The classic one-two punch of Internet Overcharging is to limit your broadband usage -and- throttle speeds downwards.  AT&T wireless customers in several major cities across the United States are experiencing that for themselves over the long holiday weekend, reporting upload speeds have been throttled down to 100kbps or less (one-tenth of the speed most customers enjoyed as late as last week).

Speedtest.net has shown AT&T network throttling in many parts of Baltimore, Boston, Cincinnati, Cleveland, Columbus, Denver, Des Moines, Detroit, Fairfax, Houston, Kansas City, Las Vegas, New York, Orlando, Phoenix, St. Paul,  Salt Lake City, and Washington, D.C.

The speeds are so noticeably slow, it has become a national story as irate customers find their wireless broadband service first usage capped at just 2GB per month, and now upload speed throttled to the point of unusability.  AT&T promised a statement explaining the issue, but one has not yet been forthcoming.  Some speculated the throttles were designed to reduce congestion on AT&T’s network over the holiday, while others suspect a technical fault.

Reducing your wireless speed reduces the impact on AT&T’s backhaul network, which in turn reduces congestion and the number of dropped wireless calls.

The introduction of speed throttles for “heavy users” is a favorite in countries where overcharging schemes predominate.  Most permit a preset amount of traffic to pass at normal speeds, but once customers exceed an arbitrary allowance, a temporary speed throttle gets applied to dramatically reduce speeds and discourage further use.  Some limit customers to a selected amount of traffic per day, others per month.  Once the window expires, the throttle is automatically removed.

While there is no indication AT&T is applying such a throttle at this point, the company has strongly opposed efforts to ban such schemes.  AT&T has a history of antagonizing its wireless customers with poor network performance, and has been judged the least favorite provider by Consumer Reports.

[The article was updated at 10:30am to include promotional and coverage information not available when the article was published late last night]

Clearwire today announced the launch of its 4G mobile broadband service for businesses and consumers in Rochester and Syracuse, New York.  Designed to deliver the Internet at speeds four times faster than 3G, CLEAR is priced comparably to many wireless broadband plans, but has no usage caps.

Pricing from their website offers customers stay-at-home and mobile service plans (or both).  Customers choosing month-to-month service have to buy the equipment up front, starting at $70 and pay a $35 activation fee.  Those who commit to a two-year service contract can lease the equipment for $4-6 a month and skip start-up fees.  Packages start at $40 a month for 6/1Mbps service.  At $55 a month, they take the speed limit off, providing occasional bursts of wireless speed up to 10Mbps.  Another $15 on top of that buys you nationwide 3G roaming.  Sales tax is not included.  Customers get a 14 day trial period to evaluate the service and can cancel within that window with no obligation, although our Jay Ovittore reports they’ll drag you through the cancellation process.

At $40 for unlimited use, CLEAR’s 4G service beats Cricket, which charges the same price for 3G speeds, but limits consumption to 5GB per month before they start throttling your speed to dial-up.  Other mobile broadband services typically charge up to $60 for 5GB of usage at 3G speeds.  Ironically, while 4G service from Clearwire is unlimited, the slower 3G speed service is not — there is a usage limit of 5GB per month on the 3G network, and then overlimit fees of five cents per megabyte kick in.

A statement from the company released early this morning talks up the fact CLEAR does not burden their 4G customers with Internet Overcharging schemes like other wireless broadband providers.

“Our residents now have a fast Internet connection that’s as mobile as they are,” said Jerry Brown, regional general manager for CLEAR. “And we’re thrilled to offer affordable rate plans with no limits on the amount of data customers use. No caps on usage, no penalties – our customers just use the Web as much as they want wherever they go – it’s that simple.”

Clearwire's coverage area in Rochester & Syracuse

In Rochester, CLEAR covers approximately 560 square miles and more than 600,000 people with service extending as far north as Lake Ontario, as far south as Canandaigua and Geneva (Ontario County), as far west as Spencerport, and as far east as Webster.

In Syracuse, CLEAR covers nearly 230 square miles and more than 265,000 people with service extending as far north as Brewerton, as far south as Nedrow, Auburn, and Cortland; as far west as Village Green, and as far east as Fayetteville and Manlius.

However, the company’s 4G coverage area is spotty in many areas in both cities.  Verifying coverage from their website is essential before considering CLEAR.  Anecdotal reports from some of our readers and others suggest 4G service from Clearwire is not nearly as robust as 3G service from some other providers, and dead zones and slow speeds have caused some to cancel service.  Here’s an example of their coverage in my part of the town of Brighton, just southeast of Rochester:

Clearwire's coverage of the 12 Corners/Elmwood Avenue area of Brighton, N.Y.

Some minor gaps in coverage are apparent near Commonwealth Drive, and if you were getting gas at the 12 Corners Mobil station or visiting Citizens Bank behind it, you’d be out of luck, but otherwise coverage looks fairly good to the west of Interstate 590.  However, a very strange gap pops up between Valley Road and South Grosvenor Road, also impacting a few apartment buildings at Elmwood Court Apartments, 3100 Elmwood Avenue.  That’s odd because although that part of Elmwood slopes slightly downwards, it’s still much higher than the homes on Valley Road or the apartments further back in the complex.  A major service gap opens up on Elmwood at Clovercrest Drive and extends into the very tony neighborhoods around Ambassador Drive and Clover Street.  But the country club set will do fine browsing away on the golf course at the Rochester Country Club further east.

In short, service can vary dramatically street by street, block by block, from nothing at all to full speed ahead.  Be sure to check your area before you commit to keeping the service, much less sign a two year contract for it.

For the rest of Rochester, if you live in the city or an inner-ring suburb, coverage is generally available.  Those further out in towns like Henrietta, North Chili, southern Pittsford, Honeoye Falls, Avon, Scottsville, Churchville, Brockport, Penfield and Perinton face significant gaps or no coverage at all.  Things improve dramatically in Ontario County in towns like Farmington and Victor and the cities of Canandaigua and Geneva.

For the greater Syracuse area, coverage pops up in Auburn and then disappears eastward until reaching Camillus.  Generally, coverage in Syracuse is not nearly as dense as in Rochester, with large gaps opening between suburbs and the city itself.  Mattydale is solidly covered, for instance, while Minoa isn’t.

Now that CLEAR has launched 4G service in Rochester and Syracuse, Road Runner Mobile, which is simply CLEAR rebranded as a Time Warner Cable service (they partly own Clearwire) will also soon be on the way.  Pricing in other Time Warner Cable cities wasn’t much different than from Clearwire direct, and some cable plans really push service contracts, which you really do not want on a service this new.  Do not commit to one unless you are satisfied with the service where you plan on using it.

Clearwire’s 4G Network in 2010

CLEAR 4G service is currently available in 44 markets across the United States, including: Syracuse and Rochester, N.Y.; Atlanta and Milledgeville, Ga.; Baltimore, Md.; Boise, Idaho; Chicago, Ill.; Las Vegas, Nev.; St. Louis and Kansas City, Mo.; Philadelphia, Harrisburg, Reading, Lancaster and York, Pa.; Charlotte, Raleigh, and Greensboro, NC; Honolulu and Maui, Hawaii; Seattle, Tri-Cities, Yakima and Bellingham, Wash.; Salem, Portland and Eugene, Ore.; Merced and Visalia; Calif.; Dallas/Ft. Worth, Houston, San Antonio, Austin, Abilene, Amarillo, Corpus Christi, Killeen/Temple, Lubbock, Midland/Odessa, Waco and Wichita Falls, Texas; central Washington, D.C.; Richmond, Va.; and Salt Lake City, Utah.

In the summer of 2010, CLEAR 4G will launch in Tampa, Orlando and Daytona, Fla.; Nashville, Tenn.; Modesto and Stockton, Calif.; Wilmington, Del.; and Grand Rapids, Mich. By the end of 2010, CLEAR 4G will also be available in major metropolitan areas such as New York City, Los Angeles, the San Francisco Bay Area, Boston, Denver, Minneapolis, Miami, Cincinnati, Cleveland and Pittsburgh.

You can read a company-provided tutorial about the service below the jump.

… Continue Reading

Hulu has announced a new premium service that will deliver entire seasons of network TV shows at 720p high definition resolution for $9.99 per month (plus applicable taxes).

The concept of Hulu Plus has been around for months now, as Hulu’s owners (Disney, NBC Universal, News Corp and Providence Equity Partners) contemplate the increasing cost of delivering video to millions of Americans during an advertising industry crisis.  Advertising revenue no longer covers the costs, so Hulu hopes paying subscribers will.

The free version of Hulu isn’t going anywhere — in fact the service has just signed agreements with CBS and Viacom to bring shows that formerly were seen on Joost over to Hulu.  Time Warner (the entertainment company, not the cable operator) is also bringing some of its shows to Hulu.

But free viewers will continue to find access to the latest shows limited, typically to the last four to five episodes.  If you want to catch up on an entire season, you’ll need to pony up ten bucks.

The prospect of watching nearly every network show from ABC, CBS, Fox, and NBC over your home computer, television or other devices including the iPhone, iPod Touch, iPad, PlayStation 3, Xbox 360, and Blu-Ray players from Samsung, Sony, and Vizio would give you more than 3,000 viewing options to choose from.  But before getting too excited, there are some downsides to Hulu Plus:

1. You’re still going to watch commercials. Just like basic cable, you are going to pay to watch commercials on Hulu Plus.  That will be a deal-breaker for many who believe if you pay a monthly fee for it, you shouldn’t have to watch advertising.  Netflix offers online viewing as part of its $9.99 monthly service and there is no advertising.
2. You still have to wait to watch shows. There is no live streaming of network shows.  You’ll have to wait until the next day like everyone else on Hulu to catch the latest episode.
3. Don’t you dare watch on your smartphone. With Internet Overcharging schemes in place at AT&T and presumably on the way at Verizon, nothing eats your allowance faster than online video.  Paying $10 a month for Hulu Plus will be dirt cheap compared to the overlimit fees you’ll pay if you exceed your usage allowance.

The cable industry still thinks it could have a better product in the end.  TV Everywhere’s variations from Comcast and other cable operators are provided free of charge to existing cable subscribers (although the advertising load may end up being greater).  Many cable network shows are better received than some of the swill served up by the networks, and cable could be free to provide season passes right from the outset.

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An introduction to Hulu Plus. (2 minutes)

A California attorney has filed a nationwide class action lawsuit against AT&T for fraud and misrepresentation over claims the company baited consumers to purchase Apple iPads with unlimited access and then subjected them to Internet Overcharging schemes after AT&T ended its unlimited data plan.

Lieff Cabraser Heimann & Bernstein, LLP claims AT&T knew it was going to break its promise to thousands of customers who were told they could switch between unlimited and limited data plans as their needs changed.  On June 7th, AT&T ended its unlimited data plan but grandfathered existing contract customers, permitting them to retain the plan indefinitely.  But if a customer changed to a limited usage plan or discontinued service, they lose the chance to get the unlimited plan back.

Apple and AT&T announced this policy change with less than one week’s notice to their customers and only about a month after Apple and AT&T began selling 3G-enabled iPads.  Apple and AT&T had promised consumers flexibility with their data plans, allowing them the ability switch back and forth between the limited data plan, the unlimited data plan, and no data plan.

No more.

“The availability of an unlimited data plan was a key reason why consumers paid the extra $130 charge to access the 3-G network, and their ability to switch in and out of the unlimited data plan was also an important consideration in the decision to purchase an iPad,” stated Lieff Cabraser attorney Michael W. Sobol. “The complaint alleges that Apple and AT&T should have known at the time they were promoting the availability of unlimited data plans, they were not going to keep that promise.”

“I originally purchased a standard iPad. Three weeks later, I returned it to the Apple store, paying an additional $130 plus sales tax to upgrade to an iPad with 3G capability. I thought the iPad 3G was worth the additional money because, with the unlimited data plan, I could work outside my office or home and access all the data I needed for a fixed, monthly price,” commented plaintiff Adam Weisblatt of Fulton, New York. “But I also knew that for several months each year, with my schedule, a lesser expensive, limited data plan was sufficient. I would have never purchased a 3G-capable iPad if I knew Apple and AT&T were planning on suddenly taking away from me the freedom to opt in and out of an unlimited data plan at my choice.”

The proposed class plaintiffs seek to represent a nationwide class consisting of all individuals and entities within the United States who purchased or ordered an Apple iPad 3G on or before June 6, 2010.

Consumers wishing to join the suit can contact the law firm for additional details.  There are no details on exactly what the attorneys will be seeking from AT&T.

Class action lawsuits have often delivered far more in benefits and compensation to the law firm that filed the lawsuit, with consumers usually left with discount coupons or less than $10 in compensation.  In this case, demanding AT&T deliver on its marketing promises or permitting customers to return their iPads for full refunds would seem appropriate.  Thanks to Stop the Cap! reader Marcus for the news tip.

Shapiro

Yesterday, Stop the Cap! reviewed a report from Robert J. Shapiro and Kevin Hassett suggesting “heavy users” should pay 80 percent of the costs to upgrade and expand broadband service to help lower prices for Internet access among America’s poor.  But what might have read to some as a scholarly assessment of challenges confronting American broadband is, in reality, propaganda produced by Sonecon, a Washington, D.C.-based lobbying firm hired by AT&T to sell their corporate agenda to the American public, interest groups, and Congress.

Beltway Economics – Buying Credentialed “Experts” to Back Discredited Policies

The dirty little secret of Washington power politics is that money buys attention, access, and all too often votes.  What began as a cottage industry to help facilitate communications between private business and political Washington has grown into a monstrosity that now largely controls the agenda, giving the upper hand to those who can outspend their rivals.  Since all too often those rivals are consumers who don’t bring money to play the game, they don’t even get a seat at the table.

Few people start a career thinking they’ll ultimately wind up prostituting their good name and resume to the highest bidder.  For many inside the beltway, what may have begun as a well-intentioned career in public service too often ends working for one of countless “public strategy firms” that help special interests get their way. Their impact on the debate is pervasive, especially when Congressional allies are on board: using suggested witnesses at Congressional hearings that lock out true consumer groups, reading lobbyist-provided talking points during floor debates, quoting from industry-sponsored reports sold as “independent research,” and gratefully accepting any accompanying campaign contribution checks along the way.

Most D.C. lobbying firms rely on recognized names who maintain a high profile in Washington power circles even years after leaving the public sector.  When selling an agenda, it helps if the person doing the sales pitch already knows the person being sold.  That’s why so many ex-Congressmen, deciding they’ve gotten used to living in Washington and want to stay, find new careers and a much bigger paycheck working as lobbyists.  But elected office isn’t a requirement.  Even those appointed to positions in the public sector can turn those lean government pay years into an income bonanza once that administration leaves office.

Robert J. Shapiro has come a long way from his early days in progressive politics found him in positions at several liberally-minded groups like the Progressive Policy Institute and the Progressive Foundation.  He advised several Democratic presidential candidates, including Al Gore, John Kerry, Bill Clinton, and Barack Obama.  Bill Clinton appointed Shapiro the U.S. Under Secretary of Commerce for Economic Affairs during his second term in office.

Unfortunately, although that title looks great on a business card and future resume, the pay is downright lousy.  Besides, his temp job would end with the Clinton Administration’s departure.

Shapiro combined his credentials with years of networking into Sonecon, LLC — a D.C. lobbying firm that pays dividends from its grateful clients, including AT&T.  Sonecon describes itself as “an economic advisory firm that provides in-depth analyses and unique insights into changing economic conditions in the United States and around the world and the impact of government policies on those conditions….”

Sonecon Knows Its Place

But just a little digging reveals Sonecon is really just another cog in the wheel of corporate campaign strategy and messaging.  Among the services promised to its clients (underlined emphasis ours):

• [Sonecon] works extensively with a network of affiliated firms (read that other lobbyists, astroturf groups, and think tanks) to help design and execute message campaigns;
• Sonecon plays an influential role in shaping public policy debates. We identify economic risks and opportunities created by recently proposed or enacted laws and regulations. By outlining the risks and opportunities associated with these changes, Sonecon enables business and government decision makers to react in a timely and appropriate way.  One recent example: Our reports on proposed new FCC regulations effecting broadband providers focused on broadband access issues for lower income households.
• As part of our services, Sonecon principals and advisers take part in strategic public relations campaigns designed to promote the firm’s work in the media, Congress and Executive Branch.  Well-informed, credentialed, and highly credible spokespersons, our team members are available for special appearances as well as ongoing communication campaigns.

Sonecon’s involvement in this particular ongoing communications campaign was made considerably easier by CNET’s sloppy editorial policy which effectively handed free media to AT&T without adequate disclosure of Shapiro’s agenda.  A simple Google search would have given CNET ample evidence that Shapiro and his firm were performing work on behalf of its clients — the telecommunications industry, especially AT&T.  This is not CNET’s first lapse.  On June 3rd, they provided column space for Robert Hahn to bash the FCC for involving itself in data plan pricing.  Only they never disclosed the fact Hahn is associated with the Technology Policy Institute (TPI), a phone and cable industry-backed think tank.  Even Comcast managed to disclose that association in their company blog.

In March, Shapiro appeared on an industry-backed panel to oppose broadband reform (from left, Robert Crandall-Brookings Institution, Walter McCormick-USTelecom, Lee Rainie-Pew Internet and America Life Project, Robert Shapiro-Georgetown Center for Business and Public Policy, and Joseph Waz, Comcast)

The unfortunate part of this story is that Sonecon and Shapiro have also infested the current debate over the National Broadband Plan.  This past March, Shapiro joined forces with the aforementioned TPI and its benefactors AT&T, Verizon, Comcast, Time Warner Cable, and the cable lobbying group NCTA to appear at a half-day “event” at the National Press Club to whine about broadband reform’s impact on industry investment and broadband expansion.  To underscore the economic investment threat, the sponsors were only willing to provide a continental breakfast for participants.  Leave us deregulated or else American broadband will resemble this stale pastry and ersatz “orange juice”-flavored beverage.

Such events happen easily in Washington with a swipe of a corporate credit card.  If consumers still had money, they could hire firms like Sonecon to represent their interests in these beltway policy debates.  But then hard-hit Americans don’t even have credit cards to spare these days, thanks to earlier lobbying efforts that allowed banks to use the economy as their personal casino.  Shapiro played his part in this too, writing a January 2008 report, “American Jobs and the Impact of Private Equity Transactions” that advocated for big Wall Street private equity leveraged buyouts, playing down the typical wholesale job losses that followed:

The data strongly suggest that private equity operations have solid, positive effects on U.S. employment, a finding consistent with the general role that private equity transactions play in the American economy. Private equity funds identify inefficient companies or subsidiaries, leverage those companies’ assets to borrow much of the financing to purchase them outright or to purchase a controlling interest, reorganize their operations and management, and run the enterprises as privately-owned entities.

Friends Until the End… Of the Contract

True to word, Shapiro did work extensively with a network of affiliated firms.  Many of the sources in his report are other groups also working for the industry or dependent on it.

The challenge here is that industry and government experts now expect that broadband bandwidth demand will continue to rise rapidly with the fast-expanding use of video and audio applications, and that consequently broadband providers face an extended period of significantly higher investments to accommodate this growing bandwidth demand.

[…]Another estimate cited by David McClure, the head of the U.S. Internet Industry Association, and John Ernhardt, Senior Manager of Policy Communications for Cisco Systems, projects that the long-term investments required to keep up with rising bandwidth demand could cost providers an additional $300 billion over 20 years, on top of their trend level investments.

Recently, the FCC broadband task force suggested that the additional investment requirements, including wiring every household with fiber, may well reach $350 billion.

The U.S. Internet Industry Association is a trade association for service providers like AT&T and Verizon.  A Verizon executive serves on its board.  Its mission includes working “to enhance your existing legislative and regulatory resources, giving your company a stronger voice over a wider range of issues — and at a reduced cost.”

Cisco Systems, principal advocate of the theory of the Internet traffic tsunami, makes its living selling equipment to manage the “exaflood” to the same industry that it pals around with in public policy debates.

Kevin Hassett co-authored the Sonecon report

And where does Shapiro’s estimated price tag of $350 billion come from?  His proclaimed source, the FCC broadband task force, is only half the story.  In fact, this cost estimate came from service providers, equipment manufacturers, and trade associations/lobbyists, among others¹.  That part didn’t make it into Shapiro’s report  — maybe he ran out of room.

Therein lies the basic problem with sock puppet research.  The credibility of any industry-funded study is questionable before the first copy even gets published.  Common sense dictates that a firm’s longevity is directly tied to its performance for clients.  Producing research that questions the strategy a company hires you to push is a one-way ticket to bankruptcy.  It doesn’t matter what credentials one brings to the table, money always speaks louder, especially in Washington.

Shapiro’s co-author, Kevin Hassett, is a political polar opposite, having served as an economic adviser to John McCain’s 2000 presidential campaign and Director of Economic Studies at the very-business-friendly American Enterprise Institute.  The potential friction between the two was eased by the ultimate incentive: big piles of bipartisan telecom cash.

In the end, Sonecon has done its client’s bidding — fixing facts to subjectively argue that unlimited, flat-rate broadband has to go. Their evidence is as flimsy as can be — assumptions that overcharging some people for Internet service will guarantee upgrades and cheaper pricing for others.

If you believe that, you’ll also believe Shapiro and Hassett wrote this report for free.

¹Federal Communications Commission. FCC Task Force on the National Broadband Plan Presentation to the FCC: September Commission Meeting (Slide 45)