Clearwire this week changed their terms and conditions governing the use of their service.  The changes are sufficiently materially adverse that subscribers under contract should be able to cancel service, if they wish, without incurring any early termination fee.

The most prominent change is Clearwire’s ability to crack down on whatever they define “excessive usage” to be, and the redefining of ‘unlimited service’ as ‘limited and speed throttled service.’

All-New to the Clearwire Terms & Conditions:

Nature of the Service.The Service provided to you is intended for reasonable, periodic, non-continuous use by a person using a computing device, consistent with the type of use made by a typical individual consumer of our Internet services. Examples of allowed uses of our Service include web surfing, sending and receiving email, sending and receiving photographs, occasional on-line gaming, and the occasional non-continuous streaming of videos and downloading of files. Examples of uses that are not permitted include the continuous unattended streaming, downloading or uploading of videos or other files, maintaining an unattended or continuous uninterrupted connection to the Internet such as through a web camera or machine to machine connections that do not involve active participation by a person, or operating an Internet hosting service such as web hosting or gaming hosting. You may not use the Service in a manner that impairs the user experience of other users, or that otherwise impairs network performance. Both fixed wire-line Internet service and wireless Internet service have limited bandwidth capacity. Like fixed wire-line service, CLEAR’s Service can suffer from congestion and reduced performance when usage by some individuals exceeds the usage of typical individual consumers, thus having a negative impact on the entire network. This AUP is intended to ensure that the activities of a few users do not unfairly impair the activities of all users of the Service.

Clearwire’s unlimited use plans have always carried a clause giving the company the right to terminate or suspend service for exceptionally excessive usage, after several contacts with customers.  The old language:

Unlimited Use Plans. (Effective January 9, 2009)

While the determination of what constitutes excessive use depends on the amountspecific state of data you may download or upload during a monththe network at any given time, you shouldexcessive use will bethat such unlimited” plans are nevertheless subject todetermined by resource consumption and not by the provisionsuse of this AUPany particular application. What this means is that allWhen feasible, upon observation of the provisions described in this AUPan excessive use pattern, including those that describe how Clearwire may perform reasonable network management such as reducingwill attempt to contact you by e-mail at the data ratee-mail address on file or otherwise to alert you to your excessive use of bandwidth intensive users during periodsand to help determine the cause. Clearwire representatives also are available to explain the parameters of congestion, will applythis AUP and to yourhelp you avoid another excessive use incident or to upgrade you to a different class of the Service that comports with your usage. The term unlimited” means that we willIf you are unavailable or do not place a limit on how much datarespond to Clearwire’s attempt to contact you uploadregarding excessive use, or download during a monthif excessive use is ongoing or other particular periodrecurring, howeverClearwire reserves the right, it does not mean that we will not take stepsset forth in the “AUP Enforcement and Notice” provisions below, to reduce your data rate during periods of congestionact immediately and without further notice to restrict, suspend or take other actions described in this AUP whenterminate your usage is negatively impacting other subscribers to our Service.

The new language now permits the company to use “network management” techniques such as reducing your speed if they feel you are excessively using Clearwire’s “unlimited” service.  Although the new language sounds friendlier — deleting references to suspending or terminating your service — Clearwire’s Acceptable Use Policy (AUP) maintains those rights in another section.  When all is said and done, Clearwire still gets to limit your usage -and- can now also reduce your speed:

Unlimited Use Plans. (Effective November 22, 2009)

If you subscribe to a service plan that does not impose limitsWhile the determination of what constitutes excessive use depends on the amountspecific state of data you may download or upload during a monththe network at any given time, you shouldexcessive use will be aware that such “unlimited” plans are nevertheless subject todetermined by resource consumption and not by the provisionsuse of this AUPany particular application. What this means is that allWhen feasible, upon observation of the provisions described in this AUPan excessive use pattern, including those that describe how Clearwire may perform reasonable network management such as reducingwill attempt to contact you by e-mail at the data ratee-mail address on file or otherwise to alert you to your excessive use of bandwidth intensive users during periodsand to help determine the cause. Clearwire representatives also are available to explain the parameters of congestion, will applythis AUP and to yourhelp you avoid another excessive useincident or to upgrade you to a different class of the Servicethat comports with your usage. The term “unlimited” means that we willIf you are unavailable or do not place a limit on how much datarespond to Clearwire’s attempt to contact you uploadregarding excessive use, or download during a monthif excessive use is ongoing or other particular periodrecurring, howeverClearwire reserves the right, it does not mean that we will not take stepsset forth in the “AUP Enforcement and Notice” provisions below, to reduce your data rate during periods of congestionact immediately and without further notice to restrict, suspend or take other actions described in this AUP whenterminate your usage is negatively impacting other subscribers to our Service.

Clearwire (and the soon-to-be-launched Road Runner Mobile from Time Warner Cable and Comcast’s mobile broadband option) share the same Clearwire WiMax network.  As investors in Clearwire, the cable operators have won the right to rebrand the service to provide a mobile option for their broadband customers.

Customers considering signing up for service should carefully verify the terms and conditions of their contract, as well as the quality of service provided where you expect to use the service the most.  Several websites highly critical of Clearwire have been established with hundreds of upset customers who were promised broadband speeds and barely managed much more than dial-up speeds using the service.

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“Clearwireblows” ran a speed test illustrating serious speed problems using Clearwire in Texas this past April.  (2 minutes)

Customers who wish to end their contract without incurring a cancellation fee can do so following this procedure:

1. Contact Clearwire in writing and inform them you are exercising your right to terminate service without charge or penalty because of materially disadvantageous changes to the Clearwire Terms and Conditions effective November 22, 2009.  Under their terms, you have a right to discontinue service in accordance with the section “Revisions: Reservation of Rights.”  Namely, “…if you do not wish to continue Service after a change that is materially disadvantageous to you, you may terminate this Agreement by providing written notice to Clearwire within twenty (20) days of the effective date of the modification.”  The link above contains contact addresses you may use.
2. Contact customer service by telephone and inform them you have followed the written cancellation procedure outlined above.
3. Be certain to insist Clearwire not charge any termination fees, and that you do not agree to pay any such fees.
4. Should you experience any difficulties, contact the Better Business Bureau as this customer did.  The BBB helped facilitate an immediate cancellation with no termination fees.

Adam Lynn

Most people agree: They pay their cable company too much money. Not only is this view widely held, it’s also backed up by hard numbers.

Annoying usage caps, allowances, and consumption billing irritate broadband users in those places where Internet Overcharging is established.  But the demand by consumers for unlimited broadband is so strong, some ISPs are giving way, looking for competitive edges that can win them new customers and keep the ones they already have happy.

Orcon, a DSL provider serving New Zealand, has announced it is exempting visits to YouTube from its data allowance until the end of January 2010.

“YouTube is one of the hottest properties on the web – with an almost endless supply of content. It makes up a big chunk of our customer-base’s usage every month. With the school holidays looming and the festive season in full swing we’re expecting a big uptake from our customers,” said Orcon chief executive Scott Bartlett.  “Streaming and downloading can rapidly chew through gigabytes of data so these holidays mums and dads can rest assured their data cap won’t take a beating. It is also a great opportunity for families to make and share their own holiday home movies with friends and family around the world.”

Orcon presently exempts several domestic websites, including TV New Zealand, from its usage allowance.  YouTube is one of the first international sites Orcon has exempted.

Orcon services its customers over the telephone network using ADSL and, in selected areas, ADSL2+ which provides service theoretically up to 24Mbps.

For Orcon customers, any streaming video exemption is good news, considering the ISP’s tiny usage allowances.

Orcon charges prices that would shock Americans:

Orcon’s Purple Plan provides a variable download speed (often 8Mbps or less downstream) and 128kbps upstream service with a 1GB monthly usage allowance for $29US a month.  Each additional gigabyte costs $1.50.  Their Platinum Plan doesn’t provide additional speed, just a bigger usage allowance.  For 20GB of usage per month, prepare to spend $95 per month.  Domestic long distance and local calling is also included in the Platinum Plan.  Orcon’s new ADSL2+ network is even more pricey, but can deliver faster speeds (12-15Mbps seem to be real world ranges for downstream).  The usage allowance is slightly higher on the ADSL2+ network, but not by much.  The highest allowance available tops out at 25GB.

[flv width=”640″ height=”405″]http://www.phillipdampier.com/video/Orcon Broadband Iggy Pop Ad 11-16-09.flv[/flv]

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p style=”text-align: center;”>Orcon Broadband ran an advertising campaign to find eight New Zealanders to help Iggy Pop re-record ‘The Passenger’ live via Orcon Broadband.  This is the result. (November 16, 2009 – 2 minutes)

Phillip "He Who Shall Not Be Named" Dampier

I’ve tangled with Todd Spangler, a columnist at cable industry trade magazine Multichannel News before.  This morning, I noticed Todd suddenly added me to the list of people he follows on Twitter.  Now I see why.

Todd is back with another one of his cheerleading sessions for Internet Overcharging schemes, promoting consumption-based billing schemes as inevitable, backed up by his industry friends who subscribe and help pay his salary and a guy from a company whose bread is buttered selling the equipment to “manage” the Money Party.

GigaOm’s Stacey Higginbotham and Broadband Reports’ Karl Bode don’t pay his salary, so it’s no surprise he disagrees them.  Oh, and I’m in the mix as well, but not by name.  Amusingly, I’m “the StoptheCap! guy, who’s making a career directing his bloggravation at The Man.”

Todd doesn’t consider himself “an edgy blogger type because, as everyone knows, I am The Man,” he writes.

Actually, Todd, you are Big Telecom’s Man, paid by an industry trade magazine to write industry-friendly cozy warm and fuzzies that don’t rock the boat too much and threaten those yearly subscription fees, as well as your paid position there.  I’ve yet to read a trade publication that succeeds by disagreeing with industry positions, and I still haven’t after today.

Unlike Todd, I am not paid one cent to write any of what appears here.  This site is entirely consumer-oriented and financed with no telecom industry involvement, no careers to make or break, and this fight is not about me.  I’m just a paying customer like most of our readers.

This site is about good players in the broadband industry who deserve to make good profits and enjoy success providing an important service to subscribers at a fair price, and about those bad players who increasingly seek to further monetize their broadband offerings by charging consumers more for the same service.  As one of the few telecom products nearly immune from the economic downturn, some providers are willing to leverage their barely-competitive marketplace position to cash in.

It’s about who has control over our broadband future – certain corporate entities and individuals who openly admit their desire to act as a controlling gatekeeper, or consumers who pay for the service.  It’s also about organizing consumers to push back when industry propaganda predominates in discussions about broadband issues, and we know where we can find plenty of that.  Finally it’s about evangelizing broadband, not in a religious sense, but promoting its availability even if it means finding alternatives to private providers who leave parts of urban and rural America unserved because it just doesn’t produce enough profit.

Let’s derail Todd’s latest choo-choo arguments.

“The idea of charging broadband customers based on what they use is still in play.” — That’s never been in play.  True consumption billing would mean consumers pay exactly for what they use.  If a consumer doesn’t turn on their computer that month, there would be no charge.  That’s not what is on offer.  Instead, providers want to overcharge consumers with speed –and– usage-based tiers that, in the case of Time Warner Cable, were priced enormously higher than current flat-rate plans.  Customers would be threatened with overlimit fees and penalties for exceeding a paltry tier proposed by the company last April.  The ‘Stop the Cap! guy’ didn’t generate thousands of calls and involvement by a congressman and United States senator writing blog entries.  Impacted consumers instinctively recognized a Money Party when they saw one, and drove the company back.  A certain someone at Multichannel News said Time Warner Cable was “taking one for the team.”  At least then you were open about whose side you were on.

“Verizon just wants to make more money by charging more for the same service. What an outrage! It’s not like the company spent billions and billions to build out their network and needs to recoup that investment.” — Recouping an investment is easily accomplished by providing customers with an attractive, competitively priced service that delivers better speed and more reliability than the competition.  Provide that in an era when fiber optic technology and bandwidth costs are declining, and not only does the phone company survive the coming copper-wire obsolescence, it also benefits from the positive press opinion leaders who clamor for your service will generate to attract even more business.  Stacey’s comments acknowledged the positive vibes consumers have towards Verizon’s fiber investment — positive vibes they are now willing to throw away.

Verizon FiOS already gets to recoup its investment from premium-priced speed tiers that are favored by those heavy broadband users.  Most will happily hand over the money and stay loyal, right up until you ask for too much.  Theoretically charging your best customers $140 a month for 50Mbps/20Mbps service and then limiting it to, say, 250GB of usage will be an example of asking for too much.  Verizon didn’t get into the fiber optics business believing their path to return on investment was through consumption billing for broadband.

“Today’s broadband networks — not even FiOS — are not constructed to deliver peak theoretical demand and adding more capacity to the home or farther upstream will require investment.” — Readers, today’s newest excuse for overcharging you for your broadband access is “peak theoretical demand.”  It used to be peer-to-peer, then online videos, and now this variation on the “exaflood” nonsense.  It sounds like Todd has been reading some vendor’s press release about network management.  Peak theoretical demand has never been the model by which residential broadband networks have been constructed.  The Bell System constructed a phone network that could withstand enormous call volumes during holidays or other occasional events.  Broadband networks were designed for “best effort” broadband.  If we’d been living under this the peak demand broadband model, cable modem service and middle mile DSL networks wouldn’t be constructed to force hundreds of households to share one fixed rate connection back to the provider.  It’s this design that causes those peak usage slowdowns on overloaded networks that work fine at other times.

No residential broadband provider is building or proposing constructing peak theoretical demand networks that are good enough to include a service and speed guarantee.  Instead, cable providers are moving to affordable DOCSIS 3 upgrades, which continue the “shared model” cable modems have always relied on, except the pipeline we all share can be exponentially larger and deliver faster speeds.  Will this model work for decades to come?  Perhaps not, but it’s generally the same principle Time Warner Cable is using to deliver HD channels quietly ‘on demand’ to video customers without completely upgrading their facilities.  You don’t hear them talk about consumption billing for viewing, yet similar network models are in place for both.

“Is it fairer to recover that necessary investment in additional capacity from the heaviest users, who are driving the most demand?” Apparently so, because providers already do that by charging premium pricing for faster service tiers attractive to the heaviest users.  But Todd, as usual, ignores the publicly-available financial reports which tell a very different tale – one where profits run in the billions of dollars for broadband service, where many providers Todd feels urgently need to upgrade their networks are, in reality, spending a lower percentage on their network infrastructure costs, all at the same time bandwidth costs are either dropping or fixed, making it largely irrelevant how much any particular user consumes. What matters is how much of a percentage of profits providers are willing to put back into their networks.

Do people like Todd really believe consumers aren’t capable of reading financial reports and watching executives speak with investors about the fact their networks are well-able to handle traffic growth (Glenn Britt, Time Warner Cable CEO), that consumption based billing represents potential increased revenue for companies that deny they even have a traffic management problem (Verizon), or that broadband is like a drug that company officials want to encourage consumers to keep using without unfriendly usage caps, limits, or consumption billing (Cablevision.)

“From 7 to 10 p.m., we’re all consumption kings,” Sandvine CEO David Caputo told Todd. “Bandwidth caps don’t do anything for you.” The implication of this finding is that “the Internet is really becoming like the electrical grid in the sense that it’s only peak that matters,” he added. — I would have been asking Todd to pick me up off the floor had Caputo said anything different.  His bread and butter, just like Todd’s, is based on pushing his business agenda.  Sandvine happens to be selling “network management” equipment that can throttle traffic, perhaps an endangered business should Net Neutrality become law in the United States.  His business depends on selling providers on the idea that sloppy usage caps don’t solve the problem — his equipment will.  Todd has no problem swallowing that argument because it helps him make his.  The rest of us who don’t work for a trade publication or a net throttler know otherwise.

What would actually be fair to consumers is to take some of those enormous profits and plow them back into the business to maintain, expand, and enhance services that deliver the gravy train of healthy revenue.  In fact, by providing even higher levels of service, they can rake in even larger profits.  You have to spend money to earn money, though.

Technology doesn’t sit still, which is why provider arguments about increased traffic leading to increased costs don’t quite ring true when financial reports to shareholders say exactly the opposite.  That’s because network engineers get access to new, faster, better networking technology, often at dramatically lower prices than what they paid for less-able technology just a few years earlier.  With new customers on the way, particularly for the cable industry picking up those dropping ADSL service from the phone company, there’s even more revenue to be had.

Or, do you think spreading the cost across all subscribers, thereby raising the flat-rate pricing for everyone, is the better option? Note that Comcast did this to an extent when it raised the monthly lease fee for cable modems by $2 (to $5), citing costs associated with its DOCSIS 3.0 buildout.

The industry already thinks so.  As we’ve documented, cable broadband providers like Time Warner Cable and Comcast (and Charter next year), are already raising prices across the board for broadband customers in many areas.  Does that mean the talk about Internet Overcharging schemes can be laid to rest?  Of course not.  They want their rate increases -and- consumption based billing for even fatter profits.

If, on the other hand, you want to pretend that all-you-can-eat plans are sustainable at today’s price tiers, you’d be kind of clueless.

Every ISP maintains an Acceptable Use Policy that provides appropriate sanctions for those users who are so far out of the consumption mainstream, they cannot even see the rest of us.  Slapping consumption based billing on consumers with steep overlimit fees and penalties punishes everyone, and the provider keeps the proceeds, and not necessarily for network upgrades.

If Todd believes consumers will sit still for profiteering by changing a model that has handsomely rewarded providers at today’s prices, with plenty of room to spare for appropriate upgrades, he’ll be the clueless one.  The cable industry’s ability to overreach never ceases to amaze me.  Every 15 years or so, legislative relief has to put them back in their place.  It’s what happens when just a handful of providers decide it is easier to hop on board the Internet Overcharging Express and cash those subscriber checks than actually engage in all-out competitive warfare with one another – keeping prices in check and onerous overcharges out of the picture.

Nobody needs to know my name to understand this.  But some of his provider friends already know the names of our readers, because PR disasters do not happen in a vacuum.  They are also acquainted with two other names: Rep. Eric Massa and Sen. Charles Schumer.  If they want to go hog wild with Internet Overcharging schemes, that list of names will get much, much longer.

Until the National Broadband Plan is in place and additional capacity is brought online, Australians make do with usage limited broadband service from Brisbane to Perth.  With prices all over the map, choosing the right plan to minimize your exposure to Internet Overcharging schemes is more important than ever.

VoIP-Sol.com, an independent blog covering the global broadband market, took a look at several popular options and discovered some revealing findings (All prices in Australian dollars – $1AUD = $0.91US — Stated speeds are relative and reflect the maximum possible, not necessarily the actual):

The Fastest Broadband Plan in Australia
BigPond’s 30,000Kbps +400MB cable plan is the fastest available (that speed available in select areas of Melbourne and Sydney only — up to 17Mbps service elsewhere), but at a hefty price: $49.95 a month with a cap of 400 megabytes. Data past the cap is charged $0.15 per megabyte. BigPond will discount the monthly charge by $10 if it is bundled with a Telstra home phone line. This plan requires a monthly contract, and there is no peak time.

The Australian Broadband Plan With the Biggest Cap
iPrimus’s Big Kahuna and Dodo’s Rhodium plan both come with 200gb of service each month over ADSL. Dodo’s setup fee of $69.99, but the monthly charge is $10 a month cheaper than iPriumus at $69.95 a month, and an additional $10 is discounted for Dodo’s home phone customers. The Big Kahuna could go on the fastest list at 24,000Kbps, while Rhodium is a still impressive 20,000Kbps. (Keep in mind ADSL speeds vary considerably depending on how far away you are from the telephone company’s exchange office.)

Australia’s Cheapest Broadband Internet Plan
The Starter Plan from Netspace may seem like a bargain with speeds of 20,000kbps for only $9.95 a month, but the setup fee is a staggering $149.

Dodo Bronze is $19.90 a month, or $9.90 a month when bundled with one of their home phones, beating Netspace by five cents. However, this gives you a tiny download cap of 150mb, with an equally low download speed of 256kbps. Excess data is charged at $0.18 per megabyte, which even the most frugal user will probably reach. The Bronze plan also requires a twenty-four month contract.

Surprisingly, the next cheapest option is Optus’ Mobile Wireless Broadband. When included with mobile or home phone service, Optus charges $19.99 a month for cellular-based Internet. Like Dodo Bronze, the download speed is limited to 256Kbps, while downloads are capped at 1 GB. Most people who buy this plan will be more interested in the service’s convenience than its performance.

There are many other regional services available in different parts of the country with their own pricing and policies.  But nearly all share a usage cap combined with “peak” and “off-peak” usage pricing, designed to prod you into confining use of your highest bandwidth applications during off-peak hours (typically between midnight and noon).  Many providers give you a bonus usage allowance to use during off peak hours, often much higher than the peak usage allowance.  In Australia, providers don’t necessarily punish you with overlimit fees and penalties for exceeding your limit, they just turn the speed of your connection down… often way down (64kbps, slightly faster than dial-up, is common) once your limit is reached for the month.  Speeds return when a new billing period begins.

Australians complain about paltry usage caps with such regularity, the government has set about constructing better broadband infrastructure to improve service.  Private providers have dragged their feet, preferring slower upgrade paths and tamping down demand with usage limitations, reducing the need to invest in their networks.  Domestic online video services and other high bandwidth innovation is greatly stifled in the country because of punishing usage limits which make consumers fear using them.

With the expansion of international connectivity and a more robust domestic network, Australians look forward to the day they can see usage caps as a thing of their past.