head of Verizon, it seemed likely customers stuck with one option – Verizon DSL – would be trapped with slow speed internet access indefinitely.

Verizon's FiOS expansion is still dead.

Verizon’s FiOS expansion rises from the dead?

But McAdam has finally shown some excitement for a high-speed internet service he does seem willing to back. Verizon’s ongoing trials of 5G wireless service, if successful, could spark a major expansion of Verizon Wireless into the fixed wireless broadband business. Unlike earlier wireless data technologies, 5G is likely to be an extremely short-range wireless standard that will depend on a massive deployment of “small cells” that can deliver gigabit plus broadband speeds across a range of around 1,500 feet in the most ideal conditions. That’s better than Wi-Fi but a lot less than the range of traditional cell towers offering 4G service.

What particularly interests McAdam is the fact the cost of deploying 5G networks could be dramatically less than digging up neighborhoods to install fiber. Verizon’s marketing mavens have already taken to calling 5G “wireless fiber.”

“I think of 5G initially as wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer,” said McAdam during Verizon’s second-quarter earnings call. “With wireless fiber the so-called last mile can be a virtual connection, dramatically changing our cost structure.”

McAdam

McAdam

Verizon’s engineers claim they can build 5G networking into existing 4G “small cells” that are already being deployed today as part of Verizon’s efforts to increase the density of its cellular network and share the increasing data demands being placed on its network. In fact, McAdam admitted Verizon’s near-future would not depend on acquiring a lot of new wireless spectrum. Instead, it will expand its network of cell towers and small cells to cut the number of customers trying to share the same wireless bandwidth.

McAdam’s 5G plan depends on using extremely high frequency millimeter wave spectrum, which can only travel line-of-sight. Buildings block the signal and thick foliage on trees can dramatically cut its effective range. That means a new housing development of 200 homes with few trees to get in the way could probably be served with small cells, if mounted high enough above the ground to avoid obstructions. But an older neighborhood with decades-old trees with a significant canopy could make reception much more difficult and require more small cells. Another potential downside: just like Wi-Fi in a busy mall or restaurant, 5G service will be shared among all subscribers within range of the signal. That could involve an entire neighborhood, potentially reducing speed and performance during peak usage times.

Verizon won’t know how well the service will perform in the real world until it can launch service trials, likely to come in 2017. But Verizon has also made it clear it wants to be a major, if not dominant player in the 5G marketplace, so plenty of money to construct 5G networks will likely be available if tests go well.

Ironically, to make 5G service possible, Verizon will need to replace a lot of its existing copper network it has consistently refused to upgrade with the same fiber optic cables that make FiOS possible. It needs the fiber infrastructure to connect the large number of small cells that would have to be installed throughout cities and suburbs. That may be the driving force behind Verizon’s sudden resumed interest in restarting FiOS expansion this year, beginning in Boston.

“We will create a single fiber optic network platform capable of supporting wireless and wireline technologies and multiple products,” McAdam told investors. “In particular, we believe the fiber deployment will create economic growth for Boston. And we are talking to other cities about similar partnerships. No longer are discussions solely about local franchise rights, but how to make forward-looking cities more productive and effective.”

If McAdam can convince investors fiber expansion is right for them, the company can also bring traditional FiOS to neighborhoods where demand warrants or wait until 5G becomes a commercially available product and offer that instead. Or both.

There are a lot of unanswered questions about how Verizon will ultimately market 5G. The company could adopt its wireless philosophy of not offering customers unlimited use service, and charge premium prices for fast speeds tied to a 5G data plan. Or it could market the service exactly the same as it sells essentially unlimited FiOS. Customer reaction will likely depend on usage caps, pricing, and performance. As a shared technology, if speeds lag on Verizon’s 5G network as a result of customer demand, it will prove a poor substitute to FiOS.

Comcast Still Telling Funny Stories to Wall Street About Usage Caps/Usage-Based Billing

xfinityOn a morning conference call with Wall Street analysts, Comcast continues to misrepresent its vision of broadband usage caps and usage-based billing, claiming customer preferences echoed through Comcast’s performance in the marketplace will tell the company what is “best for consumers,” and guide Comcast how to realize the most value for shareholders.

Wall Street is very interested in usage caps and usage-based billing because cable operators can protect video revenue threatened by cord-cutting and boost revenue earned from customers who exceed their allowance.

Vijay Jayant, and analyst at Evercore ISI, quickly zeroed in on the potential loss of anticipated revenue from Comcast’s recent decision to boost its data cap from 300GB to 1TB, something Jiyant characterized as a “hurdle” for future usage-related charges.

“Well we have one terabyte. We moved it up from 300 gigabyte to one terabyte in 14% of our markets where we have usage-based pricing,” responded Neil Smit, Comcast Cable’s president and CEO. “We think we’re going to continue to adjust and look at it as the market evolves and as usage evolves. We have different pricing models, some based on speed, some based on usage, and we’re going to be flexible and kind of let the market tell us which way is best for consumers and how we add the most value. We continue to add speeds. We’ve upped speeds 17 times in 15 years. We’ve built out the fastest Wi-Fi. So we’re going to continue to invest in the network to stay ahead of things.”

Smit’s response was incomplete, however.

Smit

Smit

Comcast’s usage and speed-based pricing models are hardly “flexible” and do not co-exist in the same markets. Customers are compelled to obey Comcast’s usage cap, face overlimit fees up to $200 a month, or pay an additional $50 a month to buy back their old unlimited use service. In Comcast markets without usage caps, the cable company only sells speed-based internet tiers with no enforced caps.

Comcast has consciously avoided allowing customers to choose between speed-based or usage-based tiers, because years of experience among other cable operators quickly proved customers intensely dislike usage caps of any kind. In fact, the largest percentage of complaints filed with the FCC about Comcast are about its compulsory usage cap trial and the fees associated with it.

One reason for that hostility may be that Comcast’s broadband prices do not drop as a result of the introduction of usage caps in a service area. The customer effectively receives a lower value broadband product as a result of its arbitrary usage limit, and the potential exposure to overlimit fees or a very expensive “insurance” plan to avoid the cap altogether. Earlier trials offered some customers a small discount if they kept usage under 5GB a month, a difficult prospect for most and in any case not much of a revenue threat for Comcast.

Comcast-marchIf Comcast was seriously interested in what its customers think about its usage cap trial, it need only review the FCC’s complaint database. According to a Freedom of Information Law request from The Wall Street Journal, nearly 8,000 complaints received by the FCC in the second half of 2015 were about data caps, and most of those were directed at Comcast.

Comcast’s claim it will let the marketplace decide only delivers a distorted view about usage caps, because many Comcast customers have only one other competitive choice, and there is a significant chance that provider caps customer’s broadband usage as well. AT&T, for example, caps its customers at a level even stingier than Comcast. Those caps have not been enforced with overlimit fees on customer bills (except for AT&T’s DSL customers), although AT&T suggests it is getting serious about collecting future overlimit fees. If Comcast gains new customers leaving AT&T to avoid smaller caps, Comcast executives seem to believe they can claim consumers have ’embraced’ Comcast’s usage billing. But we know that is about as credible as an election in North Korea.

Time Warner Cable has been one of the few honest players about usage billing, giving customers the option of keeping unlimited or switching to a capped plan for a discount. More than 99% of customers have chosen to stay with unlimited and only a few thousand have chosen to limit their usage for a small discount. An honest market test from Comcast would extend a similar option to customers. Keep unlimited or voluntarily limit usage for a small discount. Given this kind of test, we expect the overwhelming majority of customers would keep unlimited at all costs. Doing so would hurt shareholder value, however.

The only value Comcast is concerned with is how much more money they can charge customers for broadband service. In America’s broadband duopoly, where speed-based broadband pricing is already outrageously high, usage caps and usage billing are nothing more than a greedy cash grab. When money is at stake, reputation comes in a distant second at Comcast, as the company continues to prove its poor reputation with American consumers is well-deserved.

Netflix on Your Comcast Set-Top Box Will Count Against Your Usage Allowance

Comcast-LogoLater this year, Comcast customers will be able to watch Netflix content with the cable company’s X1 set-top box.

At the time the deal was first announced, there was no word whether Comcast would apply its usage caps on Netflix usage, but Ars Technica reports Comcast will, in fact, count Netflix content you watch with an X1 against your monthly internet usage allowance.

“All data that flows over the public internet (which includes Netflix) counts toward a customer’s monthly data usage,” a Comcast spokesperson said.

Comcast has been gradually imposing its 1TB cap in an increasing number of service areas, where customers face paying an extra $50 a month for an unlimited plan or up to $200 a month in overlimit penalties for exceeding that allowance.

As of now, only Comcast’s own Stream TV is exempt from Comcast’s usage caps. Comcast claims its streaming service doesn’t qualify for its usage caps because it uses Comcast’s own internal network, not the public internet, to reach customers.

 

GCI’s Stingy Caps About to Get a Boost

gciBroadband life in Alaska is usually a choice (if you live in Fairbanks, Anchorage, Juneau, or another significantly sized city) between usage-capped cable operator GCI or slow-speed DSL (if you can get it) from Alaska’s two telephone companies – ACS, where unlimited service is still available, or MTA, where a 10Mbps Internet plan starts at $50 and offers up to 50GB of usage a month.

GCI has traditionally been the fastest option, but the company’s usage caps and high prices have brought scores of complaints from customers over the years. A basic 10/1Mbps internet plan costs $59.99 a month and only includes 40GB of usage. Many Alaskans who want faster access with a more reasonable allowance have to spend $84.99 a month for 50/3Mbps access to get a 150GB usage allowance or $134.99 for 100/5Mbps service with 300GB of included usage.

Late last week, GCI announced it was boosting the usage allowance for just one of its plans, the premium-priced, limited availability 1,000/50Mbps plan ($174.99), which until recently included a 750GB usage allowance. The new usage allowance is 1TB (1,000GB).

“In today’s connected society, people are demanding more and more access to data at incredibly fast speeds,” said Paul Landes, GCI’s senior vice president/general manager of consumer services. “GCI is proud to have a product that keeps our customers connected in ways people in Boston and LA can’t even receive. Even better, we are able to provide these upgrades at no additional cost to our loyal customers.”

Alaskans face high prices for internet access from GCI, the state's largest cable company.

Alaskans face high prices for internet access from GCI, the state’s largest cable company.

Gigabit customers like Stop the Cap! reader Dave Langhorn certainly hoped so.

“This is long overdue,” said Langhorn. “For $175 a month, there shouldn’t be any data caps, considering unlimited gigabit plans in the lower-48 often sell for $70-80 a month, which is less than half what we pay and still get capped.”

Our reader Michael Horton is incensed that GCI managed a usage allowance boost for its most premium internet plan, while leaving everyone else with the same old service.

“We shouldn’t be allowing any ISPs to restrict usage on their networks,” said Horton. “You should be paying for the speed that you use and nothing more.”

Horton considers data caps anachronistic at a time when the digital economy is moving towards online distribution of products and services like movies, games, software, and other digital products. Even Windows 10 has been more often installed from a download than from physical media.

GCI has promised to address at least one of Horton’s concerns, stating they are planning speed boosts and allowance upgrades for all of their internet plans at an unspecified time later this year.

GCI says the allowance boost comes in response to customer requests from surveys and “listening sessions.”

Horton and Langhorn both believe that those voices would be heard much louder if GCI had more significant competition.

“ACS is the only alternative if you want unreliable speed,” Horton writes.”They don’t have bandwidth caps, but you will be unable to use their service efficiently if you are a gamer or watch Netflix a lot.”

 

Wurl Network’s New IP-Streaming Cable TV Networks Blur Net Neutrality/Usage Caps

wurlVideo programmers that want to avoid the problem of usage allowances that can deter internet video streaming have a new way to make an end run around Net Neutrality, distributing their content “cap-free” through “virtual cable channels” that are distributed over broadband, but appear like traditional cable TV channels on a set-top box.

This morning, Fierce Cable noted Wurl’s IP-based streaming cable television network platform was here, offering cable operators new cable channels that are actually delivered over the customer’s internet connection. The Alt Channel, Streaming News Network, The Sports Feed and Popcornflix will appear on set-top boxes and onscreen guides like traditional linear cable channels, starting in August. Wurl claims at least 51, mostly small and independent cable operators, have already signed up for the service, which could quickly expand to 10-12 channels in the future. But Multichannel News has confirmed only one partner so far — Fidelity Communications, a small cable operator serving parts of Arkansas, Louisiana, Missouri, Oklahoma and Texas.

What makes these channels very different from the other networks on the lineup is that they are delivered over the customer’s internet connection directly into a cable set-top box, and will generally be exempt from any usage allowances or caps providers impose on broadband usage. Wurl acts as a distributor, obtaining content from “popular online studios” that “until now has only been available on computers and mobile devices.” Wurl’s partners can get their content exposed on traditional cable TV to a potentially greater audience, who can watch while not worrying about using up their monthly internet usage allowance.

wurl_channels_brackets_large

The first series of bracketed channels are Wurl-TV broadband based channels, while the second are traditional linear cable networks delivered by RF or QAM. Both integrate seamlessly into the cable set-top box’s on-screen program guide.

Wurl’s unicast approach relies on its own content delivery network to provide one internet stream for each set-top box accessing its programming, which also allows for support of on-demand programming. But every cable customer watching a Wurl channel is effectively streaming video over their internet connection. Cable operators usually blame internet video for consuming most of their available internet bandwidth, necessitating the “need” for usage allowances/caps or usage based billing to manage and pay for bandwidth “fairly.” netneutralityYet Wurl’s networks consume just as much bandwidth as traditional online video. But because Wurl is partnering with cable operators, that content is not subject to the usage caps Netflix, Hulu, or Amazon Video customers have to contend with.

Wurl claims its approach is so cable-operator friendly, “there’s no reason to say no,” said Sean Doherty, Wurl’s CEO and co-founder.

Cable operators are offered Wurl channels for free, with no affiliate fees or upfront costs, and no significant technology costs since the channels are distributed direct to the set-top box over broadband, not RF or QAM. A video player is embedded into the virtual cable channel, which allows viewers to pause, rewind, and fast forward programming.

In the future, cable systems are expected to gradually transition to IP-delivery of all of their video content, turning the cable TV line in your home into one giant broadband connection, across which television, internet access, and phone service are delivered.

But cable operators are still making distinctions between services that are gradually becoming different in name only. If a customer watches a Wurl channel over the internet on their desktop, that would count against their usage allowance. But if they watch over a cable-TV set-top box, it won’t, despite the fact the journey the channel takes to reach the viewer is exactly the same. That gives certain content providers an advantage others lack, representing a classic end run around Net Neutrality.

To be fair, that is not a distinction Wurl has made in any of its marketing material, but the fact preferred content can be managed this way is just one more reason the FCC should ban usage caps and usage-based billing on consumer internet accounts. Wurl’s own marketing material tells operators the cost and impact of its video streaming on the cable operator’s existing infrastructure is next to zero… because Wurl’s content comes across broadband platforms already so robust, they can easily accommodate the potential of thousands of viewers all watching Wurl channels without any issues. That reality undermines the cable industry’s own questionable arguments about the need for data caps or usage billing.

CenturyLink: Usage-Based Billing That Makes No Sense, But Will Earn Dollars

followthemoneyCenturyLink will begin a usage-based billing trial in Yakima, Wa., starting July 26 that will combine usage caps with an overlimit fee on customers that exceed their monthly usage allowance. The trial in Washington state may soon be a fact of life for most CenturyLink customers across the country, unless customers rebel.

Already at a speed disadvantage with its cable competitors, CenturyLink will likely alienate customers with a new 300GB usage cap on DSL customers who can manage speeds up to 7Mbps, and 600GB for those lucky enough to exceed 7Mbps. Customers will be given a browser-injected warning when they reach 65% and 85% of their allowance. If a customer exceeds it, they will have overlimit fees forgiven twice before the usual de facto industry overlimit penalty rate of $10 for 50 additional gigabytes will be added to their bill, not to exceed $50 in penalties for any billing cycle.

DSL Reports received word from readers in Yakima they had the unlucky privilege of serving as CenturyLink’s first test market for hard caps and overlimit fees, and was the first to bring the story to the rest of the country.

CenturyLink hasn’t wanted to draw much attention to the usage-based billing change, quietly adjusting their “excessive usage policy FAQ” that takes effect on July 26. But it has begun directly notifying customers who will be enrolled in the compulsory trial.

“Data usage limits encourage reasonable use of your CenturyLink High Speed Internet service so that all customers can receive the optimal internet experience they have purchased with their service plan,” states the FAQ.

But counterintuitively, CenturyLink will exempt those likely to consume even more of CenturyLink’s resources than its low-speed DSL service allows by keeping unlimited use policies in place for their commercial customers and those subscribed to gigabit speed broadband.

CenturyLink’s justification for usage caps with customers seems to suggest that “excessive usage” will create a degraded experience for other customers. But CenturyLink’s chief financial officer Stewart Ewing shines a light on a more plausible explanation for CenturyLink to slap the caps on — because their competitors already are.

“Regarding the metered data plans; we are considering that for second half of the year,” Ewing told investors on a conference call. “We think it is important and our competition is using the metered plans today and we think that exploring those starts and trials later this year is our expectation.”

CenturyLink's overlimit penalties (Image courtesy: DSL Reports)

CenturyLink’s new overlimit penalties (Image courtesy: DSL Reports)

In fact, CenturyLink has never acknowledged any capacity issues with their broadband network, and has claimed ongoing upgrades have kept up with customer usage demands. Until now. On the west coast, CenturyLink’s competitors are primarily Comcast (Pacific Northwest) and Cox Communications (California, Nevada, Arizona). Both cable operators are testing usage caps. In many CenturyLink markets further east, Comcast is also a common competitor, with Time Warner Cable/Charter present in the Carolinas. But in many of the rural markets CenturyLink serves, there is no significant cable competitor at all.

Usage Cap Man is back.

Usage Cap Man is back, protecting high profits and preserving the opportunity of charging more for less service.

As Karl Bode from DSL Reports points out, for years CenturyLink has already been collecting a sneaky surcharge from customers labeled an “internet cost recovery fee,” supposedly defraying broadband usage and expansion costs. But in the absence of significant competition, there is no reason CenturyLink cannot charge even more, and also enjoy protection from cord-cutting. Customers who use their CenturyLink DSL service to watch shows online will face the deterrent of a usage cap. Customers subscribed to CenturyLink’s Prism TV will be able to access many of those shows on-demand without making a dent in their usage allowance.

For years, American consumers have listened to cable and phone companies promote a “robust and competitive broadband marketplace,” providing the best internet service money can buy. But in reality, there is increasing evidence of a duopoly marketplace that offers plenty of opportunities to raise prices, cap usage, and deliver a substandard internet experience.

As Stop the Cap! has argued since 2008, the only true innovations many phone and cable companies are practicing these days are clever ways to raise prices, protect their markets, and cut costs. Consumers who have experienced broadband service in parts of Asia and Europe understand the difference between giving customers a truly cutting-edge experience and one that requires customers to cut other household expenses to afford increasingly expensive internet access.

We recommend CenturyLink customers share their dislike of CenturyLink’s style of “innovation” in the form of a complaint against usage caps and usage-based billing with the FCC. It takes just a few minutes, and adding your voice to tens of thousands of Americans that have already asked the FCC to ban usage caps and usage pricing will keep this issue on the front burner. It will help strengthen our case that providers must stop treating internet usage as a limited resource that has to be rationed to customers. Wall Street believes the FCC has given a green light to usage caps and usage pricing, and the risk of attracting regulator attention by imposing higher broadband prices on consumers is pretty low. We need to change that thinking so analysts warn providers against being too greedy, out of fear the FCC will impose a regulatory crackdown.

Cox’s Data Limbo Dance: Slashes “Ultimate” Allowance in Half, Lies About Why

Cox's data plan limbo dance. How low can they go?

Cox’s data plan limbo dance. How low can they go?

Cox Communications has cut by half the data usage allowance of one of its fastest broadband plans targeting so-called “heavy users,” exposing unsuspecting customers to expensive overlimit fees, while claiming usage caps are now mandated by law.

Stop the Cap! reader John C. wrote to tell us he discovered his allowance for Cox’s “Ultimate” Plan, delivering 200/20Mbps, has been slashed from 2,000GB to 1,000GB, with little warning except in an obscure support FAQ.

“About 95% of Cox customers are currently on a data plan that more than adequately meets the monthly needs of their household,” Cox claimed. “However, some households, particularly those with multiple Internet users that enjoy streaming TV or movies, may want to select an Internet package with a larger data plan. That is why we offer plans for all types of users so you can choose what is best for your household.”

The plan that most customers want is a flat rate, unlimited-use plan, one that Cox has unilaterally decided to stop offering. Just as bad: targeting the most widely available premium plan for a major usage allowance cut with no explanation whatsoever. It’s bad news for John, who says after paying Cox their asking price for Ultimate service, he cannot afford to also pay overage fees on top of that (currently $10 for each 50GB allotment, charged only in the Cleveland, Oh. area for now).

Customers who contact Cox and complain about their usage caps or allowance changes are being told false fables by Cox’s customer service specialists, who claim data caps are now the law in the United States.

Here is an example of an actual support session with Cox employees, (emphasis ours, edited (…) for brevity):

cox say noYou: I also learned that you have internet data cap?

Jenna: Data limits were implemented by the FCC in 2011. By law, we have to have them. If you exceed the limit for 3 consecutive months, you will be contacted to discuss your options for upgrading.

You: FCC? can you send me details about that

[…]

Jenna: As I mentioned, there’s no fee for exceeding those limits. If you exceed the limit for 3 consecutive months, you will be contacted to discuss your options for upgrading. You can save a copy of this chat transcript for your records if you wish.

Jenna: I can also get you over to Customer Care for more information.

You: so why would you mention FCC rules then?

Jenna: Because you asked about our data limits.

Jenna: That’s why we have them.

You: Sure so can you tell me what FCC rule from 2011 you are referrind to?

Jenna: Sure, I’ll get you the link to the FCC website.

[…]

Jenna: Sure thing. Allow me a moment to get you over to Customer Care chat for further information about our Data Caps policies, and why we have them.

[…]

Christian O.: I see, well our Internet packages have a data usage limit however if you exceed that limit we won’t downgrade your speed or restrict your access to Internet or charge you more.

Christian O.: I think I found some information on the date usage and the FCC on 2011. One moment, please.

You: but it says right there that you will cahrge $10 for 50GB after I reach data cap

You: And FCC is very strict about data caps

Christian O.: Give me a moment to check something.

You: ok thanks

Christian O.: If you exceed your data plan, Cox may notify you by email to alert you. Your service will not be interrupted if you choose to stay on your existing package except in the rare cases of excessive usage. In those extremely rare situations, Cox may suspend service after attempting to resolve the issue.

Christian O.: Cox is conducting a limited data usage trial in Cleveland, Ohio. In all other markets, Cox does not currently charge additional fees if your data plan is exceeded.

You: what you are doing with data caps / usage is illegal

You: But please send me the FCC rule from 2011 that Jenna and you mention

You: “Jenna: Data limits were implemented by the FCC in 2011. By law, we have to have them.”

Christian O.: I don’t have such rule that talks about that. Do you have the rule where it says that is illegal?

Christian O.: Just asking.

[…]

Christian O.: Honestly I don’t have any idea about the rule that Jenna was speaking about. Let me go ask my supervisor. One moment, please.

[…]

Christian O.: Unfortunately we couldn’t find any information about that rule established by the FCC.

To clarify, the FCC neither has rules for or against data caps. It has remained neutral on the subject, although FCC chairman Thomas Wheeler recently advocated imposing a moratorium on data caps or usage billing for up to seven years as a condition of approving Charter Communications’ acquisitions of Time Warner Cable and Bright House Networks.

Here are Cox’s current data plans, which are effective for all residential customers. However, only customers in Cleveland will face penalties for exceeding them at this time.

Package Monthly Included Data Speeds

Download / Upload

Starter 200 GB 5 Mbps / 1 Mbps
Essential 250 GB 15 Mbps / 2 Mbps
Preferred 350 GB 50 Mbps / 5 Mbps
Premier 700 GB 100 Mbps / 10 Mbps
Ultimate 1000 GB 200 Mbps / 20 Mbps
Gigablast (Where Available) 2000 GB 1 Gbps / 1 Gbps

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