The Internet video revolution will increasingly be blocked by Internet Service Providers who will leverage their duopoly markets with restrictive usage limits to keep would-be video competitors from ever getting their business plans off the ground.

William Kidd, industry forecaster for iSuppli, an industry analyst group, sees a future of Internet Overcharging schemes like usage caps, overpriced pay-per-use pricing, and other limitations designed to erect roadblocks for online video content, which increasingly threatens the cable-TV products of both cable and phone companies.

The latest scheme to limit usage of streaming media come not from concerns about bandwidth costs but rather the “unknown risks” online video could have for cable and phone companies’ other products.

Such risks, Kidd believes, will compel broadband providers to increasingly implement caps in order to mitigate any long-term gambles that providers might have to take to make streaming media available to home and mobile environments.

At present, content can be streamed over TV from online service offerings such as Hulu and Netflix, or accessed through a device such as the PlayStation from Sony Corp. In addition, new-media business models continue to emerge with the introduction of new platforms that circumvent services currently provided by traditional cable or satellite pay-TV providers.

The caps planned for implementation will sink virtually all of the video streaming services that are not partnered with cable and phone companies.  Kidd notes the caps he’s seen offer limited viewing — as little as three hours for wireless 200kbps video streams or standard definition video streamed on wired networks for up to 25 hours per month.  True HD viewing is simply not going to happen with caps on many providers planned to cut off viewing after only seven hours.

Business plans and would-be investors must take notice of what providers have in store for would be competitors, Kidd argues.  Since the phone and cable companies maintain a near-monopoly on broadband, they ultimately control what Americans can do (and see) on their broadband accounts.

Rogers reduced usage allowances on several of its broadband plans days after Netflix announced a streaming service for Canadians.

One need only look to Rogers Communications in Canada for a timely example.  Rogers promptly lowered usage limits on some of its broadband plans just days after Netflix announced a video streaming service for Canadians that could directly compete with the cable giant’s video rental stores and cable pay per view services.

“These new-media business models imagine that they don’t have to pay the network through which their data traverse,” he said. “However, such a theory is directly at odds with the ambitions of cable and satellite-TV operators, which increasingly are unwilling to provide heavy data access through their networks for free—especially if a way can be found to monetize ongoing data traffic into viable revenue streams.”

In addition, new Internet-born content providers wrongfully take for granted that the way their largely free content has been consumed now also will apply in the future to premium services. The assumption is a bad one, Kidd observed, because in order for consumers to consider the Internet as a true substitute for their big-screen TV, content would need to be comparable in both technical quality and entertainment value. And to achieve the same level of value, such content necessarily would be extremely bandwidth intensive.

As a result, for any number of these emerging TV-substitute models to work someday, one has to assume that the picture quality being proffered is acceptable for viewing on large-screen TVs.

But providers have a trick up their sleeves by implementing seemingly tolerable usage caps as high as 250GB per month, which seem generous by today’s usage standards.  But they will be downright paltry tomorrow, especially if they do not increase over time, as online video increases in quality and size.

“By implementing caps now that don’t impinge on the way subscribers use the Internet today, cable and telco operators are able to create for themselves an advantageous situation,” Kidd said. “Under these circumstances, emerging media competitors must work more directly with the network owners before getting their services off the ground—as opposed to around them, as they may have previously hoped.”

That means giving them exactly what they want — a piece of the action and control over the content that crosses over their wires to broadband consumers.

One month after Frontier Communications took over phone service from Verizon Communications in West Virginia, unresolved problems over West Virginia’s telephone system continue to mount, leaving one sheriff’s department using Facebook to communicate with some residents and a renewed call for an investigation over Frontier’s poorly functioning “Operational Support System.”

One serious problem is in Wetzel County, where the local sheriff’s office faces trouble from disruptions to their call management system that began July 1st, the date Frontier switched over operations from Verizon Communications.  Calls that are intended to reach individual officers’ direct extensions or voicemail are instead being diverted into a black hole, as callers are told they will be transferred to an operator that does not exist.

The result of the ongoing, month-long problem is that individual residents are unable to reach officers except through the county’s Facebook page and website.  Emergency calls to 911 are not affected, but calls transferred from 911 to the sheriff’s office are.

Despite weeks of back and forth, Frontier is blaming an outside vendor for the problem, claiming the sheriff’s office needs to order a “part” to repair the all-digital call management system.  That doesn’t seem to impress Wetzel County Sheriff James Hoskins, who wonders why the problem suddenly started the same day Frontier switched away from Verizon’s systems.  Additionally, voicemail messages saved on Verizon’s old system are no longer accessible to the department.

Meanwhile, other service disruptions continue to pile up across the state, along with consumer and business complaints at the Consumer Advocate’s Division of the Public Service Commission.  Things have deteriorated so much, the state’s Consumer Advocate Byron Harris is asking the Commission to hold hearings on Frontier’s poor performance in the state.

Harris told MetroNews the problems have gone beyond glitches.

“In any transition between companies, there are always going to be some glitches, but this has gotten past the point of glitches,” Harris said.

FiberNet uses Frontier’s landline network and, last week, that company asked for a similar review.  FiberNet officials say their customers have been experiencing many problems since the change at the beginning of the month.

“At the Consumer Advocate’s Division, we’ve also noticed a significant increase in complaints, across the board, all types of complaints from customers,” he said.

Harris says customers that are having problems are, in some cases, also finding it difficult to get in touch with anyone with Frontier to report their issues.

But Frontier Spokesperson Brigid Smith says it’s impossible to completely avoid all such problems.

“We are 30 days into a very, very large change which, by and large, has gone very well,” Smith told MetroNews.

“There have been glitches.  We have taken accountability for those.  We are trying to fix a system that has been sorely neglected and we are very, very committed to the state.”

Stop the Cap! reader Janel from Huntington thinks that excuse is becoming the equivalent of a broken record.

“Frontier can’t help but tell people here over and over and over how great of a job they’re doing and how well the transition went,” she writes.  “But there are a whole lot of people who disagree — they just don’t happen to work for Frontier.”

Janel’s cousin lost his DSL service for nearly a week after the transition and after repeated calls to customer service finally learned the company lost his records.

“They deactivated his account and their customer service people, when they bothered to answer, were about as useful as a car in a ditch,” she notes. “They had no record he even had an account and thought he was served by some other company, despite having a phone bill he was willing to fax them showing he had their DSL service.”

Frontier eventually “re-established service” after re-entering his customer information and reauthorized the DSL modem.

Frontier’s unionized employees facing enormous overtime demands are perhaps the best evidence Frontier continues to experience serious transition issues.

Frontier used a provision in its union contract with the Communications Workers of America to demand 70-hour workweeks for many Frontier service technicians working in West Virginia, declaring an “emergency and long term service difficulty.”

With an extremely hot summer underway, line technicians are facing long hours in 90 degree plus weather repairing lines Verizon neglected for years.  Transition issues are also being blamed for long overtime hours as Frontier works its way through a large number of unresolved support requests.

[flv]http://www.phillipdampier.com/video/WTRF Wheeling Major Concerns With Phone Line at Wetzel County Sheriff’s Office 7-31-10.flv[/flv]

WTRF-TV in Wheeling, W.V., reports on the concerns of the Wetzel County Sheriff’s Office, which is still without properly working phone service a month after Frontier Communications took over phone service in the state.  (3 minutes)

Illinois politicians raked in more than a half-million dollars in campaign contributions from AT&T, yet claim the money had no influence on their decision to let AT&T reduce investment in its landline network, still serving three-quarters of residences and businesses in the state.

Not a single “no” vote was cast in either state legislative body over the latest deregulation bill — a combined vote of 177-0 in the Illinois House and Senate.

But many lawmakers said “yes” to hefty campaign contributions from AT&T.

The St. Louis Post-Dispatch counted the money:

The AT&T legislation relaxes state rules on the company regarding its maintenance of basic land-line phone service, essentially allowing it to focus more fully on its wireless business. The bill also gave the company more flexibility in changing the packages it offers to customers without awaiting regulatory approval.

The company presented the measure as crucial to the unfettered advancement of the wireless market. Critics worried that land-line users and others would see a reduction in service from the company, and safeguards were negotiated into the bill with the consumer organization Citizens Utility Board and others. Gov. Pat Quinn signed it into law June 15.

Citizens Utility Board (CUB) Executive Director David Kolata says his group is still worried that land-lines users, rural customers and others may end up left behind as a result of the legislation. He stopped short of blaming AT&T’s heavy campaign donations for the company’s success at getting most of what it wanted from the legislation, but he noted: “Those of us who had concerns about the bill really had no money on our side.”

AT&T gave about $594,000 to state-level Illinois politicians from Jan. 1, 2009, through June 30, 2010, according to the most recent data compiled by Kent Redfield, a political scientist and campaign finance expert with the University of Illinois at Springfield. That puts the company among an elite core of high-powered donors — including Ameren, ComEd, the Illinois State Medical Society several major unions — who gave more than $500,000 during that time.

Lawmakers who receive significant money from donors, while helping usher their bills through Springfield, invariably maintain the support is a matter of shared goals, not a quid pro quo.

“They’ve been supportive of me for the last three or four terms,” state Rep. Kevin McCarthy, D-Orland Park, said of AT&T, which has given him more than $10,000 since 2006. McCarthy was the chief House sponsor of the telecom bill.

“I’m a pro-business Democrat,” he said. “I think it was a great bill for the people of our state. I appreciate their support.”

If only it were that simple.  AT&T’s contributions ebb and flow depending on legislative action items before the state legislature.  For instance, nothing provoked a bigger blizzard of AT&T money than the 2005 purchase of AT&T by SBC Communications.  Seeking regulatory approval for the merger, SBC/AT&T kicked in more than $1.17 million dollars to state legislators. Less than half that amount was handed to legislators the year before.

Money buys attention to legislative issues and can move a low priority agenda item to the front burner, especially if contributions are likely to arrive from all sides of an issue.

AT&T’s latest legislative accomplishment has bought the company the right to focus its attention on its wireless business, with financial requirements to maintain landline service quality eased.  While that might help urban residents in northern Illinois achieve better cell phone service, it could leave many rural, elderly and poor residents with deteriorating basic phone service at potentially higher prices and no broadband.

That is because AT&T’s deregulation campaign left the company off the hook for a requirement it deliver broadband to 90 percent of its landline customers outside of Chicago.

The Moline Dispatch and The Rock Island Argus had a problem with that:

CUB’s biggest objection, which we share, is that the measure as written lets AT&T off the hook from a state order to ensure that its network provide high-speed Internet access to 90 percent of its customers outside Chicagoland — including folks here in the QCA and just about every corner, and the vast middle, of the state. Telecom companies would have you believe that their industry is truly competitive. But in many areas it is not, particularly outside of large urban centers. Adds Mr. Kolata, “This should be of particular concern to residents of central and southern Illinois, as state regulators recently concluded that many areas in the land of Lincoln are ‘grossly underserved.'”

Ask any company, including this one, which has tried to get the monopoly service provider to cooperate in upgrading high-speed Internet access, or at least to get out of the way of others who would, what they think and you’re liable to get an earful. They know from experience that AT&T has shown little interest in any meaningful upgrade or expansion of its facilities in the Illinois Quad-Cities.

The telecom giant and its big communication company allies are calling this a jobs bill, but saying it doesn’t make it so. Indeed, the rewrite will have the opposite effect if it does not require the corporate giant to provide critical technology outside of Chicago.

AT&T’s landline rate plans force many Illinois residents to overpay for their phone service.  The CUB has a consumer fact sheet to help AT&T customers potentially save hundreds of dollars a year.

A Pennsylvania police chief is in hot water with his wife after AT&T combed through his calling records at her request and confirmed what she has suspected — he was calling an ex-lover on his cell phone and allegedly lying about it.

Garold Ray Miller, police chief of Industry, filed suit against AT&T for disclosing his call records to his wife, whose name was not on the cell phone account.

The lawsuit makes public the formerly private affair, and it’s now fodder for the Pittsburgh Post-Gazette:

According to the complaint, Mr. Miller’s wife confronted him in the spring of 2008 in regard to his communicating with a woman about a criminal investigation.

“Miller denied having communicated with the woman in question, as he had known the woman growing up and had also dated her in high school, and he did not wish to alarm his wife,” the lawsuit said.

However, it continued, Mr. Miller’s wife insisted he was lying and later told him that she had gotten access to his phone records from AT&T to prove it.

“His wife also revealed that the [AT&T] representative conducted a number search on his records, in order for her to confirm her suspicions that he was communicating with this woman.”

The complaint goes on to say the relationship between Mr. Miller and his wife became severely burdened. Further, when they went out for drinks one night, “Miller’s wife became violently ill, confessing that she had been troubled by her suspicions.”

Because of the invasion of privacy by AT&T, Mr. Miller contends, he suffered psychological pain and suffering, as well as humiliation, shame, embarrassment, self-revulsion and damage to his self-esteem.

AT&T won’t comment on the case except to say it values its customers and takes its obligation to protect customer data very seriously.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WTAE Pittsburgh Industry Police Chief Suing ATT For Releasing Phone Records To Wife 7-28-10.flv[/flv]

WTAE Pittsburgh covered the lawsuit between a Pennsylvania police chief and AT&T over the disclosure of his cell phone calling records.  (2 minutes)

Wal-Mart is expanding its prepaid wireless service Straight Talk to include new phones that will work on AT&T’s network.

Straight Talk, operated by TracFone,  currently resells Verizon Wireless service.  Adding AT&T coverage expands service into parts of the country where Verizon signals don’t make it.  AT&T’s network reaches larger parts of states like Wisconsin, West Virginia, and New Mexico than Verizon does.

Straight Talk phones that currently work with Verizon are not interchangeable with AT&T service, however.  Verizon uses the CDMA standard for its network, while AT&T uses GSM.  The two are not compatible.

Wal-Mart’s prepaid service is appealing to consumers who do not require the latest handsets and seek wireless service without a two year contract or expensive add-ons.  Straight Talk delivers cheaper cell service than Verizon does, with both using Verizon’s network.  The same will be true as AT&T service is added.

Straight Talk currently offers two service plans

Wholesale wireless service, typically sold to prepaid providers, delivers enhanced profits to big carriers like Verizon and AT&T without having to spend money on customer support.  Many prepaid providers sell older, more basic handset models that may have been in excess supply, are reconditioned/used, or are inexpensive to provide consumers.