FCC Chairman Julius Genachowski

In a dramatic departure from the former Federal Communications Commission’s largely “hear no evil, see no evil” oversight, Julius Genachowski, the new Chairman of the Federal Communications Commission, is a downright activist.

Genachowski, over the course of several interviews given this week, has made it clear that he sees major problems in the American broadband industry — it’s too expensive, it’s not competitive enough, and its widespread availability is absolutely critical to the economic success of the United States in coming years.  He’s made it clear broadband will be the most important issue before the agency for the immediate future.

“It’s tremendously important. I’m convinced that broadband is our generation’s major infrastructure challenge, akin to what railroads were, what the highway system was and universal electricity. This is the platform that will determine whether the country can compete in the 21st century. If we get this right, our broadband infrastructure will be an enduring engine for job creation, economic growth, investment, innovation, so it’s essential,” Genachowski said in an interview published today in The Wall Street Journal.

Although short on specifics in most of the interviews given to date, Genachowski has signaled his interest in preserving the concepts of Net Neutrality — providing open and equal treatment of Internet traffic without favoring or throttling traffic.

“The openness of the Internet has been a big driver of that. And it is important that we preserve that openness in order to drive investment, innovation, job creation and economic growth,” he said.

With the departure of the former FCC Chairman Kevin Martin earlier this year, Genachowski will mirror much of the Obama Administration policies and their telecommunications agenda.

Martin’s FCC, with a Republican majority, exercised a deregulatory approach to oversight, and was frequently criticized for not protecting consumer interests.  But Martin did routinely clash with the nation’s cable television operators, in his unsuccessful effort to force them to provide a-la-carte cable television programming tiers.  Martin’s leadership also brought about heightened oversight of “decency” policies impacting broadcasters, and resulted in substantial fines for radio and television stations that violated language or decency standards.  Most agency watchers summarize the last eight years of telecommunications policy as generally industry friendly, particularly to telephone companies, and mildly hostile to cable.  The Commission also sought to permit an increase in ownership concentration of the nation’s radio and television services, and approved mergers routinely, including one between former competing satellite radio providers XM and Sirius.

Genachowski’s FCC is expected to substantially change its regulatory approach, but only over time.

Although it will maintain an activist approach to broadband issues, Genachowski believes a top-down ‘agency makeover’ is required to prepare the FCC to meet the challenges of the 21st century.

“There are real challenges given the state of the infrastructure at the agency. As an example, there are literally millions of pages of documents that should be available to the public, and technically are because people can come in and look them up, that aren’t in digital form at all. They’re in paper. Some of these are historical documents, but there’s a huge resource downstairs in the pubic reading room that has something like 7,000 linear feet of paper that we really do need to digitize and put online. There’s a lot of paper that is online but not in machine-readable format, it’s not searchable,” he said.

Most FCC watchers believe the agency will move forward on several issues in the next 12-24 months:

1. A review of the Universal Service Fund (USF), which collects several dollars from every telephone customer in the United States to help underwrite and defray expenses of the nation’s most rural and disadvantaged telephone subscribers.  The USF has been roundly criticized for collecting an enormous amount of money, and squandering it on projects that go well beyond the Fund’s original intent, resulting in considerable waste, fraud, and abuse.  Genachowski’s FCC will be asked to consider using USF money to deploy and/or underwrite broadband service in areas not economically viable enough for private companies to provide service.
2. A review of the state of the competitiveness in the broadband, telephone, and wireless telephone industries, with particular emphasis on the latter.  Wireless phone companies like Verizon Wireless and AT&T Mobility are already under scrutiny for their exclusivity agreements with telephone equipment manufacturers, and their attempts to hold consumers’ hostage by refusing to permit them to reactivate their phones on other company’s networks.
3. A review of applications and filings by broadcasters relating to low power radio and television, improving reception for digital over the air television signals, indecency complaints, and mergers and acquisitions in the industry.

There is bad, and then there is REALLY, REALLY BAD.

CableOne punishes you if you exceed your daily usage allowance.

CableONE’s new residential broadband Internet Overcharging pricing achieves new lows among American broadband providers – low caps that is.

The company has boosted the speed of its residential broadband services, and lowered the allowance you receive each month to use it.  The “Economy” package, if used to any degree for anything beyond e-mail and a smattering of web page viewing each month, will wreak havoc on any household budget.  Providing just 1.5Mbps downloads and 150kbps uploads for $26 a month, your monthly usage allowance is just ONE gigabyte.  Exceed that at your financial peril.  The overlimit penalty is a whopping $10/GB, and that full $10 is billed whether you exceed your allowance by one byte or 999 megabytes.  CableONE graciously limits their Money Party to a maximum $50 in overlimit penalties, putting your broadband service you thought you paid $26 for at the “reasonable” price of up to $76 a month.

But there is a way to steer clear of the overcharging, if you are a night owl.  The company turns the “meter” off from 12 midnight until 12 noon the following day.

CableONE’s other residential plans now also have lower consumption allowances, designed to limit your day to day use of your broadband service.  Instead of adopting a monthly maximum allowance, the company imposes daily limits that do not “roll over” from day to day.  If you use your connection heavily one day, but not at all the next three, you could still find yourself over the limit.

Standard Service: 5Mbps/500kbps – $49/month – 3 GB Daily Usage Limit
Premium Service: 10Mbps/1Mbps – $59/month – 5 GB Daily Usage Limit

Going over your limit between one and 14 days per month will result in an automatic downgrade in your broadband speed to the next lowest tier.  Exceed it more than 15 days per month, and your account will be terminated.

The company has suggestions for customers who want to reduce their usage to stay compliant.  Right on top: stop watching those online videos.

Suggestions for Reducing Bandwidth

CableONE’s service counts bytes used during the peak usage period which is defined as 12 noon to 12 midnight.

The following types of usage consume high amounts of bandwidth and should be avoided during peak usage period:

• Movie downloads
• Streaming Video
• Picture downloads or uploads
• Leaving your browser open on pages that “refresh” automatically

Some of the programs you have installed will try to update themselves periodically by downloading files. You can typically set your program to schedule updates during off-peak times. Windows software can be set to update overnight as well. Updates and large downloads done between midnight and 12 noon do not count against your allocation.

Subscribers, particularly in southern Mississippi, have had an increasingly difficult relationship with CableONE.  In March, a subscriber announced a lawsuit against the cable operator for gouging customers on set top boxes, required for digital cable viewing.  CableONE charges its customers $11 a month for a regular Motorola cable box and $23 for its HD-DVR box.  In June, a suspicious white powder was found in the Biloxi CableONE office, that was later determined to be harmless.

An unintentionally amusing CableONE ad follows the jump below.

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The west was won with higher upload speed.

Qwest, one of the nation’s largest telephone companies serving the western half of the United States, has proven that telephone company broadband need not be stuck in the past with slow and unreliable DSL speeds. Today, the company announced it was unveiling new super fast upload speed tiers for its entire lineup of broadband plans.  During the promotional period, current subscribers with a 7, 12, or 20Mbps download tier can upgrade to 5Mbps upload speed for $5 more a month.  That upload speed is far faster than what cable companies are providing customers across Qwest’s service area.

Neil E. Cox, executive vice president of Qwest Product and IT emphasized the growing importance of upload speeds for consumers.

“Faster download speeds are important, but upload speeds are getting more attention. By increasing connection speeds in both directions, Qwest is poised to support user-generated content and simultaneous high-bandwidth applications, like multiple online video streams and downloads or multiple players of online video games,” Cox said.

The company also announced a new super fast 40Mbps download and 20Mbps upload tier in selected cities.

Amy Lind, IDC Research Manager, Consumer Broadband and Mobile Services said that consumers are clamoring for faster speed and their research shows customers aren’t simply passively accessing web content any longer.

“Broadband providers have primarily focused on download speeds because, until recently, the Internet has been mostly a source for content, especially online video. Now, as more people create and share their own content, upload speeds have become increasingly important,” she said.

“Qwest has recognized this rapidly growing user-generated content trend and is encouraging the evolving Internet habits of its customers by adding new broadband tiers that emphasize upstream speeds,” Lind added.

The upgrades are possible because Qwest is deploying VDSL2 technology, a modern version of DSL, across its service area.  The technology works over a combination fiber optic/copper wire telephone network.  As long as a neighborhood is reached with a fiber optic line, VDSL2 can work over existing telephone wiring in the home.  Consumers subscribing to the service are provided with an Actiontec® Wireless VDSL2/ADSL2+/2 Universal DSL Wireless Gateway (modem).  The company warns that although the service is very fast, download and upload speeds will be up to 15% lower “due to network requirements and may vary for reasons such as customer location, Web sites accessed, Internet congestion and customer equipment.”

Pricing of Qwest’s New Speed Offerings

40 Mbps download with 5 Mbps upload, $99.99 a month for the first 12 months when combined with a qualifying home phone package.
40 Mbps download with 20 Mbps upload, $109.99 a month for the first 12 months when combined with a qualifying home phone package.
An introductory rate of $5 more a month for qualified customers with 7 Mbps, 12 Mbps or 20 Mbps speed tiers who upgrade to 5 Mbps upstream speeds.

A fact sheet is available with more information about the upgrade.

Read more and see a company video below the break.

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Bronson Riley realized not long ago that he and his wife were paying way more for cable television than they were getting out of it. They watched only a few shows each week.

At the time, he was reading a book on personal finance. It mentioned purchasing services “a la carte” rather than as a package.

The Lincoln, Nebraska resident knew that wasn’t an option for cable TV. So he cut the cord about two months ago, canceling his cable subscription. Now the couple watch what they want, when they want — online.

The mainstream press has started devoting more attention to the plight of cable television executives pondering what to do about “parasites” like Bronson Riley, who they see as poaching their programming and watching it online… for free.

One of the unintended consequences of the unveiling of TV Everywhere, the Comcast/Time Warner Cable concept of permitting “authenticated” viewers to watch cable programming online, (as long as they already subscribe to a standard “cable package”) is an exploration of the phenomenon of  consumers cutting cable’s cord and doing without.

Riley touches on an issue that has bugged cable consumers for decades now — paying for channels they didn’t ask for and don’t want.  In the 1980s and early 1990s, talk about 500 channels of cable programming was dismissed as fanciful, but has since become reality when one includes on demand and music channels.  What has also become an increasing reality for cash-strapped consumers is the bill at the end of the month, which has grown annually faster than the rate of inflation.

A-la-carte, simply defined as paying only for those channels you watch, is an alarming concept for the nation’s cable television operators.  They have resisted the concept for more than 20 years, when it was first seriously raised in congressional hearings to deal with runaway cable bills.

Unfortunately for the industry, most consumers have suggested they have no need for most of the channels they receive today, and are tired of paying for them.  Many consumers would be happy with just six channels they routinely watch,  eager to pay only for them and nothing else.

With this in mind, some customers who also have broadband service from their cable provider have begun to discover many of their favorite shows are available, on demand, for free.  With more and more shows becoming available, a small, but growing minority of cable subscribers have decided to drop cable TV and watch video online instead, an issue the Omaha World-Herald explored:

Andrea Riley watches “Desperate Housewives” at ABC.com, which streams free full episodes of that and other popular shows such as “Lost” and “Grey’s Anatomy,” often the day after they air. The couple buy episodes of another favorite, “The Soup,” a revamp of “Talk Soup” on E! Entertainment Television, on Apple’s iTunes for $1.99 each with only a day’s wait.

Even paying for the handful of shows they can’t get free legally, Riley figures watching TV online saves money. The only thing they miss is flipping on CNN Headline News and the Weather Channel in the morning.

“It’s all getting to watch the TV shows you want to watch at a cheaper price, at your convenience,” he said.

In making the switch, the Rileys have joined a small but growing number of people who are tuning in online rather than over traditional network, cable or satellite pipelines. Some watch online occasionally to catch up on an episode they’ve missed or to track down old or obscure shows. Others, like the Rileys, watch online routinely.

For now, only a minority of web-aware consumers understand how to watch television online, but that’s changing.

“People are just figuring this out,” Jeremy Lipschulz, director of the University of Nebraska at Omaha School of Communication said. “Once people figure out that all this content is out there, you’ll see a more dramatic shift.”

Bobby Tulsiani, a senior analyst with the market research firm Forrester Research, agreed it’s still tech types who are making the change. Two years from now, more people will be doing it, he told the World-Herald.

Ann Shrewsbury, public affairs director for Time Warner Cable Nebraska, said their business trends nationwide show the same thing.

That leaves cable operators like Time Warner Cable in a quandary, and they’ve thus far responded with a trial to stream cable shows online, on demand, for their customers.  But the catch is one must remain a cable TV subscriber to access it.

Across many parts of Nebraska, served by Cox Cable, they’ll be left out of the online video revolution on offer from Time Warner Cable and Comcast, at least until Cox Cable can negotiate its way into the project being run by its larger brethren.

Riley said he generally doesn’t miss cable, having spent more of his time online or watching movies on demand, except for local weather from The Weather Channel and catching up with news on Headline News.  He doesn’t regret the savings either.  Most standard cable tiers are priced higher than his broadband service.

But Riley does recognize there is one way to put a stop to the revolution and end the parade to true, on-demand television viewing on a “pay per view” or free basis: limits on his Internet service.

With Internet overcharging schemes like usage limits, or charging overlimit fees for “excessive consumption,” cable operators might hope to stop the threat before it gets out of hand.

The Internet Innovation Alliance claims to advocate for consumer interests, but has telecom backing.

The Internet Innovation Alliance released a report Tuesday telling you what you already know (thanks to Stop the Cap! reader ‘Bones’ for sending the link):

(1) Consumers receive more than $30 billion of net benefits from the use of fixed line broadband at home, with broadband increasingly being perceived as a necessity;
(2) With even higher speed, broadband would provide consumers even greater benefits – at minimum an additional $6 billion per year;
(3) Significant broadband adoption gaps exist between various groups of households;
(4) Among those who are connected to broadband at home, there is no significant valuation gap based on race, although there are valuation gaps along other lines;
(5) The total economic benefits of broadband are significantly larger than our estimates of the consumer benefits from home broadband.

Astroturf Thursday

In simpler terms, the IIA did a study that discovered consumers value broadband in dollar amounts higher than they currently pay for it.  To the general media, it will be interpreted as evidence that broadband is wonderful in the United States and may be underpriced.  That’s music to the ears of providers, who also study the gap between what a consumer would be willing to pay for a product versus what they actually pay.  That gap represents the wiggle room for providers to raise prices and safely predict consumers will not be outraged about it.

The IIA also trumpets the value of broadband in their study, entitled The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households, for the benefit of their benefactors, who stand to gain substantially from broadband stimulus funding.  The IIA, one of the many astroturf organizations out there supported by the telecommunications industry, advocates for a “partnership” between private providers and government to deploy broadband.  In other words, they want the government to hand over tax dollars to private providers to construct broadband networks while preserving the completely deregulated “free market” broadband marketplace.  The “free market” concept now seems to include public taxpayer dollars subsidizing private business, all while providers demand no oversight or regulation to “hamper their innovation.”

Public money funneled to private business with no regulation or oversight = broadband goodness.

Still, it’s not all bad.  Even the IIA understands the obvious — providing faster broadband speeds not only enhances the perceived value of the product, consumers are also willing to happily pay higher prices to obtain it.  They didn’t study Internet Overcharging schemes like usage caps, consumption-based pricing, and other similar pricing schemes, presumably because the results would have shown dramatically dampened consumer enthusiasm.

What Is The Internet Innovation Alliance?

Who They Say They Are: “[A] broad-based coalition …committed to more widespread usage and availability of broadband through wise policy decisions.”
Who They Really Represent: Members include telecom business such as AT&T, and telecom trade associations such as the Information Technology Association of America.
What They Say They Do: “[A]ssist public policy makers to better understand new technologies and to promulgate smart policies that facilitate their growth.”
What They Really Want: To create a tiered Internet and allow broadband providers to charge web sites like Google and Yahoo! for the ability to reach their subscribers.
On the Web: http://www.internetinnovation.org/

The Internet Innovation Alliance runs a slick website dedicated to promoting broadband Internet policies that “will improve Americans’ lives.” While the Alliance claims to include “consumer advocates” in its coalition, no true consumer groups can be found anywhere in its membership list. But AT&T, one of the largest telephone companies in the country, is on the list. As recently as late 2004, the Internet Innovation Alliance (IIA) did seem to be on consumers’ side on the issue of network neutrality – the principle that your Internet service provider shouldn’t be able to block or interfere with your ability to access any content or use any services on the web.

Take a look at IIA’s scathing statement after SBC Communications revealed plans to charge fees to web-based telephone providers (also called Voice-over-Internet-Protocol, or VoIP): “SBC’s charging of higher fees to VoIP providers …is discriminatory in nature and is a dangerous first step toward eradicating the vast array of benefits services like VoIP will provide to consumers. VoIP promises great consumer benefits provided it remains unburdened by regulations and access fees…. SBC apparently missed the memo or chose to ignore it in the face of larger profits.”

So where was the outrage a year later when SBC head Ed Whitacre told Business Week magazine that broadband Internet providers should be allowed to charge fees not only to VoIP companies, but to any web-based company or service? “Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. …We [the telephone companies] and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!,” argued Whitacre.

This time, the Internet Innovation Alliance was nowhere to be found. Why? Maybe because SBC Communications was in the final stages of a merger with AT&T—one of IIA’s “member” groups. IIA does not disclose how much its “members” contribute to the organization, but in the case of AT&T, it appears to be enough to have bought IIA’s silence. — Common Cause