Americans have got it all wrong.  Their ‘faster is better’ obsession over broadband speed threatens to harm jobs and hurts those looking for work.

Those are the views of Stuart N. Brotman, a senior fellow at the Digital Policy Institute, which calls itself “a vehicle for faculty research that coalesces around the arenas of law, regulation, economics, intellectual property, and technology as these relate to public policy issues of local, state and national interests.”

Brotman argues that while broadband speeds matter, regulators should not be focused on speed as much as considering how broadband can help Americans find jobs.

The Agriculture and Commerce Depts. are tasked with administering $7.2 billion in stimulus funding for broadband by Sept. 30. As they decide where to place the bulk of those funds, which remain unawarded, government officials should show preference to grant and loan applicants that can use broadband to reach displaced workers more quickly.

There also need to be more funds made available to, and a greater focus on, public institutions, such as libraries, community centers, job training facilities, and adult education sites, where broadband spending may have the largest impact on jobs.

Greater broadband competition, which the FCC recognizes is essential to promote more infrastructure development and more varied pricing, also will be helpful. So, too, will be more efficient use of our spectrum resources, particularly those that have been controlled by colleges, schools, and other educational institutions for decades. Those airwaves can be better deployed to deliver high-speed wireless broadband services or leased to private-sector companies offering them.

Large telecommunications providers couldn’t have said it any better.  They have repeatedly argued broadband speeds are besides the point.

Brotman

AT&T last fall wrote the Federal Communications Commission, suggesting residential customers would do fine with broadband speeds that let them “exchange emails, participate in instant messaging, and engage in basic web-browsing.”  For AT&T, speed was less important than setting “a baseline definition of the capabilities needed to support the applications and services Americans must access to participate in the Internet economy—to learn, train for jobs, and work online….”

Verizon echoed AT&T, asking the Commission to retain the current minimum definition of broadband speed at 768kbps downstream and 200kbps upstream.  That allows them the chance to participate in stimulus funding projects that set the broadband speed bar low, especially in the rural areas Verizon wants to spend less on or is trying to sell-off.

“It would be disruptive and introduce confusion if the Commission were to now create a new and different definition,” Verizon said in its letter to the FCC.

Some of the smaller telecommunications companies also believe broadband speed should be de-emphasized.

Embarq, before completing a merger with CenturyTel (now CenturyLink) told the FCC 1.5Mbps broadband service has become “the most common offering.”  Embarq called that “consistent with an emphasis on economic development and jobs as many important applications, such as video conferencing are arguably possible only with 1.5 Mbps service and above. Any higher speed threshold, however, would risk defining as unserved the large number of satisfied customers of 1.5 Mbps service, which seems implausible.”

Embarq underlines the real reason providers are concerned about broadband speed — they’re not delivering it.  Once legislators or the Commission increases minimum broadband speed levels, many of these companies may find themselves below the threshold, guilty of “just enough speed to scrape by” in non-competitive markets.  That could lead to the prospect of facing federally-funded stimulus projects from others in their service areas, now deemed “unserved” or “underserved.”

Brotman further advocates that funding be focused on those that can deliver results “quickly.”

Embarq would agree with him there as well, stating “funds through grants directly to broadband providers rather than loans or other measures as this will have the greatest and quickest impact in bringing broadband to the hardest-to-serve areas.  …there is no time to wait for complete broadband maps or block grants to states for redistribution.”

Telecommunications companies would also do well by Brotman’s suggestion that federal funding for broadband projects reaching public and community service institutions should be emphasized.  As communities often request companies provide those services at a deep discount or free in return for franchise agreements or other licensing provisions, that’s money AT&T, Verizon, and others need not spend out of their own pockets.  Getting free airwaves swiped from educational institutions to deliver wireless broadband also benefits AT&T and Verizon, who are in that business as well.

When a “policy institute,” “research group,” or other seemingly unaffiliated entity starts rehashing telecommunications industry talking points, it’s time to start digging.

Buried on page five of a PDF file describing the work of the Digital Policy Institute, one comes to a section titled, “DPI Impact and Influence.”  DPI doesn’t list their financial supporters or partnerships as such.  Instead, they call them “national, collaborative relationships.”  Who does DPI collaborate with?

• AT&T
• Embarq
• National Telecommunications Cooperative Association (rural telco lobbyists)
• Verizon
• …among others.

Imagine my surprise.

But that’s not all.  Stuart N. Brotman Communications counts (or counted) among his clients AT&T, Cox Cable, National Cable and Telecommunication Association, and the New England Cable TV Association.

Perhaps Business Week would have done a better service to readers had they also disclosed that.

Some communities are luckier than others.  When your cable company boosts rates, some consumers have another provider available, letting them take their business elsewhere.  That’s especially true if there is another provider in town that doesn’t require you to attach a satellite dish to your roof.

For those who have no other alternative, it’s time for the family meeting to discuss what action, if any, will be taken to deal with a bill that relentlessly increases year after year.  The solutions usually come down to “grin and bear it” when paying the higher price, start dropping channels, or go cold turkey and get rid of cable altogether.

In economically troubled western New York, just accepting a higher bill isn’t always an option.  For residents of Buffalo, many have the choice of switching from Time Warner Cable to Verizon FiOS.  Many Queen City residents have threatened to do just that, often extracting concessions from Time Warner Cable when they call to cancel.

Stop the Cap! reader Marion, who lives in Amherst, wrote she was outraged to receive word of yet another rate hike from Time Warner Cable.

“Our family had been pestered by Verizon ever since FiOS came around our area, but having the phone company tear up your house to rewire everything and change your e-mail address was a real hassle, so we just kept Time Warner,” she writes.  “I’m fed up paying for all these filthy channels I never watch and I frankly can’t afford to keep paying them more and more every year whenever they have one of their programmer disputes.”

Marion called to cancel service and was transferred to a “retention specialist” who is trained to rescue departing customers before they cut the cord or show up at the cable office with their set top boxes in hand, waiting to turn them in.

“They always want to argue what a great value they are and how messy and time-consuming FiOS is to install, and you have to pay extra for HD channels I’m too old to appreciate anyway, but I just kept saying ‘cancel’ and said the only thing I cared about was the price,” Marion adds. “In the end they offered to cut the bill twenty dollars a month and give me a discount only new customers would get if I agreed to stay with a term plan.  I decided I would, for now.  I’m on a fixed income and with no Social Security increase this year, the price is very important to me.”

Alan Pergament is the TV Critic for the Buffalo News

Time Warner Cable is well aware when customers leave.  The company’s “churn” rate, measuring departing customers, has been on the increase in highly competitive service areas.  Consumers have learned to use new customer promotional offers from the competition against their current provider, threatening to cancel if they refuse to match them.  The costs of getting those customers back can be higher than just handing over a temporary discount, so many providers relent and give customers the lower price they want.

In Buffalo, convincing customers the local cable company is a better value and offers better service than the fiber-based FiOS competition might keep customers from thinking about switching in the first place.  That’s the idea, anyway.

The Buffalo News Tuesday published an interview with Time Warner’s Jeff Unaitis on the recently-announced rate hike and what changes the company is making to try and hold onto their customers.

Unaitis started with a range of new and upcoming improvements the cable operator is planning to make across upstate New York:

• The 24-hour news channel YNN —or Your News Now—will be the title of all TWC news channels across the state shortly to give it a “seamless news presence across the state.”

“You are beginning to see more shared coverage across the state,” said Unaitis.

Additionally, viewers in Western New York will get an upconverted HD version of YNN on Channel 709 by April or so. In other words, it isn’t shot in HD but it is HD quality. It already has been done on TWC’s news channel in Syracuse. “The reality is when you are accustomed to see HD content going back to something that is standard digital, let alone analog, is more difficult viewing,” Unaitis said.

• A new interactive, user-friendly, online programming guide will be available soon. One bonus: It will be easier to order On Demand titles.

In the next few months, the satellite feature celebrated in the ads with “Pysch” star Dule Hill that allows subscribers to program their DVRs remotely while they are away from home will soon be available to TWC subscribers with this guide.

• TWC is looking at the possibility of expanding “significantly more” HD channels that the public has requested. BBCAmerica, Lifetime and all the Viacom channels (VH1, MTV, Comedy Central and Nickelodeon among them) are among the most requested. “Some of them are contingent on carriage deals,” said Unaitis. “Others we do have the rights to carry, we just haven’t done the engineering required to have them yet.”

• The popular Start Over feature — which is up to 90 channels here and allows viewers to start shows from the beginning during the time window it airs — will be augmented some time this year by a new “Look Back” feature. “Look Back” enables viewers to watch shows for up to 72 hours after they air rather than just the window in which they air.

Unaitis added that viewers may not realize that the Free on HD Demand channel offers subscribers many of the same programs that are available on Prime Time On Demand, but in HD.

YNN provides 24/7 local news coverage on individual channels in Buffalo, Rochester, Syracuse, and Albany

The newspaper’s TV critic, Alan Pergament, noted the service changes, but immediately pelted Unaitis with the concerns local residents actually have about their Time Warner Cable service.  To save time, and because of complaints I’ve had about my verbosity, I’ve boiled it all down for you:

Q. Why isn’t Time Warner Sports-Net, the local sports channel, in HD?

A. Because it costs too much, but Unaitis claimed the channel will be upconverted to HD, which will “give it an HD-quality signal.”  Not really.

Q. Buffalo gets Canadian networks from Toronto-area stations on their lineup.  Why aren’t they available in HD?

A. Who knows.

Q. Why can’t people pay for only the channels they want?

A. Because programmers won’t allow it, and the cable company would end up charging you the same price you pay for 75 channels today that you’ll pay for 20 channels tomorrow. Plus, you’ll need a box on every TV in the house and that also increases your bill.

Q. How much do western New Yorker’s pay for YNN?

A. None of your business.

Q. How many subscribers does Time Warner Cable have in western New York?

A. None of your business.

Q. Why do those in western NY pay a higher price for cable service than elsewhere?

A. Unaitis didn’t know if that was true or not, but then explained it was because of the weather, labor costs, high state taxes and the difficulty building and maintaining the cable lines.

Okay, then.

Advertising Age this week predicted online TV could be about to undergo a transformation — into the online equivalent of advertising-packed traditional television.

Starting as early as this fall, that 47 minute “hour long” show you’ve watched with a handful of commercial interruptions may become a 59 minute show, with almost 15 minutes of additional advertising piled on your viewing experience.  Worst of all, if your service provider wants to stick you with a usage allowance or “consumption billing,” you will effectively be paying to watch commercials.

Imagine after receiving your monthly pay television bill, a company representative arrives to install a coin meter on the side of your TV.  Your monthly fee just gives you access to the channels, he explains.  Actually watching them costs more.

Why introduce more advertising?

Nielsen, a ratings measurement service, will start providing its subscribers ad viewing information regardless of whether the viewer sees it on a traditional television or online.  The catch is the advertising must be the same across platforms.  That means online video could run the same ads your local station or cable network carries.

“The financial models used for the current large video hubs in the online space are not sustainable,” said Jack Wakshlag, chief research officer for Time Warner’s Turner Broadcasting. One way to make online viewing more financially lucrative, several TV executives suggested, is to use it to aggregate viewing of popular shows across TV, online and other emerging media — and then use that rating as a means of negotiating for the cost of an ad against the program.

What’s lending traction to the idea of increasing the number of commercials in online TV runs is the “TV Everywhere” concept currently embraced by industry players Time Warner and Comcast, among others. Under the plan, cable subscribers would be able to watch their favorite shows via broadband for no extra fees, while non-subscribers would be blocked. If the media companies can use this idea to control how consumers watch TV programming, they may also be able to force a more traditional amount of advertising on them, too.

Even worse, many online video providers like Hulu are considering charging viewers their own fees, leaving consumers paying three times – twice in money for broadband service and a subscription fee, once in time wasted sitting through unstoppable ads.

Some consumers don’t mind the trade-off as long as viewing remains free.  But with Internet Overcharging schemes, online video ads count against your allowance.

One TV executive told the trade magazine research suggests that 80% to 90% of people would rather watch TV online with the same load of ads as a traditional TV show if it meant doing so for free. “People don’t want to pay more subscription fees on top of their cable subscription fee,” this executive said.

It is likely testing of full commercial loads will precede any large scale rollout, if only to gauge consumer reaction.  If people refuse to pay to watch commercial advertising, the industry will have to go back to the drawing board to come up with other ideas to monetize online video.

Burlington Telecom (BT), the city owned-and-operated fiber-based cable, broadband, and telephone provider is mired in debt and is not financially viable in its current form.

Those are the findings of a “blue ribbon” committee tasked with answering questions about the future of the financially-troubled municipally-owned provider serving 4,600 Burlington customers in Vermont.

In an 11-page public report, the committee recommended the city partner with a commercial entity that would assume a majority interest in BT.  As a minority stakeholder, the city could eventually recoup the 17 million dollar investment it has made in the company.

Although some residents have lobbied the city to abandon the 100 percent fiber network to stem ongoing losses, the committee advised against it.

“The city has a considerable asset in BT, and should not give this asset away at a fire sale price,” notes one independent consultant working with the committee. “BT is too important to be jettisoned, in part because it keeps the competition honest.”

Burlington Telecom building and staff

But carrying forward as-is is not a good idea either, the report concludes.

“BT is not viable in relationship to its current debt load of $51 million and its ability to generate earnings to repay this debt. BT cannot meet its principal and interest obligations at this time,” the committee concluded, noting that the company’s current business plan can’t meet future financial challenges either.

As if to underscore that notion, BT this month asked the city of Burlington for a $386,000 loan from to make an interest payment to CitiLeasing by Wednesday, to prevent the company from technically defaulting on its $32 million municipal lease purchase.  On Friday, a judge issued a restraining order forbidding such a loan unless the Vermont Public Service Board agrees.

The committee noted that the reasons for BT’s financial problems weren’t rooted in its “first-class” fiber optic network, or its usefulness to the city.

In summary, the committee and its consultants blamed the problems on these factors:

• HBC found BT overpaid for its fiber network, spending $1,000 per home passed, when fiber build-out prices have dropped in the past few years.

• BT is spending too much money on customer installations.  HBC reports BT could save more than $600 off the $1,600 the company pays to hook up each customer.

• The company uses the same door-to-door marketing company Comcast uses to get new customers.  Additionally, BT contracts with a third party service company to handle installations and service calls.  This work should be done in-house, HBC recommends, as paying a company based on how many installations are performed provides a built-in incentive to cut corners and quality.

• BT’s broadband products are too slow for a compete, handing incumbent cable provider Comcast an unnecessary competitive advantage.  Fiber can blow cable modem service out of the water when competing on speeds, but BT foolishly charges too much money for too slow service topping out at just 8Mbps/8Mbps, for a whopping $71.80 a month.  BT calls that “the ultimate Internet experience.”  It’s not.  HBC predicts broadband will become BT’s most important service, so it is critical for the company to make the product more attractive to customers.

• BT is mired in politics that has nothing to do with its service to the community, and it creates unnecessary distractions that commercial providers do not have.  Some who oppose the municipal fiber project or the current city council use BT as a political football.

• Because it is a public entity, too much financial and strategic business information is open to public review, which includes BT’s competitors.  That gives Comcast and FairPoint advance notice of BT plans, pricing, and growth strategies.  Restructuring as a semi-private entity under local government oversight would help guarantee competitive business information stays out of the hands of the competition.

• BT lacks an effective marketing strategy to convince residents and businesses to change providers.  Without a compelling lineup of services, and a marketing effort to sell them, customers will be reluctant to go through a disruptive switch to BT service.  The provider’s bundled service packages are often compelling (a triple play with basic television and phone service only costs $89 a month, less than $20 more than standalone broadband service), but they often lack the services, speed, and channels consumers want.

• The company does not pay enough attention to customer service strategies.  Customers complain BT does not accept cash payments from walk-up customers, who are told to return with a money order.  From a confusing automated attendant that answers customer calls to inconvenient hours and appointment scheduling, BT needs to hire marketing experts to help restructure how it serves potential and subscribing customers.

Burlington Telecom's fiber broadband speeds are the same uploading and downloading, but there is plenty of room for improvement in speeds at a lower price

• BT utilizes a 200-megabit backbone at a cost of $6,000 a month and a 350-megabit backbone at a monthly cost of $16,331. It is HBCs belief that backbone costs can be reduced considerably, as much as $6,000 per month should be saved through re-negotiation. Costs should be in the neighborhood of $25 to $30 per megabit, as compared to the $40 per megabit of speed now being paid by BT. HBC buys twice as much bandwidth per month than BT and pays only $7,000 more for the additional capacity.

• Finally, the company leaves a lot of potential earnings on the table.  It doesn’t provide local-ad insertions on cable channels and doesn’t leverage its excess broadband capacity with businesses by selling them web hosting, co-location, and speed critical services.  It doesn’t provide value-added services that cable companies now offer, such as caller ID on TV.

The Burlington mayor, Bob Kiss, expressed skepticism at some of the conclusions in the committee’s findings.

Kiss believes refinancing BT’s debt would give the telecom company more time to implement better marketing and service improvements, which could attract new customers and revenue.

For Burlington business leaders, the entire affair is an embarrassment.  Many believe significant harm will come from a city gaining a reputation for defaulting on its obligations.

The conclusion many have reached is that Burlington Telecom was naively planned, without sufficient regard to realistic projections of expenses and revenues, and lacks expertise to effectively compete with other local providers.  Building an advanced fiber network for your community is only as good as the services offered at a price that makes sense.  Alienate customers with ineffective marketing or out of touch product packaging, and your future will be in doubt.

[flv width=”368″ height=”228″]http://www.phillipdampier.com/video/WCAX Burlington Telecom Saga 12-15 02-01 02-05 02-11-2010.flv[/flv]

<

p style=”text-align: center;”>WCAX-TV in Burlington has followed the BT saga for months.  This video includes five reports covering the company’s future viability (13 minutes)

1. Burlington Telecom Saga Continues (12-15-2009)
2. Burlington Telecom Forces Changes In Burlington City Government (02-01-2010)
3. Burlington Telecom Not Financially Viable (02-05-2010)
4. Burlington Council Gets Blue Ribbon Committee Report (02-11-2010)
5. Burlington Telecom’s Fate Under Discussion (02-11-2010)

[flv]http://www.phillipdampier.com/video/WFFF Burlington Burlington Telecom’s Future Unclear 02-11-2010.flv[/flv]

WFFF-TV in Burlington reports the telecom company’s future is unclear. (1 minute)

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WPTZ Plattsburgh Burlington Telecom Not Viable.flv[/flv]

WPTZ in Plattsburgh covered the contention over an upcoming interest payment BT needs to pay by Wednesday.  (3 minutes)

Read our complete coverage on Burlington Telecom.

While several American broadband providers contemplate limiting customer’s broadband usage or launching usage-based billing, Australia is headed in the other direction with today’s introduction of the country’s first truly unlimited and unthrottled broadband plan for a flat monthly price.

AAPT, part of the Telecom New Zealand Group, claims its new Entertainment Bundle will revolutionize broadband in Australia as its competitors are forced to adopt unlimited plans of their own to compete.

For $88US per month, AAPT offers ADSL2+ 20Mbps service that has no usage limits, no throttled speeds, and no metered billing.  The plan also includes free home phone line rental and a monthly $50 voucher good for downloading from the AAPT In Song music store, offering one million songs.  A Wi-Fi modem is also included in the plan.

AAPT's unlimited plan is the first to dispense with usage allowances, speed throttles, and metered billing for Australian broadband users

AAPT CEO Paul Broad said the company’s new unlimited plans would deliver Australians better broadband.

“You go to the United States and there’s no such things as caps – you get online and get an unlimited download,” he said. “Consumers don’t know what these caps mean.”

Broad

The plan requires a two year service contract.  Australian broadband pricing always includes a total cost of the plan over the length of the contract.  For this particular plan, it’s $2,129.34US for two years of service.

Previously, AAPT offered unlimited downloading only between the hours of 2am-8am local time.  Daytime usage was limited to a maximum of 60GB per month, with speeds throttled to 64kbps for the remainder of the month if you exceeded your plan allowance.

“We were first to market with 2am-8am unlimited [service], then 8pm–8am unlimited, and now 24/7 Unlimited Broadband downloads plus music streaming,” Broad said.

The company still reserves the right to terminate service for grossly excessive usage, not specifically defined, but that is a common right reserved by virtually every service provider.

Would-be customers are finding AAPT’s website and broadband plans confusing because AAPT’s broadband plans page does not yet contain details of the truly unlimited plan, which can be found here.

AAPT invites those with questions to call them on 132 082.