Craig E. Moffett joined Sanford C. Bernstein & Co. as the Senior Analyst for U.S. Cable and Satellite Broadcasting in 2002.

Craig Moffett, a Wall Street analyst with Sanford Bernstein, is sounding the warning bells that if AT&T and Verizon assign usage caps to their forthcoming LTE wireless broadband services, they will never provide suitable competition for American consumers.

The implications of Internet Overcharging schemes in wireless broadband go well beyond the two companies’ broadband offerings.  Investors expect either AT&T or Verizon to attempt a buyout of DirecTV in the coming months, hoping to pair the satellite service with broadband packages delivered by DSL, fiber, or wireless broadband.  Because many DirecTV subscribers are located in rural areas where even DSL service is often not available, wireless broadband networks would be the most likely means of reaching customers, but not with onerous usage caps.

“If LTE networks are going to be usage-capped, then the last pretense that LTE networks can be positioned as a substitute for terrestrial broadband would seem to be gone,” Bernstein told his clients. “And if LTE can’t be offered as a replacement for wired broadband, then the notion of an out-of-region bundle of DirecTV and LTE is no more.”

Unlike earlier broadband technologies, WiMax, LTE, and other 4G broadband platforms can deliver far more data to subscribers at reduced costs.  With the increased efficiencies offered by the faster networks, carriers can provide customers with considerably more wireless broadband service, unlike heavily capped 3G networks, most of which are limited to 2-5GB of monthly usage before the penalty rates or speed throttles kick in.  While completely unlimited service is unlikely until capacity increases, there is plenty of room to allow customers to access 4G networks without thinking twice about everything they do on them.

Sprint is betting its comeback on its virtually-unlimited Clear WiMax 4G service, now becoming available in an increasing number of cities across the country.  Marketed as a replacement for wired broadband, Sprint is hoping customers will flock back to the carrier, especially if AT&T and Verizon’s 4G LTE offerings are capped.

But AT&T and Verizon have both made noises about usage capping their LTE offerings, if only to increase revenue.  These profit raising Internet Overcharging schemes come despite efforts by the Obama Administration to dramatically increase wireless spectrum available for wireless broadband services.  Dave Burstein from DSL Prime says Federal Communications Commission chairman Julius Genachowski is betting the farm on wireless broadband being the best chance for increased broadband competition.

“The heart of the U.S. broadband plan is to release more spectrum – enough for 10-20 networks like Verizon’s LTE now building – and pray that will be enough competition in five to seven years to check price increases,” Burstein writes.

Making wireless an important substitute for DSL requires raising bandwidth caps from today’s typical 5-10 gigabytes to several times as high as LTE makes the cost reasonable. If Verizon follows AT&T with an abusively low cap of 2-5 gigabytes and Sprint etc. don’t clobber them, the whole broadband plan falls apart because that’s not enough for competition in the future.

I doubt Julius understands this, because he would be doing everything in his power to avoid low caps. It’s just one more strike against “affordable” broadband, like the recent Comcast and Verizon price increases. People need to laugh out loud when Genachowski says “affordable” while tolerating continuous price increases.

Dave Burstein, DSL Prime

While wireless broadband can deliver access to many Americans who have never had broadband service before, it’s not well-positioned to compete for customers seeking to use the next generation of high bandwidth Internet applications.

None of the current wireless services are suitable for high quality video streaming of HD TV shows and movies, a crucial application for many broadband users. Burstein also notes large uploads are painfully slow on Clear’s WiMax network because of limited upstream speeds, but he expects improvements in time, assuming carriers expand with demand.  If not, as more users pile on the next generation wireless networks, their suitability for high bandwidth services becomes even more questionable.

“How much wireless could compete with landlines, especially as all cable connections are moving to 50 meg, was a crucial question for the broadband plan,” Burstein writes. “The consensus of several good engineers is that 4G competes fine with DSL if not many people expect video or other high-bandwidth apps. Wireless certainly can’t keep up if many people want to watch their TV over the net, so it’s only a partial substitute.”

As for AT&T and Verizon, Moffett suspects both may have to take a pass on DirecTV, consumed with fighting against broadband reclassification and Net Neutrality policies in Washington.  Taking on a second battle to run another dog and pony circus to gain regulatory approval for a buyout of DirecTV may be more than they’re willing to deal with at the moment.

AT&T was sending 156 page cell phone bills in Linda Drussel's name to her son in Texas

All Linda Drussel tried to do was add her son and daughter-in-law to her AT&T FamilyTalk calling plan, adding a phone to Drussel’s account for $10 per month.  But instead of a $10 monthly fee added to her bill, Drussel got a past due notice from a collection agency demanding $1,182, threatening to ruin her credit if she didn’t pay.

Drussel told WDAF-TV she doesn’t pay her bills late, and had no idea what AT&T was talking about, having never received a past due bill from AT&T.  The collections agency was unimpressed, telling Drussel, “Oh come on, Ms. Dressel, you have to know about this — your name is on this.”

Drussel made multiple calls to AT&T trying to get someone to resolve this, but even company supervisors refused to provide any straight answers.  WDAF-TV felt Drussel’s pain when they got the AT&T runaround themselves.  At one point, a reporter was surprised when AT&T asked her for Drussel’s AT&T cell phone number.

It turns out AT&T didn’t establish service for her son under her own account — instead opening one under her name and charging full price for service, delivering the bill to her son’s home in Texas.  When her son and daughter-in-law divorced, nobody paid the bill and AT&T’s collections department decided to pursue Linda Drussel for the past due bill, claiming it was her responsibility.

With a local station’s newscast following the story, AT&T finally determined Linda didn’t ultimately owe the company a cent and has resumed pursuing her son for the past due balance.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WDAF Kansas City Problem Solvers Calling ATT 7-13-10.flv[/flv]

WDAF-TV’s ‘Problem Solvers’ had to be called in to try and get through to AT&T that a Kansas City-area woman didn’t owe the company $1,182 it claimed she did.  (3 minutes)

Your Friendly Internet traffic cops Time Warner Cable and Comcast paid for research that suggests those Internet speed slowdowns are your fault (or at least not theirs).

A study from MIT suggests that broadband speed test results that show “real world” broadband speeds far below what your provider promises are actually better than you think, and if they’re not — it’s not your provider’s fault.  The paper, Understanding Broadband Speed Measurements, finds slow Internet speeds are often your problem, because you run too many applications on your computer, visit inaccurate speed measurement sites, use a wireless router, or have run into an Internet traffic jam outside of the control of your ISP.

The research comes courtesy of MIT’s Internet Traffic Analysis Study (MITAS) project, financially backed by some of North America’s largest cable and phone companies — Clearwire, Comcast, Liberty Global (Dr. John Malone, CEO), and Time Warner Cable in the United States, Rogers Communications and Telus in Canada.  Those providers also deliver much of the broadband speed data MITAS relies on as part of its research.  Additional assistance came from MIT’s Communications Futures Program which counts among its members Cisco, an equipment manufacturer and promoter of the “zettabyte” theory of broadband traffic overload and cable giant Comcast.

The study was commissioned to consider whether broadband speed is a suitable metric to determine whether an ISP provides good or bad service to its customers and if speed testing websites accurately depict actual broadband speeds.  Because Congress and the Federal Communications Commission have set minimum speed goals and have expressed concerns about providers actually delivering the speeds they promise, the issue of broadband speed is among the top priorities of the FCC’s National Broadband Plan.

“If you are doing measurements, and you want to look at data to support whatever your policy position is, these are the things that you need to be careful of,” Steve Bauer, technical lead on the MIT Analysis Study (MITAS) told TG Daily. “For me, the point of the paper is to improve the understanding of the data that’s informing those processes.”

Bauer’s 39 page study indicts nearly everyone except service providers for underwhelming broadband speeds:

While a principal motivation for many in looking at speed measurements is to assess whether a broadband access ISP is meeting its commitment to provide an advertised data service (e.g. “up to 20 megabits per second”), we conclude that most of the popular speed data sources fail to provide sufficiently accurate data for this purpose. In many cases, the reason a user measures a data rate below the advertised rate is due to bottlenecks on the user-side, at the destination server, or elsewhere in the network (beyond the access ISP’s control). A particularly common non-ISP bottleneck is the receive window (rwnd) advertised by the user’s transport protocol (TCP).

In the NDT dataset we examine later in this paper, 38% of the tests never made use of all the available network capacity.

Other non-ISP bottlenecks also exist that constrain the data rate well below the rate supported by broadband access connections. Local bottlenecks often arise in home wireless networks. The maximum rate of an 802.11b WiFi router (still a very common wireless router) is 11mbps. If wireless signal quality is an issue, the 802.11b router will drop back to 5.5mbps, 2mbps, and then 1 mbps. Newer wireless routers (e.g. 802.11g/n) have higher maximum speeds (e.g. 54 mbps) but will similarly adapt the link speed to improve the signal quality.

End-users also can self-congest when other applications or family members share the broadband connection. Their measured speed will be diminished as the number of competing flows increase.

The study also criticizes the FCC for relying on raw speed data that does not take into account the level of service being chosen by a broadband customer, claiming many service providers actually deliver higher speed service than their “lite” plans advertise.

In short, it’s everyone else’s fault (including yours) for those Internet speed slowdowns.

Ultimately, the report’s conclusion can be summed up in three words: change the subject.  It’s not slow broadband speeds that are the problem — it’s the lack of understanding about what you can accomplish with the speeds you do get from your ISP:

In the next few years, as the average speed of broadband increases, and the markets become more sophisticated, we expect that attention may shift towards a more nuanced characterization of what matters for evaluating the quality of broadband services. Issues such as availability (reliability) and latencies to popular content and services may become more important in how services are advertised and measured. We welcome such a more nuanced view and believe it is important even in so far as one’s principal focus is on broadband speeds.

One thing the paper does effectively deliver at top speed are industry talking points, particularly the one that says less regulation is better (underlining ours):

Our hope is that progress may be made via a market-mediated process that engages users, academics, the technical standards community, ISPs, and policymakers in an open debate; one that will not require strong regulatory mandates. Market efficiency and competition will be best served if there is more and better understood data available on broadband speeds and other performance metrics of merit (e.g., pricing, availability, and other technical characteristics).

These kinds of research reports are often tainted by the industry money that pays for them.  Researchers and universities routinely deliver industry-pleasing, sober-sounding studies in return for considerable financial contributions, grants, and other forms of underwriting.  This report lacks full disclosure about who is helping to pay for it — North America’s largest cable operators, who also deliver much of the data MITAS relies on for their research.

Ask yourself how much longer these companies would be writing checks to MIT had they delivered a report implicating them in false advertising of speeds they do not deliver or for relying on inadequate upstream providers to handle their Internet traffic?  The report pulls any and all punches delivered to the companies who finance it — a clear sign of bought-and-paid-for research in action.

Rural Alltel wireless broadband customers are getting the axe as the company’s new owners have started pulling the plug on customers caught roaming too much with their service.

Not all of Alltel customers have become Verizon Wireless customers after Verizon bought Alltel in 2008.  In areas where Verizon Wireless already provided service, FCC rules required Alltel to sell its assets to other cell phone companies like AT&T or several regional providers.  One such company, Allied Wireless, bought the rights to use the Alltel name for its service.  But it’s not the same Alltel customers in southern Illinois remember.

Scott Sneddon, who lives near Benton, discovered that for himself when trying to log in using his Alltel Aircard.  When the service wouldn’t work, he called Alltel to learn they had unilaterally canceled his wireless broadband service because he was roaming off Alltel’s original network too often.  For the Sneddon family, that meant the Internet itself would no longer be available to them as they have no access to DSL or cable broadband service.  Sneddon received no warning and no second chance.

Sneddon is concerned because Alltel’s unlimited service plan did not carry the typical 5GB monthly usage allowance other providers enforce.  Despite having a two year contract, Alltel was able to pull the rug out from under his service because the company wanted to cut its roaming costs.  Although the Sneddon initially faced a $400 early cancellation penalty to switch providers, the media attention Alltel received made them relent — Alltel customers in similar positions who find themselves out in the wireless broadband cold will not have to pay a penalty to cancel all of their Alltel services.  Additionally, the company has promised to refund one month of service and refund all wireless broadband equipment charges incurred by dropped customers.

For rural America, incumbent wireless providers disconnecting service for customers they don’t want to serve is just another broken broadband promise.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WSIL Harrisburg Alltel Drops Illinois Customers 6-27-10.flv[/flv]

WSIL-TV in Harrisburg, Ill., shares the stories of two Illinois families left without Internet service when Alltel suddenly canceled their service “for roaming too much.”  (4 minutes)

No Cable? No DSL from FairPoint Communications on those phone lines either.

Ossipee (Carroll County), New Hampshire

Some residents of Ossipee, New Hampshire have gotten so desperate for broadband service, they’ve planted lawn signs begging Time Warner Cable to provide it.  Ossipee, population 4,211, is located in the western half of New Hampshire.  Its decidedly rural charm has made it popular for vacationers and those seeking a quiet New England lifestyle.

Unfortunately, for those on Water Village Road, it’s too quiet.  There is no broadband service available.

FairPoint doesn’t offer DSL service in the immediate area and Time Warner Cable, although willing to wire neighbors 1/2 mile away, will not provide service to Water Village Road residents.

Time Warner Cable says it provides service where there are 15 or more homes per mile.  Water Village Road only has 13.95 homes per mile.  The company says it will cost about $100,000 to extend service, and has offered to pay $15,000 towards the cost, with the rest coming from the pockets of residents.

So far, they have refused.

Residents do have one way to get cable and Internet service from Time Warner Cable — commit a crime that lands them at the Carroll County Jail, less than a mile down the road.  It has cable.

As for the signs, Time Warner told WMUR-TV it appreciated the interest, but it still doesn’t make economic sense to provide Water Village Road residents with service.

(See more pictures of the lawn signs below the jump.)

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WMUR Manchester Company Says Area Not Dense Enough For Service 7-14-10.flv[/flv]

WMUR-TV reports on the campaign by several Ossipee, N.H., residents to embarrass Time Warner Cable into bringing them cable and broadband service.  (2 minutes)

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