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Texas Customer Goes to War With Time Warner Cable & AT&T Over Internet Overcharging After Getting Huge Bill

Phillip Dampier June 16, 2009 AT&T, Data Caps 27 Comments
Beaumont & Golden Triangle residents were the first to participate in a Time Warner Cable Internet Overcharging trial

Beaumont & Golden Triangle, Texas residents were the first to face Time Warner Cable Internet Overcharging experiments.

For awhile there, it seemed like nobody in the Golden Triangle on the Gulf Coast of Texas was paying attention to the fact their region was the nation’s guinea pig for Internet Overcharging schemes.  How wrong we were.

Stop the Cap! reader Mark, who lives just north of Beaumont in the city of Silsbee, had been fighting a one man battle against not one, but two providers serving his community of 7,400 — Time Warner Cable and AT&T.  Mark may exemplify the average consumer in the Golden Triangle, unaware that their broadband service had been subjected to Internet Overcharging experiments until the bill arrived in the mail.  Both providers have a track record of not always disclosing such schemes to their customers when trying to sign them up for service in southeastern Texas.

Both providers have used the area for pricing experiments, providing paltry usage allowances and charging steep overlimit fees for exceeding them.

Mark’s problems began when he unknowingly set himself up to be overcharged later.  Originally a Time Warner Cable customer, Mark decided to give AT&T’s Elite DSL package a try, primarily because it was less expensive than Road Runner service and supposedly faster as well.  AT&T claims their Elite DSL service in Silsbee provides up to 6Mbps down/768kbps up speed for $35 a month, compared with Time Warner Cable’s Golden Triangle Road Runner, providing (at the time) 5Mbps down/384kbps up speed for $44.95 a month.

“After DSL was installed, we discovered we were too far from the [phone company facilities] to get Elite speed, and instead of informing us about the problem, they switched us to Basic service speed, which is up to 768kbps down/384kbps up, and never bothered to tell us,” Mark writes.

The bill Stop the Cap! reader Mark received showing $73 in Internet Overcharging penalties

The bill Stop the Cap! reader Mark received showing $73 in Internet Overcharging penalties (click to enlarge)

After Mark’s family felt AT&T was too slow to meet their needs, they ventured back to Time Warner Cable for Road Runner service.  The salesperson offered a “welcome back” discount, and mentioned nothing about the fact Time Warner Cable had implemented an Internet Overcharging scheme on the residents of the Golden Triangle region.  Instead of his old service priced at $44.95 a month for unlimited use, his new standard service was priced at $54.95 a month, and was limited to 20GB of usage per month before a $1/GB overlimit penalty kicked in.

When the first bill arrived showing his family exceeded that amount, it was quite a shock.  In addition to the $54.95 charge for “Roadrunner Residential”, there was a $73.00 fee entitled, “Road Runner Select Plan Additional Usage.”  (They also nickle and dimed him $0.99 for a “Paper Invoice Fee.”)

This was the first time Mark had encountered an “additional usage” overlimit fee, so he called Time Warner Cable to investigate.  Despite what the salesperson had sold him on, and online promotions were still selling to attract new customers, Mark learned for the first time Time Warner Cable changed pricing.  The Golden Triangle Division of Time Warner Cable implemented an Internet Overcharging scheme in June 2008, but only applied it to new customers.  Had Mark never left Time Warner Cable for AT&T, he would have never been an unwilling participant in the experiment to extract an extra $73 from his wallet.

Because he returned to Time Warner Cable after the “experiment” commenced, he was stuck.

Mark was angry.  He contacted the Better Business Bureau (BBB), the Federal Trade Commission, and the Federal Communications Commission to complain about unfair business practices, improper disclosure of the Internet Overcharging scheme, and abusive pricing.

Time Warner Cable's 4/7/09 letter in response to a Better Business Bureau complaint regarding Internet Overcharging schemes implemented in the Golden Triangle, Texas (click to enlarge)

Time Warner Cable's 4/7/09 letter in response to a Better Business Bureau complaint regarding Internet Overcharging schemes implemented in the Golden Triangle, Texas (click to enlarge)

The most productive response came from Time Warner Cable, responding to the BBB complaint Mark had filed.  In addition to giving the standard talking points about Internet Overcharging schemes, Alberto Morales, Southwest Division Customer Advocate for Time Warner Cable, suggested the company would do a better job of training salespeople to disclose “the disclaimer regarding the consumption based billing when processing a new Roadrunner order.”  Morales also issued a one time credit for the $73 in overlimit fees charged to Mark’s account.

Mark recognized the language of the letter for what it was — propaganda from a cable broadband provider looking to cash in at the expense of their customers.  Among the dubious reasons given in the letter:

It’s also recognized that the Internet was not designed to handle the mass amounts of video that are now being consumed, therefore there is a risk that service speeds could slow down dramatically.  Video over the internet is an interesting and growing phenomenon.

So are Internet Overcharging schemes, but few would call them “interesting.”  Using the company’s own logic, Time Warner Cable should not be placing video on their own customer website, much less embark on a grand experiment called TV Everywhere to stream enormous amounts of video at broadband speeds to their customers.  Now that is interesting.  The “Internet brownout” theory of slowdowns and outages can occur when a provider chooses to pocket profits instead of keeping up with required investments to maintain their broadband network.  Time Warner Cable CEO Glenn Britt disputes there is a problem with Time Warner Cable’s network as-is, telling a conference sponsored by Sanford Bernstein in May that, “I’m very comfortable with our plant… I don’t see a need for a massive upgrade.”

By implementing the Roadrunner Select Plan (where a customer can choose the level of speed they desire for their internet use), each level has its own cap of bandwidth consumption allowance per month.

Of course, customers cannot choose the one plan that has been an outstanding success for Time Warner Cable since its inception – the one they have right now (or had in the Golden Triangle prior to the “experiment”), unless they were willing to pony up 300% more for the same level of service, based on the last proposal Time Warner Cable introduced before temporarily “shelving the plan” due to customer outrage.

In the Golden Triangle, the maximum amount of usage was 40GB per month, followed by “the sky is the limit” $1/GB overlimit penalties.

Morales claimed that only “5% of users actually exceed their limit.”  But 100% of the Golden Triangle’s customers were left waiting for the arrival of a “gas gauge” measuring their usage, something they would now be required to check daily if they wanted to be sure not to exceed the paltry level of “bandwidth allowance” they were granted.

Time Warner Cable's follow-up letter of 4/29/09, in response to Mark's complaints that he was never told about the Internet Overcharging plan which subjected him to a 20GB monthly limit and $73 in overlimit penalties. (We assume the June 6, 2009 reference is a typo and should have read 2008) (click to enlarge)

Time Warner Cable's follow-up letter of 4/29/09, in response to Mark's complaints that he was never told about the Internet Overcharging plan which subjected him to a 20GB monthly limit and $73 in overlimit penalties. (We assume the June 6, 2009 reference is a typo and should have read 2008) (click to enlarge)

Mark wasn’t sold by any of the arguments Morales was making.  That’s because he read Time Warner Cable’s own shareholder documents, as he had been accustomed to doing since he bought shares himself.  They told a very different story — one he shared in a letter to Morales:

“In 2007, Time Warner made $3,730 million dollars on high speed data alone, and then had to turn around and spend $164 million to support the cost of the network,” Mark writes. “In 2007, total profit on high speed data was $3.566 BILLION dollars.”

He adds, “in 2008, Time Warner made $4,159 million dollars on high speed data alone, and then spent just $146 million to support the cost of the network, a decline from the year past.  Total profit in 2008 on high speed data: $4.013 BILLION dollars.”

Mark realized “it cost Time Warner 11% less money to keep their network running in 2008 than in 2007.”

He also knew Time Warner Cable’s experiment in his city was done where the only alternative was his AT&T DSL service, which hardly offered comparable competition.

In a follow-up letter responding to Mark in late April (after the four city experiment was shelved), Time Warner Cable made it very clear their position was firmly planted in the ground:

“There are no plans to deviate from the consumption based billing plan.”

The company also elected to blame the customer for not understanding that an Internet Overcharging scheme had been introduced in the first place.

“When a customer goes online at www.roadrunneroffers.com, a disclaimer appears on the page with the first sentence including the following, “Subject to change without notice.  Some restrictions may apply.  Installation fees may apply.” This information is in view for anyone to read before proceeding with an order entry.

The fact this kind of disclaimer is, in the company’s view, sufficient notice for implementing Internet Overcharging schemes, is hardly adequate.

“We eventually dropped them again,” Mark writes. “We thought a usable slower Internet was better than a faster one we were not going to use.”

Mark realized Time Warner Cable’s business practices and models aren’t a good fit for the way he feels companies should treat their customers, and he dumped his Time Warner Cable stock and did what so many customers have also chosen to do: use the one word Time Warner Cable did seem to understand during their Internet Overcharging experiment:  C A N C E L.

As long as broadband providers continue to believe that Internet Overcharging schemes are the best way to protect their business models and leverage even more profits from their broadband division, action on every front, from legislative to direct consumer protest and refusal to do business with such companies remain the best course of action.

Stop the Cap! will continue to help deliver that action, along with a consumer education campaign that doesn’t require focus group testing to sell, because it’s based on common sense and not dollars.

Still to Come: Mark takes his battle to AT&T and gets an upper level AT&T retention agent to mark his account “exempt” from Internet Overcharging fees and penalties.  Perhaps you can, too!

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jr
jr
12 years ago

Kudos to Mark for fighting back against the corporate thugs

BrionS
Editor
12 years ago

Way to go Mark! The only way to get the message across to Time Warner (and others) is to reduce or eliminate their revenue from the products they wish to unreasonably shackle. It certainly is doublespeak for TWC (or any other ISP) to say large downloaders and video are the problem from one side of their mouth and then offer downloadable on-demand video services and have 3-minute flash movies touting how much better their service is. Let’s see…. short intro flash movie is probably about 5 MB of data. Each visitor to the site who watches the entire thing has… Read more »

Smith6612
Smith6612
12 years ago
Reply to  BrionS

Considering that this topic is on data usage, may I just point out that within the last 3 and a half hours, my PC has transferred 1.56GB of data from/to the internet, and this is from video watching, gaming, and some off-site file backups. By the end of tonight I’m sure that I’ll be hitting 6GB of total internet usage for my network, at a minimum. Tiered usage is terrible especially for a family. You never know especially when you have kids in the household, who have their game consoles, PCs, handhelds, etc how much they’re going to use, and… Read more »

Oscar@SA
12 years ago

TWC has this regarding caps on their FAQ:

Question:
What is Time Warner Cable doing?
Answer:
We don’t have any specific plans at this point other than to begin a conversation with customers and other people who have an interest in this. As we move along we will be very open and transparent about any future plans that might develop as a result.

link here:
http://www.timewarnercable.com/SanAntonio/site.faqs/HighSpeedO/Consumptio/What-is-Time-Warner-Cable-doin

open and transparent??? I think it is time to push for some regulation/bill to stop the crap before they implement it somewhere else…

Greg
Greg
12 years ago

kudos to Phillip – this is exactly the type of PROOF we need to fight the companies who are or plan to implement “Internet Overcharging Schemes”. The average public needs these types of stories to understand what is at stake.

Greg

Tim
Tim
12 years ago

But, but, but TWC says that it is cheaper to go with cap plan! LOL, I can sympathize with this guy. I am glad he dropped TWC like a bad habit. I would go for the lower speed connection with unlimited over caps any day. Good for this guy! Now AT&T needs to get off their dead ass and start offering Uverse in that area. That would get TWC to drop those caps.

waiting and watching
waiting and watching
12 years ago

ISPs are the entire music industry price fixing CD’s, cassettes, etc all over again. That one took a class-action lawsuit to fix. Is that what it is going to take to put internet provides in line as well? Then after that we must go after the electric companies for those stuck in monopolized areas with no other choices?

Uncle Ken
Uncle Ken
12 years ago

Electric companies are another story. Here we have coal, nuke, hydro, wind mill, and a small amount of solar but it is all mixed into a pot called the grid. Electric companies buy from the grid. They could be forced to offer a fixed or variable plan but nothing else unless you want 5 different power lines with 5 meters and a very complex system to level out all the lines as no single source can provide all the power needed all the time. No one is going to string 5 sets of power lines when one does the job… Read more »

UNCLE ME
UNCLE ME
12 years ago

This guy used 90 GB!!! Oh my god! What are you doing. Most websites do not even see that much traffic. Maybe try using the internet for what it is supposed to do send e-mails and surf the net. It is this type of use that bogs up the net for the rest of us.

Brion
Editor
12 years ago
Reply to  UNCLE ME

Absolutely, the Internet is only supposed to be used for email and static web pages… in 1995! Here’s a Moment Of Shocking Fact: using Netflix to stream 8 movies a month, watching 3 one-hour TV shows in HD online a month, and downloading a single Linux ISO (CD image) will eat up 43.7 GB for that month (and that’s if you do absolutely nothing else). In today’s metropolitan areas, and sometimes in less metro areas, we have high-speed Internet access that provides us opportunities to do things online we could never have done in any reasonable amount of time over… Read more »

Mark
Mark
12 years ago
Reply to  UNCLE ME

I committed the “sin” of letting the kids and grandkids watch netflix videos off the internet. I also up/download astro pics. I just downloaded a 700mb hubble pic. Hey I dropped my bandwidth hogging internet phone that TW pushes.

BrionS
Editor
12 years ago
Reply to  UNCLE ME

Just to give you a little more perspective on what web sites see in traffic today (popular ones at least) check out YouTube — (estimated) 25 Petabytes / month ( http://willy.boerland.com/myblog/youtube_bandwidth_usage_25_petabytes_per_month )

Other sites such as Google, Yahoo!, MSN, eBay, Amazon, Microsoft don’t disclose their bandwidth usage and it’s hard to guess, but you can be assured that it dwarfs 90 GB / month.

Here’s a graph to demonstrate the impact of Google services being down for 2 hours can have on Internet bandwidth usage – http://www.wired.com/epicenter/2009/05/when-google-goes-down-it-goes-down-hard/

Tim
Tim
12 years ago
Reply to  UNCLE ME

Guess you didn’t see the video of the guy saying the average gamer used 60GB/month just to game? Add in other types of internet activities and you could easily reach that 90GB. Personally, I could blow 90GB, if I wanted to, in a few days. Trust me, 90GB, isn’t going to be a lot with online video streaming. Once it starts really kicking in as a viable competitor, you will see 90GB all the time.

Smith6612
Smith6612
12 years ago
Reply to  UNCLE ME

I suppose I’m naughty then because I’ve been using roughly 250-400GB the last few months total throughout my network from gaming, HD video uploads, tons of beta testing (operating systems, games, etc soon to probably be adding OnLive to the beta testing soon), patches, HD video streaming, you name it, with some light torrenting/seeding to help with the distribution of the new Ubuntu/Fedora/other Linux ISOs from time to time during release weekend, which I use 90% of my upload. And as an FYI: Netflix HD burns up bandwidth like crazy. It can peg a 15Mbps cable connection for at least… Read more »

UNCLE ME
UNCLE ME
12 years ago

Why would anyone want to watch TV on a little computer with the computer fan running in the background. That is what my BIG massive HDTV is for. To each their own I guess. Just seems silly that a little network (so it was visioned) is used for watching tv and movies? HUH?

Smith6612
Smith6612
12 years ago
Reply to  UNCLE ME

I personally prefer the quality of my PC’s two 30″ LCD screens over a 1080p HDTV any day, along with watching HD and even SD content on them. With both of the screens running at 2560×1600 via DVI and them having a very small pixel per inch count, things look better in my opinion. Now, as per the PC noise, unless you’re running tons of small fans on your PC at full speed or you’ve got something that is old, the PC should run very quiet. My gaming PC that I built myself is right now happily running with the… Read more »

Ron Dafoe
Ron Dafoe
12 years ago
Reply to  UNCLE ME

That is why I stream netflix through my xbox connect to my TV. There are also a lot of people that have DirectTV. DirectTV on demand uses a broadband connection. You can also connect a computer to your TV to stream to the TV and record.

After all, these days, everything is a computer. Your cable TV box is a computer that runs specialized software.

Just becuase you are viewing stuff through a computer, does not neccessarily mean we are not using our HD TVs to the fullest, after all, it is just another monitor to the computer.

Mark
Mark
12 years ago
Reply to  UNCLE ME

“Why would anyone want to watch TV on a little computer with the computer fan running in the background. That is what my BIG massive HDTV is for. To each their own I guess. Just seems silly that a little network (so it was visioned) is used for watching tv and movies? HUH?” I guess that was my problem. I hooked a computer to our 55″ 1080p plasma and the kids were at the house all of spring break. Two movie watchers and two online gamers. The little network was fine on dialup for us. The little network became Big… Read more »

BrionS
Editor
12 years ago
Reply to  UNCLE ME

Over the years I’ve managed to design and build a silent PC that I can use in the living room and attach to my HDTV. In fact, the PC itself looks just like a stereo component other than the fact it has a DVD-ROM tray (it even has a volume knob). In reality I don’t do a lot of TV streaming on it, I have an OTA HD tuner card that gets my TV from the broadcast digital HD signals. However I do rip my DVD movies to my network and play them back from the computer. The benefits are… Read more »

UNCLE ME
UNCLE ME
12 years ago

I guess to each their own. I will stick with my BIG screen TV and the convenience of watching TV on a comfy couch without custom building anything and worrying about two way cable card crap or anything. You stick to what you want and I will stick with what I want. But it is still my opinion that caps will happen in some shape or form. Did everyone think they could just use 100’s of GB’s per month for nothing? If the caps don’t happen then the raising of monthly pricing will continue with all ISP’s. Pick your poison… Read more »

BrionS
Editor
12 years ago
Reply to  UNCLE ME

You’re probably sick of my posts by now and I don’t blame you, I’ve been rather rude – sorry. But I’d strongly encourage you to read my comment on another article here that attempts to describe why caps won’t do anything for anyone but Time Warner. (Warning: it’s long!) http://stopthecap.com/2009/06/18/on-sock-puppets-industry-hacks-reactions-to-rep-eric-massas-legislation-predictable-transparent/comment-page-1/#comment-4795 The short-short version: 1. low-volume users get degraded speed if they choose the cheapest plan (ostensibly to save money) 2. normal users who don’t change rates get slapped with overage charges if they wander beyond their cap (which is actually quite easy to do given these caps) 3. “power” users… Read more »

Ron Dafoe
Ron Dafoe
12 years ago
Reply to  UNCLE ME

“Did everyone think they could just use 100’s of GB’s per month for nothing?” In a nutshell? No, I expect to pay my $59.99 a month bill and get it like I do now. I can assume that is almost $15 a month more than most people spend on their RR a month. I expect to keep doing the things that I have been doing for 10 years on the internet. In last 10 years, my monthly roadrunner bill has not gone up, except when I added turbo on my own. In those 10 years, my level of service dropped… Read more »

uskaggs
uskaggs
12 years ago

I’m glad Beaumont is getting some attention now. I am also a Golden Triangle resident and I’ve had to deal with the threat of caps since July of last year. Since I stayed on top of this issue since the very first announcement, I got my new RR subscription for my new home just in the nick of time, just 2 days before the caps were put in place. I’m sure many thousands of people like the man in this story are having a terrible time dealing with this mess and being unprepared. I’ve been bugging AlexTWC on twitter and… Read more »

Mark
Mark
12 years ago

I just recieved a letter from TWC. They state they are preparing a reply to my complaint with the FCC. They have been contacted by the FCC and reply to the complaint both to thyem and me. When/if I get the response I will send it to Phillip. have not heard from the FTC yet.

Uncle Ken
Uncle Ken
12 years ago

Mark Yes the best place to send it is to Phil. He is real good at these things

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