[flv width=”512″ height=”404″]http://www.phillipdampier.com/video/Al Franken on Net Neutrality SXSW 3-14-11.flv[/flv]

Sen. Al Franken (D-Minn.) delivered comprehensive remarks at today’s South By Southwest (SWSW) gathering in Austin, Tex.  Franken declared the fight for Net Neutrality is by no means over, and claimed corporate opponents and some members of Congress are “using a rhetorical technique called ‘making stuff up'” to fight the rules guaranteeing a free and open Internet.  Franken added an open Internet does not mean open season for online content piracy, but preserving today’s online experience is crucial for entrepreneurs working in the 21st century digital economy, as well as for the creative talent attracted to SXSW.  (45 minutes)

Broadband Reports has obtained a leaked memo stating AT&T plans on eliminating its flat rate broadband plans for DSL and U-verse customers effective May 2nd.

On that date, AT&T will limit its DSL customers to 150GB per month and its U-verse customers to 250GB per month in what will be the largest Internet Overcharging operation in the nation.  Customers who violate the usage limits will face a three-strikes-you’re-overcharged penalty system.  After three violations of the usage limit, customers will pay an additional $10 for each block of 50GB they consume.  Although that represents just $0.20 per gigabyte, less than some others have imposed, it is not pro-rated.  Whether a customer uses one or fifty “extra” gigabytes, they will face the same $10 fee on their bill.

Customers will begin receiving notification of the change in the company’s terms of service March 18.

AT&T claims only 2 percent of their DSL customers will be exposed to the Internet Overcharging scheme.

“Using a notification structure similar to our new wireless data plans, we’ll proactively notify customers when they exceed 65%, 90% and 100% of the monthly usage allowance,” AT&T’s Seth Bloom told Broadband Reports. The company also says they’ll provide users with a number of different usage tools, including a usage monitor that tracks historical usage over time, and a number of different usage tools aimed at identifying and managing high bandwidth consumption services.

“Using a notification structure similar to our new wireless data plans, we’ll proactively notify customers when they exceed 65%, 90% and 100% of the monthly usage allowance,” AT&T tells us. The company also says they’ll provide users with a number of different usage tools, including a usage monitor that tracks historical usage over time, and a number of different usage tools aimed at identifying and managing high bandwidth consumption services.

However, AT&T’s accuracy in measuring broadband usage is open for debate.  The company is facing a class action lawsuit over its wireless usage billing.  According to the suit, AT&T consistently inflates usage measured on customer bills.  No third party verification or oversight of usage meters is mandated — customers simply have to trust AT&T.

AT&T ran trials in Beaumont, Tex., and Reno, Nev., from 2008 with a range of usage limits.  Customer reaction to the trials was hostile, and the test ended in early 2010.  In December, FCC Chairman Julius Genachowski told providers the agency was not opposed to usage limits and consumption billing schemes, leading some to predict the green light was given to companies willing to test whether customers will tolerate Internet Overcharging.

AT&T claimed this weekend its new pricing was going to benefit customers.  So long as customers keep paying their bills, AT&T will not “reduce the speeds, terminate service or limit available data like some others in the industry,” Bloom said.

But the usage limits come at the same time Americans are increasing their consumption of online video and other high bandwidth services.  Usage limits which may appear to be reasonable at first glance become punishing when they do not change over time and customers increasingly risk exceeding them.  Once established, several companies have repeatedly lowered them to further monetize broadband service usage.  AT&T has delivered some of the lowest usage limits in the wireless industry, so it has faced customer criticism in the past.

Customers tied to existing term contracts may likely avoid the usage caps temporarily.  Others will not stick around long enough to find out.

“I will be canceling my U-verse service on Monday and go back to Time Warner Cable,” writes Stop the Cap! reader Jeffrey.  “I will never do business with a provider that imposes overlimit fees on usage that literally costs them next to nothing to provide.  It’s like charging extra for every deep breath.”

Some of our other readers are headed back to Comcast, which has a 250GB usage cap, or exploring DSL provided over AT&T lines by third party companies, which likely will not impose usage limits, at least for now.

“Charging 20 cents per gigabyte isn’t too bad, but you just know AT&T will lower the caps or jack those rates up,” our reader Ian writes. “It is very important to send AT&T a message right now we are prepared to quit doing business with them over this issue, or else we will be nickle and dimed to death by them tomorrow.”

Our reader Jared asks whether new legislation has been introduced to curb unjustified Internet Overcharging.  In 2009, then Rep. Eric Massa (D-N.Y.) introduced a bill to ban Internet Overcharging unless companies could prove it was justified.  At the moment, there is no new legislation, but when providers attempt to overreach and impose pricing the vast majority of broadband customers oppose, that could change.

At the moment, Stop the Cap! recommends AT&T customers begin to explore alternative providers and prepare to terminate their service with AT&T unless they scrap their Internet Overcharging scheme.  AT&T earns billions in profits from their broadband division and spends millions on lobbying.  With this amount of largesse, AT&T does not need this pricing scheme to remain profitable.

Community broadband networks deliver the best value and speed for North Carolina consumers and businesses

Word has reached Stop the Cap! that hundreds of e-mails and phone calls are pouring into Rep. Marilyn Avila’s (R-Time Warner Cable) office protesting her hard work on behalf of the state’s largest cable company.  We are being called “mean and nasty” by those supporting Avila’s anti-consumer bill, H.129.

Our answer to that: we are not “mean” or “nasty.”  We are fed up c0nsumers (and voters) who have serious concerns about certain state legislators who introduce bills custom-written by cable lobbyists to enact their business agenda into law.

These anti-community broadband bills have come year after year in North Carolina, despite the fact the state has an “also-ran” reputation as a broadband backwater, with tremendous room for improvement in broadband speed, price, availability, and choice of providers. The bills have also been nothing but trouble for those that have introduced them, alienating constituents and bringing them bad press:

Ty Harrell resigned his office in disgrace over financial irregularities, but he was already in hot water when he introduced his bill. We were stunned when his office staff literally handed the phone to a cable industry lobbyist sitting there to answer questions.  We held him accountable.

David Hoyle did not leave office at his finest moment either, openly admitting on television Time Warner Cable wrote the bill he introduced.

This year, it’s Ms. Avila, who repeatedly promised to hold existing community-owned networks harmless by exempting them from the draconian, project-killing legislation she has proposed.  But after closed door meetings, we learned those promises were hollow.  The words of her bill may have changed, but the results are exactly the same — she is micromanaging community networks into insolvency (while exempting the companies that wrote the bill she introduced).

The unanswered, critical question every legislator needs to ask is: How does H.129 improve North Carolina’s dismal broadband ranking and deliver improved service?

The former Rep. Harrell

The answer is, it does nothing.  Not only does it ignore the chasm of low quality service prevalent west of Charlotte and north of Winston-Salem, it specifically erects roadblocks to keep any community from trying to resolve a situation they’ve dealt with for years and years.  Ask any rural community’s leader if they’ve heard from constituents upset by the unavailability or quality of broadband in their area and you will get an earful.  The truth is, had the cable and telephone companies in the state had a real interest in providing 21st century service to these communities, they would have already done it.  With H.129, they can rest easy knowing nobody else will try.

This is not an auspicious position for Ms. Avila to take.  She ran for office upset with backroom deals, insider political maneuvering, and closed government.  Reviewing her campaign platform, the one thing she emphasized time and again was her promise to bring “open government” to the people in her district, just north of the state capital.

Where is the open government on H.129?  Nowhere to be found.

Stop the Cap! would have loved to include the complete video record of the first meeting to modify her bill to protect incumbent providers.  Only there is no video record.  The meeting was held behind closed doors, and it took a source to reveal details about how the cable and phone companies ran it as their own.  It’s the epitome of the kind of back-room deals Ms. Avila railed against in her campaign.

Considering the results, we can understand why the meeting was secret.  The cable lobby understands full well the power of sunshine’s disinfecting power.  Shining a bright light on the cozy connection between legislators and the companies whose interests they brazenly represent tells a story they do not want the voting public to hear.

Unfortunately, it gets worse.  We’ve learned Ms. Avila plans to bring H.129 to a vote in the Finance Committee as early as this Thursday, with no public discussion allowed.  Voters can be spectators of their own broadband demise, but they will not be allowed to say a word about it.  Meanwhile, certain members of the legislature have had plenty of time to meet repeatedly with cable and phone company lobbyists.

As we’ve seen time and time again, that lobbying campaign of disinformation tries to muddy the implications of bills such as these.

You cannot hear if you are not open to listening.

Legislators who may not understand what H.129 is really all about need to hear from the public and communities to understand precisely what they are voting for and what impact this legislation will have.  The ripple effects go far beyond just keeping Time Warner and CenturyLink free from pesky competition.

Neither company is truly harmed by community broadband networks.  In fact, both of them have thumbed their noses and shrugged their shoulders even in the presence of much larger competitive threats in their urban markets — Time Warner for the phone company and AT&T’s U-verse, which is available in limited areas.

The best thing Ms. Avila could do is withdraw her legislation because it simply is not in the best interests of North Carolina.  Barring that, she should do what she promised and specifically exempt ALL existing community networks in the state from the provisions of her bill.  At this point, that delivers a win to bondholders who will see their investment pay off, communities can continue to provide service to interested customers, and everyone else will continue to enjoy the benefits of lower rates these networks bring every telecommunications customer.

That’s common sense to everyone except the cable and phone companies that will stop at nothing to bury community-owned providers.

Where does your legislator stand?  If you have not made your feelings known to the members of the Finance Committee, time is running out.  Call and e-mail them and let them know you expect them to vote NO on H.129 when it reaches their committee this week.  We’re going to do our best to watch what may turn out to be another “voice vote” that prevents voters from knowing how individual members voted.  This time, we’ll be paying close attention to the lips and movements of individual committee members and take our own vote so we know who to thank and who needs to held accountable.

Finance Committee Members

(click each name for contact information)

H.129 will insure rural North Carolina's broadband will resemble the backwaters of the Great Dismal Swamp.

Despite promises to protect North Carolina’s existing community-owned broadband providers, Reps. Julia “My Word is My Bond” Howard and Marilyn “I Do What Time Warner Tells Me” Avila have reneged and intend to ram through their anti-community-broadband bulldozer bill.

Stop the Cap! learned this evening that Avila has no intention of meeting with North Carolina communities again, even as resolutions continue to pile up in Raleigh condemning their special interest legislation.

Asheville and Rockingham County have joined the city of Raleigh issuing resolutions opposing H129 and are openly wondering why state legislators are so contemptuously overruling the interests of North Carolina communities for the benefit of out-of-state corporations.

The answer, clearly, is money.

Rep. Howard apparently answers to the interests of companies like AT&T, which has donated more than $1,500 to her campaign, CenturyLink — $4,000, and Time Warner Cable, which so far has shorted her with just $750.  It evidently doesn’t take much to influence a legislator these days, and we anticipate her telecommunications contributions will spike in the near future for a job well done.  That enormous contribution from CenturyLink is telling, considering they are not the primary phone company in Howard’s district.

As a result of the sellout, H129 will likely move to the Finance Committee as early as next Thursday, effectively unchanged from its original.  The implications for the state are staggering, particularly if it drives existing community networks out of business.  That will take the state’s bond rating with it.

Howard accepted $4000 from CenturyLink.

The sad part of all this is that both representatives were elected to serve the interests of their districts, and instead they are paying more attention to the well being of big cable and phone companies who honestly don’t need their help to earn enormous profits in the state.

While unserved communities and those stuck with dismal, antiquated DSL service have their pleas for better broadband ignored, Avila and Howard are doing all they can to sabotage the networks that do provide 21st century broadband to their residents.

With this kind of hostility, don’t look for Google to bring Gigabit broadband to the Tar Heel State anytime soon.  With all of the impediments and roadblocks these two legislators have thrown up on behalf of their friends at the cable and phone company, can Google expect to be treated any better?  The search giant even signed a letter strongly opposing H129, to no avail.

It’s not too late for Rep. Howard to prove us wrong.  She can turn this around in a second by demanding real exemptions for existing municipal networks — and I mean real exemptions, not the fake passes contained in the so-called substitute amendment.  Better yet, she can distance herself altogether from this disaster.

North Carolina residents must get on the phone and call Finance Committee members and tell them this broadband train wreck needs to stop in their committee with a resounding NO vote.

Let them know H129 will not only deliver years of sub-standard broadband service in the state, it will also ruin two showcase fiber networks, harm the state’s bond rating, and make North Carolina an also-ran in broadband innovation.

At a time when the state needs to move towards digital economy jobs, thumbing your nose at the likes of Google, Alcatel-Lucent, and Intel is a giant mistake — adding insult to injury to the potential loss of community broadband networks the cable and phone companies will stop at nothing to eliminate.

Finance Committee Members

(click each name for contact information)

Jenkins

The Wall Street Journal attempted to attach its own conventional wisdom in an opinion piece about cloud-based streaming that suggests Canada “is just ahead of the U.S. in introducing usage-based pricing [and] has bloggers and politicians accusing Bell Canada of unconscionable ‘profiteering’ from usage caps. The company, they rage, is reaping huge fees for additional units of bandwidth that cost Bell Canada virtually nothing to provide.”

The author, Holman Jenkins, is a regular on the ultra-business friendly editorial page of the Journal, and has been raging against Net Neutrality and for higher Internet pricing for several years now.

Jenkins’ latest argument, just like his earlier ones on this subject, falls apart almost immediately:

This critique, which is common, could not more comprehensively miss the point. Another car on the roadway poses no additional cost on the road builder; it imposes a cost on other road users. Likewise, network operators don’t use overage penalties to collect their marginal costs but to shape user behavior so a shared resource won’t be overtaxed.

Jenkins needs to spend less time supporting his friends at companies like AT&T and Bell and more time exploring road construction costs.  If you are going to try and make an analogy about traffic, at least get your premise straight.

Before debunking his usage-based billing meme, let’s talk about road construction for a moment.  In fact, the kind of traffic volume on a roadway has everything to do with what kind of road is constructed.  In the appropriately named “Idiots’ Guide to Highway Maintenance,” C.J.Summers explores different types of road surfaces for different kinds of traffic.  Light duty roads in rural areas can get results with oil and stone.  Medium duty side streets and avenues are frequently paved with asphalt, and heavy duty interstates routinely use concrete.  Traffic studies are performed routinely to assist engineers in choosing the right material to get the job done.

Digital information doesn’t wear down cables or airwaves.  If broadband traffic occupies 5 or 95 percent of a digital pipeline, it makes no difference to the pipeline.  Jenkins is right when he says Internet Overcharging schemes are all about shaping user behavior, but for the wrong reasons.

Jenkins thinks Netflix and other high bandwidth applications face usage-based pricing to allow providers to keep their broadband pipes from getting overcongested:

Netflix is one of the companies most threatened by usage-based pricing, and it has quickly geared up a lobbying team in Washington. In a recent letter to shareholders, CEO Reed Hastings downplayed the challenge to Netflix’s video-streaming business. In the long run, he’s probably right—the market will settle on flat-rate pricing once the video-intensive user has become the average user.

In the meantime, however, Netflix shareholders had better look out.

In fact, providers are reaping the rewards of their popular broadband services, but almost uniformly are less interested in investing in them to match capacity.  It is as if the AT&Ts of this world assumed broadband users would consume    T H I S    M U C H   and that’s it — time to collect profits.  When upgrade investments don’t even keep up as a percentage of revenue earned over past years, the inevitable result will be a custom-made excuse to impose usage limits and consumption billing to manage the “data tsunami.”

Canadian providers did not slap usage caps on broadband users because Netflix arrived — they lowered them. Telling users they cannot consume the same amount of bandwidth they used a month earlier has nothing to do with managing traffic, it’s about protecting their video businesses by discouraging consumers from even contemplating using the competition.  Jenkins works for a company that understands that perfectly well.  News Corp., has a major interest in Hulu as well as satellite television services in Europe and Oceania.

The rest of Jenkins’ piece is as smug as it is wrong.  In attacking Net Neutrality supporters as “crazies” trying to defend their “hobby horse,” Jenkins claims public interest groups are pouting about usage-based billing, too:

All along, what the net neut crazies have lacked in intellectual consistency they’ve made up in fealty to the business interests of companies that fear their services would become unattractive if users had one eye on a bandwidth meter. That’s why opposition to “Internet censorship” morphed into opposition to anything that might price or allocate broadband capacity rationally. But such a stance is rapidly becoming untenable, whether the beneficiary is Google, with its advertising-based business model, or Netflix, Apple, Amazon and others who hope to capitalize on the entertainment-streaming opportunity.

All are betting heavily on the cloud. All need to start dealing realistically with the question of how the necessary bandwidth will be paid for.

Part of Jenkins’ theory calls back on his usual Google bashing — he perceives the company as a parasite stealing the resources bandwidth providers paid for, while forgetting the success of their businesses ultimately depends on content producers (who indeed pay billions for their own bandwidth) making the service interesting enough for consumers to buy.

But there is nothing rational about Jenkins’ support for Internet Overcharging.  North Americans already pay some of the highest prices in the world for the slowest service.  While providers attempt to lick the last drop of profits out of increasingly outdated networks (hello DSL!), their future strategy is less about expanding those networks and more about constraining the use of them.

Jenkins is ignorant of the fact several of Net Neutrality’s strongest proponents, Public Knowledge being a classic example, have not historically opposed usage-based pricing, much to my personal consternation.  As we’ve argued (and I submit proved), Net Neutrality and Internet Overcharging go hand in hand for revenue hungry providers.  If they cannot discriminate, throttle, or block traffic they consider to be costly to their networks, they can simply cap demand on the customer side with usage limits or confiscatory pricing designed to discourage use.  That is precisely what Canadians are fighting against.

It’s all made possible by a broken free market.  Instead of hearty competition, most North Americans endure a duopoly — a phone company and a cable company.  Both, particularly in Canada, have vested interests in video entertainment, television and cable networks, and other entertainment properties.  As long as these interests exist, companies will always resist challenges to their core business models, such as cable TV cord cutting.  It’s as simple as that.

The “realistic” way bandwidth will be paid for escapes Jenkins because his quest for condescension takes precedence over actual facts.  Content producers already pay enormous sums to bandwidth providers like Akamai, Amazon, and other cloud-based distribution centers.  Consumers pay handsomely for their broadband connections, part of which covers the costs of delivering that content to their homes and businesses.  AT&T and other providers don’t deserve to get paid twice for the same content.  Indeed, they should be investing some of their enormous profits in building a new generation of fiber-based broadband pipelines to keep their customers happy.  Because no matter how much data you cram down a glass fiber, the ‘data friction’ will never cause those cables to go down in flames, unlike Jenkins’ lapsed-from-reality arguments.