Bruce

Charging usage-based pricing and monetizing your use of the Internet is key to enhanced profits and higher earnings as broadband becomes the key product for cable operators.

That is the view of Robert Bruce, president of the communications division of Rogers Communications, eastern Canada’s largest cable operator.

“[The Internet] is the key to the future of our business, hence monetizing the increased bandwidth usage will rapidly become the future across all our businesses, whether it is wireless or wireline,” Bruce told a financial analyst in response to a question about ongoing Internet rate increases from the cable company. “There are clearly some unlimited offers out there and we think they are fairly shortsighted as the Internet is the future of the business.”

Bruce believes there is plenty of room for future rate increases, especially as the cable company boosts Internet speeds and ends network traffic management, improving the perceived quality of Rogers’ Internet service.

“We have significantly enhanced the value of this product and over time it is our plan to monetize it accordingly,” Bruce explained to the analyst. “The price increase that you receive in the mail would have just been one step in the monetization that we think will continue as Internet service becomes the backbone product in the home.”

Rogers admits it will continue to lower the bar on customers with usage caps and higher broadband pricing.

Ironically, Rogers is currently offering its own unlimited use plans, primarily in response to a competing offer from Bell.

Dr. Michael Geist, a broadband industry observer and law professor at the University of Ottawa notes competition is the only thing keeping Rogers’ pricing and usage caps in check.

“If the Bell offer disappears, so will the Rogers plan,” Geist predicts. “With limited competition, favorable pricing plans will come and go, with executives anxious to increase prices and implement usage caps. The only solution is sufficiently robust competition that all players are continually forced to improve service and keep pricing in check to retain and attract customers.”

Rogers may tell the public Canadian broadband is robustly competitive but the company signals something very different to the investor community. With OECD data already showing Canada among the ten most expensive countries for broadband service in the developed world, Rogers is primed to raise prices even higher as it further tightens Internet usage caps.

Rogers’ improvements in its broadband service do not necessarily correspond with the company’s pricing power. As consumers increasingly consider Internet access an essential utility in the digital economy, Rogers is finding it can set prices as it likes and regularly increase them without effective subscriber backlash. With most Canadians buying service from the cable or phone company, if both providers avoid a pricing war, investors will be able to extract OPEC-like earnings from the barely regulated service.

Providers routinely claim rate increases are tied to costly upgrades, but Rogers’ own financial statements and comments to shareholders say otherwise. The cost to deliver broadband service in Canada is dropping, but the price charged for Internet access and the overlimit fees collected when customers exceed their usage limit will continue to rise as a growing percentage of company revenue now depends on broadband service.

Time Warner Cable is once again raising its broadband prices, reflecting the fact Internet access continues to be a “must-have” product with room to raise the cost without driving customers away.

On average Time Warner Cable customers in the northeast with broadband-only service will pay $3 more a month starting Aug. 9, according to public relations manager Joli Plucknette-Farmen. Customers now pay $51 a month for 15/1Mbps service. After the increase, customers will pay $54.99, not including the modem rental fee. In early 2010, customers were paying $39.95, around $15 less.

Time Warner Cable’s new broadband prices will range from $34.99 a month for Lite 1/1Mbps service to $104.99 a month for 50/5Mbps service.

The rate hike will likely spread across the rest of Time Warner Cable’s systems around the country over the summer and fall.

Plucknette-Farmen said the increase will help the company offer the best possible broadband service.

Not every customer will immediately face higher pricing. Customers on promotional pricing packages will remain unaffected until those offers expire.

Because Time Warner Cable increasingly prices its services on a customer-by-customer basis, assessing the full impact of rate changes is extremely difficult because customers can pay dramatically different rates for the same services. A Time Warner Cable customer paying regular prices for standalone Internet service will find their neighbors with bundled service packages paying much less and those with promotional/customer retention deals paying the lowest rates of all.

In 2012, Stop the Cap! wrote a guide for Time Warner Cable customers to negotiate a better deal for themselves. Readers report the method still works.

Comcast has filed a patent application that would let the company expand its Wi-Fi network by turning customers into human Wi-Fi hotspots and convincing them to offer Comcast Wi-Fi from rental cars, bicycles, and buses.

FierceCable found the patent application, called “Mobile WiFi Network” that would let the cable company build a dynamic mesh network of mobile hotspots that could be used by its customers. But instead of placing permanent Wi-Fi antennas on buildings or light posts, Comcast wants a patent to extend its network by using vehicles and people that can be positioned exactly where Comcast needs better wireless coverage.

In one example, Comcast’s proposed roving rental car fleet would use incentives to convince renters to activate the car’s built-in hotspot in return for free or discounted services.

“The offer may indicate that if the rental car is dropped off at one or more designated parking spots, the driver will receive a discounted car rental rate, free parking, a coupon for items sold at the designated parking spot, etc. In this manner, the driver may be incentivized to assist in managing the network of transceivers to improve the coverage area. A driver wishing to accept the offer may press a button on the car’s computing display, or other computing device (e.g., using a smart phone application) to respond to the offer with an acceptance,” Comcast states in the patent application.

If a driver says no, Comcast can up the ante with an even better offer in response. If that does not work, Comcast can expand its Wi-Fi network dynamically in other ways.

“It should be understood that the process could be implemented by placing transceivers in or on any other mobile unit, such as bicycles, Segways, buses, police cars, taxis, boats, persons, dedicated vehicles, etc. or any combination of such mobile units,” Comcast wrote.

Last month, Comcast announced it would activate a public Wi-Fi network over wireless routers supplied to customers on a secondary channel.

Cablevision has begun notifying Florida customers it is pulling the plug on its market trial OMGFAST wireless broadband and voice services Aug. 19.

The cable operator launched the venture in 2012 advertising $29.95 broadband service delivered over Multichannel Video and Data Distribution (MVDDS) frequencies it won in a 2004 FCC auction.

FierceCable learned the service had not been a runaway success, attracting only 1,600 customers in the market test conducted in Broward and Palm Beach counties.

The writing may have been on the wall for the future demise of the service after the company laid off workers at its Pompano Beach headquarters at the end of June. The 10,000 square-foot building reportedly housed about 60 employees.

Cablevision sold its MVDDS spectrum to Dish Network last fall. Dish had been leasing the spectrum back to Cablevision to keep the service up and running.

Cablevision said it was still in the process of notifying customers they will have to get their phone and broadband service from somewhere else starting next month.

OMGFAST marketed up to 50Mbps service for $29.95 a month, charging an extra $10 a month to lease the required equipment.

Just as in the United States, the promises made by satellite broadband providers are turning out to be too good to be true.

In Great Britain, commercial broadband providers have argued satellite Internet access is a better solution for rural residents because wiring out-of-the-way places is “too uneconomical.”

Despite promises of 20Mbps service from satellite operators, customers report actual speeds are well below 1Mbps at the times they actually want to use the Internet. Unlimited access is also increasingly a thing of the past, replaced with usage caps of 50-60GB, with unlimited usage from 11pm-7am.

Providers deny any serious problems, pointing to speed test tools developed and released by the ISPs showing speeds are theoretically great. But browsing the public Internet suggests otherwise.

Avonline customers have a very active ongoing discussion complaining that £65 satellite broadband should work better:

For past three weeks, the service takes a dive in the evening, I thought this started about 7pm but having tried it earlier, it’s more like 5pm and today about 4pm. Speed tests provided by Avonline suggest I am getting 20/5Mbps but all other tests suggest between 1 and 2Mbps download and ?? upload. Often their own speed test stalls on the upload altogether or eventually returns a result of 0.1Mbps or similar.

As a family, we come home from work and school and want to watch things online at a time to suit us as terrestrial TV is a bit dire. The service is unavailable at this key time and remains down until 1 or 2 am.

Unlimited customers paying £75 per month have been told they are “abusing” the service and that it has effectively run out of capacity and is oversold.

“Unfortunately we cannot do much about the bandwidth on the shared network during peak hours,” came one response from Tooway, another satellite ISP that recently disclosed it will only sell unlimited service to 20,000 customers and wants assurances customers are using their accounts for private, family, and personal use only before the overnight usage caps come off.

*-Only applies at 3am.

But even then, some customers say pervasive speed throttling accomplishes the same thing as a strict cap – it keeps customers away from the service. One Tooway customer shares his dissatisfaction:

The Fair Use policy posted by ToowayUK has only just been introduced. Prior to this there was just boilerplate language that boiled down to “we can do anything at any time” (not that different from the FUP language of any other ISP).

Of course what is really a joke here is that the “unlimited” service actually has a 60GB cap – the traffic management policy works just the same way if we go beyond 60GB as when a capped customer goes beyond their cap.

ThinkBroadband notes satellite ISPs may also have insufficient capacity back on earth, but later reports show satellite bandwidth capacity is also a growing issue:

The KA satellites carry many transponders, but these are usually spread out to cover the whole of Europe meaning that for any particular satellite there may only be 3 or 4 transponder beams for the whole UK, and as a transponder has a throughput limit of 475Mbps this could prove a bottleneck. Oddly the fact that the speed probe tests gave good results, suggests the issue may not be satellite capacity but rather the purchased amount of capacity from the ground station to the Internet at large.