Cogeco, following in the footsteps of Rogers, Canada’s largest cable operator, has mailed letters home to residential subscribers informing them that their new Internet Overcharging scheme and fees are real and will apply to broadband accounts that exceed their arbitrary usage allowances.  Since the spring, Cogeco has been showing the Internet Overcharges on subscriber’s bills, but not actually billing them.  That is set to change, however, and many residents in Ontario and Quebec are quite upset.

“Cogeco can bite me. As soon as I manage to scrounge up a second DSL modem I’m gone.”

“I’m waiting for the Cogeco trolls to come out of the woodwork so they can claim how competitive and affordable that plan is.”

“I am starting to hate Cogeco very much, I am tempted to cancel my internet and my digital TV service for spite.”

“Vote with your wallets guys, I did. And now with the increase I’m going to cancel my HD access and return the receiver — enough is enough. I’ll be down to Basic Digital Cable and if they keep increasing prices, that will go too.”

“Ditto! Price increase is THE LAST STRAW for this 10 year + customer!”

Cogeco’s limits also come with overlimit fees that are particularly harsh on casual and power users.  In Canada, many overlimit fees are currently capped at a maximum amount, and do not continue to increase beyond that maximum.  Lite users face a $2.50/GB overlimit fee (maximum $30), despite representing almost no usage impact on Cogeco’s network, and “Pro” users face a $1/GB overlimit fee, but face a maximum of $50 in overlimit penalties, despite paying a much higher up-front monthly subscription fee.

In a nutshell,

• Lite – 10GB/mo bitcap – $2.50 per GB over to a maximum of $30
• Lite Plus – 20GB/mo bitcap – $2.00 per GB over to a maximum of $30
• Standard – 60GB/mo bitcap – $1.50 per GB over to a maximum of $30
• Pro – 100GB/mo bitcap – $1.00 per GB over to a maximum of $50

Broadband providers in the United States always promise that if they are permitted to introduce Internet Overcharging schemes, it will be “fairer” for all customers, because “heavy users should pay more for what lighter users don’t do.” Providers also typically allude to network improvements and no widespread price increases.

But as Canadians have already discovered, big telecommunications firms operating with virtual duopolies can have their cake and eat it too.

Cogeco customers now face the prospects of classic Internet Overcharging — usage allowances, overlimit fees and penalties, and “fair pricing,” but after the company implemented these schemes, consumers got a reminder of what cable operators like Cogeco are also capable of — widespread rate hiking.

New Rates: We’re improving our services so you’ll continue the best today and in the future (effective July 17, 2009):

Internet Pricing

Standard – With TV or Phone…..current rate: $44.95……new rate: $45.95

Standard – Standalone……..current rate: $52.95………..new rate: $54.95

Pro – With TV or Phone……..current rate: $69.95………..new rate: $76.95

Pro – Standalone……………..current rate: $74.95………..new rate: $81.95

Internet Overchargers like Cogeco consider “fair share” to mean giving an equal amount of dollars from yourself to them.  That’s fair, right?

It’s simply more evidence to this universal truth, a fact of life every North American should already know:

Cable bills never decrease, they only increase, unless you drop services.

When a cable company tells you they have a plan to guarantee “fairness,” be sure to remember what represents “fairness” to you may mean something entirely different to them.

Canada is a victim of Internet Overcharging, with virtually every major provider limiting access to broadband, throttling speeds, and charging overlimit penalties for exceeding arbitrary limits. Now Cogeco, which itself engages in these schemes for its residential broadband service, has made a breakthrough of sorts.

Cogeco One Zone, available only to users of Apple’s iPhone and iPod Touch, provides 802.11g WiFi across the One Zone WiFi network for only $5CAD a month. One Zone, acquired last August from Toronto Hydro Telecom, operates within a six kilometre region in the downtown core of Toronto. Users discovering the service report it can achieve speeds of up to 7Mbps, and there are no data consumption limits or contracts.

Any iPhone/iPod Touch user who accesses the network within range will automatically be taken to a special sign-up page to begin service. Cogeco One Zone’s offer represents a major discount off the pricing being charged to other One Zone WiFi users:

1 Hour
60 minutes of continuous access
$4.99 + GST and PST

1 Day
24 hours of continuous access
$9.99 + GST and PST

1 Month
Continuous access to same date in following month
$29.00 + GST and PST

(All prices are in Canadian Dollars)

So why has Cogeco decided to practically give away the service?

“Our expectation is that users won’t be using it for downloading video and huge files … It’s just the nature of the device. It’s not likely they’ll be downloading gigabytes of information standing on the street,” Cogeco Data Services president Ian Collins told itWorldCanada.

One potential use Collins may not realize has been among Toronto residents who live and work within range of the network. For some of them, Cogeco One Zone is being used from work and home, and although it is unlikely to replace residential broadband accounts that connect with home computers, some users will give the network a real workout. Should customers figure out how to tether their iPhone WiFi connection to their home computer, effectively accessing the network from a home PC or laptop, that could become an entirely new challenge.

For Canadian iPhone owners, who already face higher prices for iPhone data plans (no “unlimited” plan exists in Canada as it does in the United States), the biggest savings may come from customers downgrading data plans for “phone-based” data, because they rely on the WiFi network instead. Most iPhone owners currently pay $30 per month for 1GB or $25 for 500MB. With unlimited access through WiFi, there are no worries about exceeding data allowances.

Knowledgeable iPod Touch owners could also turn their players into Voice Over IP telephone lines using Skype or Truphone, and effectively pay just a few dollars per month for unlimited long distance calling.

In the last two installments I covered the North Carolina legislators that had a hand in HB1252/S1004, legislation that would have severely curtailed municipal broadband projects in this state, and how they were involved in bringing the bills to the floor. I am now going to focus on some powerful, long term state senators, who have a very influential vote on the Senate floor.

R.C. Soles (D-Brunswick, Pender & Columbus Counties) has served for 17 terms. Soles, as he is not a co-sponsor or sponsor, does carry great influence in the Senate and can gather votes. Soles took a lot of money from the cable/telecom industry in 2008, $7500 in total. From Embarq he took $2000, Time Warner $1000, AT&T PAC $4000, and from the Sprint/Nextel PAC he took $500.

Senator Tom Apodaca (R-Buncombe, Henderson and Polk Counties) is a four term senator who also took a bundle of money from the cable/telecom industry in 2008. In total he received $12500 in contributions. Embarq gave $3000, Time Warner $2500, AT&T PAC $4000, Sprint/Nextel PAC $1000, and AT&T Mobility Employees PAC $2000. There was also a suspicious contribution from one “Jasie Barringer.” Barringer is listed as a housewife and self employed, but in reality she is more likely the chairman of RH Barringer Beverage Distributors (Anheuser-Busch), which is well known to me as it’s here in Greensboro. They also appear to have used a business address for the contribution, which is illegal in North Carolina. I will be filing a complaint with the State Board of Elections.

Senator Dan Clodfelter (D-Mecklenburg County/City of Charlotte), is the six term senator who sits with with Sen. Hoyle of the Revenue Laws Joint Sub-Committee, where they are trying to direct HB1252/S1004. Clodfelter also took a lot of money from the cable/telecom industry, $10250 in total. Embarq contributed $1500, Time Warner $2250, AT&T $2000, NC Cable PAC $2500, Sprint/Nextel PAC $500, NC Association of Broadcasters $500 and NC Broadcast PAC gave $1000.

There are a few other influential legislators in the House and Senate, but they are a little harder to track because of their positions of power. Speaker of the House, Rep. Joe Hackney and President Pro Tempore of the Senate Marc Basnight hold a considerable amount of power and influence, and receive a lot of money from everyone. This makes it a little harder to track. Basnight received $18500 in contributions from the cable/telecom industry and Speaker Hackney received $21000 in contributions.  While this is a lot of industry money, it’s not out of proportion from what they receive from every industry PAC that contributes to their campaign coffers.

If you have not read the first two installments here at Stop the Cap!, they can be found here and here. I will follow up when the first quarter reports become available for 2009.

It’s important to note that in all three articles, acceptance of political contributions in no way implies criminal activity.  It does imply that money from big donors can create a climate of influence with legislators.  This is the culture of politics, whether it is in North Carolina, Washington, or your local city council. Until we can remove the influence of industry PAC money on elected officials, the lobbies for these industries can continue to have the upper hand on the common citizen and what is good for us, unless we stand up and make our voices heard.

The information gleaned from here in North Carolina underlines this point, and I encourage you to review campaign finance reports to investigate why an elected official would be so insistent on standing against consumer and constituent interests.  Not every legislator that accepts contributions automatically means they will not stand with their constituents.  Many will.  But for those who do not, this can help explain why.  Should you require assistance locating, searching, or investigating the tricks of the campaign finance trade, feel free to contact me.

Frontier Essentially Accuses Time Warner Cable of Being a Shakedown Artist

Early indications of a more challenging second quarter of 2009 may be what’s behind the sudden speed increases and new promotions being run by providers, who are also counting on signing new customers, now that moving season is in full swing.  A roundup of promotions and service adjustments customers may find enticing them:

AT&T

U-verse Internet Max customers received free upgrades last week in most areas, boosting broadband download speeds from 10Mbps to 12Mbps.  AT&T previously announced a slowing of U-verse deployment for economic reasons.  AT&T competes with cable operators offering video, voice, and broadband service.

Cablevision

Cablevision Systems continues to offer new customers taking at least a combined broadband and phone package a $200 American Express gift card through June 30.  The company already announced major increases in premium speed levels, and promises no limits on consumption.

Comcast

Reduced pricing in highly competitive Washington, DC market for premium 50Mbps service to under $100, for customers signing up for at least two Comcast services (video, voice, and/or broadband)

Frontier

A substantial mailing offering discounts and giveaways was sent through postal mail to consumers in many Frontier service areas.  Frontier is using a cable-critical mailer depicting their cable competitor as “Rob” and “Bill.”

Rogers (Canada)

Rogers, which earlier increased rates for subscribers, announced a “free speed increase” to its “Hi Speed Internet Express” package, from 7Mbps to 10Mbps, and “Internet Lite” from 1Mbps to 3Mbps.  Rogers limits its customers typically to 60GB of consumption per month for standard levels of service.  Much lower limits are placed on economy packages.

Time Warner Cable

Time Warner Cable is continuing to mail customer postcards and other mailings promoting its existing service packages, but this week also attempts to pick up customers trapped in Frontier term contracts by agreeing to cover early contract termination penalties, up to $200.  Time Warner Cable is also hinting that cable customers will soon be able to use Tivo software for their Digital Video Recorder (DVR) boxes, which permit customers to record programming.

Verizon

Verizon announced substantial speed increases throughout their service area. The company also has engaged in a price war with Cablevision over gift cards. Verizon offered $150 gift cards to new customers signing up for a service bundle (although Cablevison beat their offer by $50).  The company also began promotional giveaways to customers signing a contract agreement.

To date, AT&T continues tests limiting consumption to as low as 20GB per month in Beaumont, Texas and Reno, Nevada.  Comcast has a straight limit of 250GB of consumption per month for residential customers nationwide.  Frontier defines “acceptable use” at 5GB consumption per month, but does not enforce it at this time.  Rogers limits consumption based on the level of speed selected by the customer.  Most customers face a 60GB monthly limit.  Time Warner Cable tested, but temporarily shelved, tiered pricing and consumption limits.  Other providers not listed have no Internet Overcharging schemes in place.

The NoChokePoints Coalition has a point.  They are a coalition of public interest groups and providers like British Telecom and Sprint-Nextel that are upset with monopolistic pricing for high speed broadband lines.  Verizon and AT&T “control the broadband lines of almost every business in the United States” the coalition states, and “generates a profit margin of more than 100% for the controlling phone companies.”

“Releasing the broadband economy from the chokehold these huge phone companies have on the special access market will be a catalyst for innovation and investment in the broadband marketplace, something we desperately need,” said Maura Corbett, spokeswoman for the NoChokePoints coalition.

“Every time you send an email, withdraw money from an ATM, or use your wireless phone, your information travels on these high-capacity lines. Excessive pricing and other market abuses by these companies have long been an issue of concern at the Federal Communications Commission (FCC). Nearly five years ago, after many complaints by broadband customers in several FCC proceedings, the Commission began a review of the high-capacity broadband market to determine the changes needed to ensure reasonable prices. Despite ample evidence of excessive pricing, the Commission inexplicably has yet to take any action.”

“The Obama administration, Congress, and the FCC repeatedly emphasize the importance of broadband to our economic recovery and, frankly, it defies explanation that we are still fighting this market abuse,” Corbett continued. “Huge companies like Verizon and AT&T control the broadband lines of almost every business in the United States. The virtually unchallenged, exclusive control of these lines costs businesses and consumers more than $10 billion annually and generates a profit margin of more than 100 percent for the controlling phone companies, according to their own data provided to the FCC. This hidden broadband tax results in enormous losses for consumers and the economy, and this country cannot afford it; especially now.”

NoChokePoints cited four central principles of its campaign to reform the special access market: (1) the special access market is broken; (2) the outgoing Federal Communications Commission made a bad situation worse by failing to address obvious market abuse by these huge phone companies; (3) this unchecked market control continues to slow broadband deployment, compromise innovation and harm our national information economy; and (4) the resulting market failure must be corrected now.

Yes, when one or two providers get together and establish pricing for a product that is way out of line for what it costs to provide, and uses that control to further squeeze every last penny they can from customers, something should be done.

As consumers, we should agree to join the NoChokePoints coalition struggle.  There are several very credible pro-consumer organizations that support the Coalition and its goals.  And consumers like myself shall, mere seconds after:

Member BT (British Telecom) stops throttling UK customer’s broadband connections, and imposing Internet Overcharging schemes on customers through limits on their data consumption.

Member Sprint-Nextel agrees that consumers should be able to request temporary suspension of their wireless data account, currently limited to 5GB of consumption per month, the moment the limit is reached to avoid the potential of paying overlimit fees, if/when applicable.

TW Telecom gets a pass here as they are entirely independent from Time Warner Cable.

Internet Overcharging schemes, monopolistic control, abuse of market pricing, and other anti-competitive behavior should be confronted.  But companies engaged in problematic behavior themselves should not anticipate a great deal of consumer compassion towards their plight, when those consumers often are on the receiving end of that problematic behavior themselves.