Verizon FiOS, the fiber to the home service from “the phone company” in many areas around the country, today formally announced it was increasing broadband speeds for customers to provide them with better service.  FiOS often provides the fastest Internet speeds in the markets they serve, prompting speed, service, and occasionally even price wars wherever Verizon competes with cable companies.

Verizon’s strong competition makes cable think twice about conducting Internet Overcharging experiments with talk of limits, tiers, and other anti-competitive, anti-consumer pricing.

“From its inception just five years ago, Verizon FiOS has transformed the American broadband and home-entertainment experience by delivering innovative services that our competitors can’t match,” said Mike Ritter, chief marketing officer for Verizon Telecom. “Today FiOS leaps forward again with faster two-way broadband speed options that free customers to fully participate in today’s interactive, multimedia Web.”

Verizon is doubling-to-quadrupling the upstream connection speeds and increasing the downstream connection speeds of its most popular FiOS Internet offerings. The company has raised the connection speed of its entry-level FiOS Internet service from 10/2 megabits per second (Mbps) to 15/5 Mbps, and has raised the connection speed of its flagship, mid-tier offering from 20/5 Mbps to 25/15 Mbps. In New York City, on Long Island and in other New York City suburbs, FiOS Internet is even faster with a new entry-level connection speed of 25/15 Mbps, and a new mid-tier offering of 35/20 Mbps, available only in bundles.

According to a survey of residential broadband users in the U.S. by the market intelligence firm In-Stat (“US Broadband Speeds on the Rise,” In-Stat, Feb. 2009), the average upstream connection speed used by cable broadband customers is 2.68 Mbps. Verizon is offering speeds two-to-seven times faster than this typical cable upload speed.

Verizon’s standard service plan offers new customers in many areas some dramatic improvements, leaving services like Time Warner Cable and Comcast in less competitive areas in the dust:

Verizon FiOS Standard Service (outside of NYC/Long Island) (was 10Mbps/2Mbps) is now 15Mbps/5Mbps
Time Warner Rochester Standard Service remains 10Mbps/384kbps
Price per month $45 (TWC charges $5 less if you are a cable customer)

Verizon FiOS (‘Faster’ Plan) (outside of NYC/Long Island) (was 20Mbps/5Mbps) is now 25Mbps/15Mbps
Time Warner Rochester Turbo Plan remains 15Mbps/1Mbps
Verizon plan is $65 per month, Time Warner Turbo is cheaper but has much slower upload speeds, and runs around $50 a month.

The new speeds are available to new customers or those existing customers who wish to upgrade to a new contract with Verizon (one year term commitments are common for FiOS).  But customers who sign up for a bundle package of telephone, broadband, and video service will also receive a free Flip Ultra Camcorder or Compaq Mini Netbook.

Of course, where Verizon FiOS does not compete, expect more of the same from incumbent providers, who continue to contemplate ways to extract more money from customer’s wallets for the exact same, comparatively slow service.

Time Warner Cable’s Rochester, New York division has been playing hardball in Frontier Communications’ largest metropolitan service area for years, running ads that attack Frontier’s term contracts, inconsistent broadband speeds, hidden “extras”, and the fact customers might sign a contract today and be dissatisfied with the service tomorrow.

This morning, Time Warner Cable upped the ante with new ads, telling Frontier’s Rochester area customers who would prefer phone or broadband service from the cable company that they’ll cover up to $200 in fees Frontier charges for exiting a term contract early.

[flv]http://www.phillipdampier.com/video/TW-Frontier Ad War 6-22-09.flv[/flv]

There is, of course, the fine print:

Offer expires 6/26/09.  Up to $200 one-time credit available to current Frontier phone and/or DSL customers in a contract with a disconnect penalty who provide their Frontier bill evidencing early disconnect charge.  Credit will be applied to Time Warner Cable account after customer is installed with Digital Phone Nationwide and/or Road Runner Standard Service and within two weeks after customer supplies copy of Frontier bill to TWC showing the applicable cancellation penalty.  Credit will be equal to the amount of the early disconnect charge, not to exceed $200.  One credit per qualified household.  Customer must keep TWC services for a minimum of 12 months or the up to $200 credit will be charged back to their TWC account.

What Time Warner Cable has just effectively done is to get the subscriber out of one term contract with Frontier, and into another… with them.

AT&T’s pushback on Rep. Massa’s consumer protection legislation brought quite a reaction when it invoked the vision of “grandma” overpaying for her broadband account.  The Contact form here got a workout well into this afternoon, from upset grandmothers who attack AT&T for presuming they couldn’t spot a raw deal when they saw one:

Irene from Austin:

AT&T thinks they are so smart about getting us to believe them.  I’ve got five grandkids and raised four daughters and one son.  If they couldn’t pull a fast one on me, AT&T sure can’t. God didn’t put me on this earth to be stupid or He wouldn’t have given me a brain.  I don’t use that much Internet myself, but when the kids come over, the computer is the first thing they head for, and they’re doing everything on it. Heaven help people who don’t know about this hot air meter they want to stick us with, because they’ll be blown over when the bill comes. I’m not buying this one bit.

Dee from Thomasville, North Carolina:

I told Time Warner Cable they could come get their boxes and wires out of my house the minute they wanted to run this plan on us. Who do they think they are fooling. We grandmothers know a ripoff when we see one. I’d tell AT&T the same darn thing. Come and get your things out of my house. I’d rather not have it at all than pay even more than I do now.

“AT&T Granny” from Kernersville, North Carolina:

If Ma Bell were still alive, she’d take these greedy people out to the woodshed and set things right.

Ann from Perinton, New York:

I have their economy plan from Time Warner already.  It works just fine.  I don’t believe a word cable companies say. All they know is “price increase” and we just paid them another rate increase in February. I’m insulted by AT&T [that] thinks grandmothers like myself would be dumb enough to fall for their scams.  Now grandfathers might be something else, which is why I pay the bills in this house. When these cable companies want to let me choose what channels I want then tell me about their “fair” plan.  When cable companies and governments come to you with something called a fair plan, you know what to do. We live in New York and know better! Keep doing the right thing.

Nancy in Oklahoma:

I’m 77 years old. I’ve hated the darn phone company for 50 years. It’s always one lie after another with these people. It’s all about the money. How do they expect people to pay the bills they already get? Now these same companies want to get our tax dollars for Obama’s broadband, and then overbill us for more money? Never trust phone companies. They are almost as bad as those crooks in Washington. Not one of my children or grandchildren would work for AT&T. Where are the honest American companies that used to give you a good service at a fair price? I’ve learned a lot of things since my son gave me a computer and brought the Internet to me. But if they start telling me I have to worry about extra fees and meters to watch, I am getting rid of it. The Internet is not a credit card company.

This week’s finding from the Pew Internet & American Life Project:

Where competition exists in broadband, prices are significantly lower than in areas where competition does not exist or is limited.

This is, of course, common sense.  But it underlines the importance of broadband competition to control pricing and overcharging schemes.  Broadband prices have been increasing in the United States, along with the number of customers, the revenues earned from those customers, and the loyalty customers to their broadband service.

What has decreased, despite the growth in broadband pricing, revenues, and customers, is some providers’ investments in their own networks to keep up with that growth.  In 2008, Time Warner Cable’s annual report showed interesting results:

“In 2007, TW made $3,730 Million, on high speed data alone, and then had to turn around and spend $164 Million to support the cost of the network. 2007 total profit on high speed data: $3.566 Billion”

“In 2008, TW made $4,159 Million, on high speed data alone, and then had to turn around and spend $146 Million to support the cost of the network. 2008 total profit on high speed data: $4.013 Billion”

“It cost TW 11% less money in 2008, to keep their network running, than in 2007.”

These numbers illustrate the folly of crying poverty when asked why network upgrades aren’t being performed to support evolving growth in usage.  Instead, the meme of “heavy downloaders are costing light users money and slowdowns” is part of the Re-education campaign to justify Internet Overcharging.

Yet broadband prices are continuing to climb even with reduced investments by many providers.  Pew found pricing up across all classes of broadband service, significantly so between 2008 and 2009.  Pressure on revenues from the video side of the cable business are partly responsible as investor demands for profits demand results.  Consumers, responding to a poor economy, have been cutting back on their cable TV package, especially premium channels, pay-per-view, and add-ons of extra channels.  A few are abandoning cable/satellite TV altogether, relying on their broadband connection and online video, a prospect that terrifies those providing traditional cable-like programming packages.

Some 84% of home broadband users see their fast connection as “somewhat important” or “very important.” This increasing reliance on broadband is turning a convenience into a necessary utility.  Yet the industry that provides it is under very little scrutiny and has largely been deregulated, with only limited oversight possible.

The results have been mixed.  Americans living in areas lucky enough to experience robust competition have fast, reliable service at low prices, with only limited efforts to impose Internet Overcharging schemes.

In areas with more limited competition, particularly when those competitors do not provide an equivalent level of service consistently across their service area (fast consistent cable modem service vs. variable, speed-challenged DSL), mischief by the dominant provider is increasingly common.  “Experiments” to increase prices, limit use, require customers to purchase or rent equipment, or impose annual or bi-annual service contracts, and/or  limited advancements in speed are not atypical.

Rural communities, in particular, remain exposed to many challenges — high prices for installation and service, slow/uneven speeds, contracts, and usage allowances are all commonplace.

The Obama Administration intends to spend tens of millions of dollars to improve broadband in the United States.  Unfortunately, many worthwhile projects and ideas are up against schemes from less worthy providers and groups that have teams of lobbyists and connected “interest groups” proposing spending that carries few limitations, little oversight, and loads of loopholes.  In some cases, needed project funds could even be diverted away from new projects altogether.

The Pew Study summarized its findings:

Home broadband adoption stood at 63% of adult Americans as of April 2009, up from 55% in May, 2008.

The latest findings of the Pew Research Center’s Internet & American Life Project mark a departure from the stagnation in home high-speed adoption rates that had prevailed from December, 2007 through December, 2008. During that period, Project surveys found that home broadband penetration remained in a narrow range between 54% and 57%.

The greatest growth in broadband adoption in the past year has taken place among population subgroups which have below average usage rates. Among them:

• Senior citizens: Broadband usage among adults ages 65 or older grew from 19% in May, 2008 to 30% in April, 2009.
• Low-income Americans: Two groups of low-income Americans saw strong broadband growth from 2008 to 2009.
  • Respondents living in households whose annual household income is $20,000 or less, saw broadband adoption grow from 25% in 2008 to 35% in 2009.
  • Respondents living in households whose annual incomes are between $20,000 and $30,000 annually experienced a growth in broadband penetration from 42% to 53%.

"This is not a rate increase, this is about fair pricing for everyone, seriously."

It’s always awful when you wake up with a bad taste in your mouth.  That’s the flavor of industry hacks and sock puppets who spent a good part of yesterday and last night on the attack against Rep. Eric Massa and your consumer interests.  Part of this battle is about engaging those who claim to represent consumers, but actually turn out to be paid by a lobbyist firm or “think tank,” usually located either in or near Washington, DC.  They are typically unwilling to disclose that involvement.  I’m not.  When called out, the typical response ranges from silence to ‘I would be saying the same things even if I didn’t get paid by them.’

Sure they would.

Consumers need to be particularly vigilant about the Say for Pay crowd of sock puppets that arrive in quotations in articles that attack common sense pro-consumer positions, or in the comments  below an online article.

Now you may be asking what in the world is a “sock puppet.”  Craig Aaron at Free Press explains:

Sock puppets, for those unfamiliar with the creatures commonly found inside the Beltway, are mouthpieces who rent out their academic or political credentials to argue pro-industry positions. These pay-to-sway professionals issue white papers, file comments with key agencies, and present themselves to the press as independent analysts. But their views have a funny way of shifting depending on who’s writing the checks. (To be clear, at Free Press we take no industry money.)

Sock puppets and astroturf groups go hand in hand.  If you remember, we’ve exposed a number of these groups that claim they are standing up for consumers, but in reality are paid to sit down and absorb their industry backer’s talking points.  The snowjob that typically follows claims that if you do the pro-consumer common sense thing, such as not allowing Internet Overcharging schemes to rip people off, you’ll destroy the Internet, America, and maybe even freedom itself.  Besides, just look at the “expert credentials” of our guy telling you that.

When you boil it all down, sock puppets are people who feel morally fine with taking money for being willing to assume any position you want them to take.  It’s vaguely familiar to another profession that’s been around for a very long time.  One just has better office space than the other, and better business cards, too.

If you want to explore a perfect example of sock puppetry at work, with a group trying to get public taxpayer money to benefit big telephone and cable companies with few strings attached, check out Craig Aaron’s article on the subject this past January.

In Stop the Cap!‘s history, we’ve debated a representative from Nemertes Research who refuses to disclose who pays for their industry research reports that conveniently say exactly what the telecommunications industry’s positions are on the broadband issues of the day.  We’ve questioned a group that claims that “openness” or “neutrality” of the Internet is irrelevant, and called out the American Consumer Institute Center for Citizen Research (you gotta love the name — it’s a delicious consumery-sounding word salad… with special interest croutons sprinkled all over the top), who applauded Internet Overcharging as a great thing for customers, except they were packed with lobbyists to really satisfy big telecom interests.

Readers of this site should be well-qualified to engage industry propaganda and consumer misconceptions about the fairness of Internet Overcharging schemes.  You’ve gotten the information you need to effectively educate consumers and expose the sock puppetry.  The entire reason this group exists is because we realized the fight is not over, and we’d need an army prepared to combat the Re-education campaign we were promised back in April.  The battle is fully engaged now, and I’ve been happy to see many of you joining conversations on other sites where misconceptions and sock puppets prevail, and helping to educate consumers with facts, not focus group-tested propaganda.

We need many more of you to do likewise.  If your local newspaper runs an article on Rep. Massa’s bill, or our issues, take a look at the article online and look at the comments being left by readers.  Encounter misconceptions?  Help educate people.  Discover a sock puppet browbeating consumers for standing up for common sense reform of the broadband industry?  Defend the consumer’s point of view and don’t allow anyone to berate you with smug, fact-free answers.  Most are unprepared to respond with actual evidence to back their views, just a load of industry rhetoric and evidence-free claims they have expertise you don’t.

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