Your Money = Their Money

Time Warner Cable has mailed letters to subscribers in its Northeast Ohio and Western Pennsylvania division announcing that “with many of our fixed costs escalating, we are forced to adjust the prices of some of our services accordingly.”

That price adjustment takes Road Runner’s 7Mbps broadband service to $49.95 per month, if the subscriber also takes cable-TV service from Time Warner, according to one subscriber in Cleveland.  Another subscriber in Erie, Pennsylvania also noticed Road Runner Lite was also increasing in price to $24.95 per month with the rate change, effective November 24th.

A Canton, Ohio subscriber sent Stop the Cap! a copy of the letter their family received regarding the rate hike.

The company suggests customers might use the letter as a motivation to inquire about subscribing to even more services from Time Warner as part of a bundled package.

An Alliance, Ohio subscriber called the company’s rate increase pathetic, noting the division has some slow broadband speeds compared with other Road Runner service areas.

“With 768kbps upload speed, give us more then we will pay more,” he writes.

Time Warner's letter to customers in northeast Ohio and western Pennsylvania (courtesy: kba4)

Shaw Communications, western Canada’s largest cable company, has expanded its High-Speed Nitro DOCSIS 3 broadband service in British Columbia and Alberta.  Offering speeds of 100Mbps downstream and 5Mbps upstream, Shaw charges customers $149 per month for the new plan, assuming you also subscribe to other Shaw services.  The three latest cities to obtain upgraded service join Victoria in British Columbia, Saskatoon in Saskatchewan, and Winnipeg, Manitoba, where upgrades were unveiled earlier this year.

“The expansion of High-Speed Nitro into the cities of Calgary, Edmonton and Vancouver demonstrates Shaw’s commitment to continually enhancing our Internet services to meet our customers’ changing needs,” said Peter Bissonnette, President, Shaw Communications Inc.

Paying $150 a month doesn’t buy you unlimited broadband, however.  Despite the premium price, Shaw insists on slapping a usage allowance of 400 gigabytes per month.  While at first glance that limit seems generous, particularly compared with Comcast’s 250GB limit, paying $150 a month for Internet access apparently is not enough to spare their most generous customers from a pesky Internet Overcharging scheme.

Jeff from Calgary, a Stop the Cap! reader writes, “exactly how much profit does Shaw need to earn from customers before they turn the damn meter off?”

“It’s bad enough with a 100GB limit on their so-called High-Speed Extreme plan, which gives my family up to 15Mbps service for $45 a month.  If I am going to pay them $100 more a month for service, there shouldn’t even be a limit,” he adds.

The High-Speed Extreme plan seems to be the pricing “sweet spot” for Shaw, because the next step up in Calgary is High-Speed Warp, which brings 25Mbps service for the warped high price of $96 a month.  For nearly twice the price, Shaw only throws another 50GB towards customers’ usage allowances, limiting service to 150GB per month.

With all of the discussion about Net Neutrality recently, the mainstream media often has a difficult time absorbing what this concept means and ends up confusing it with Internet Overcharging schemes.  CNN is the latest to make the mistake — not once but twice in three days as Nicole Lapin and Tony Harris discuss how Net Neutrality policies will impact consumers.

Lapin suggests this week’s decision by the FCC to begin writing a formal Net Neutrality policy was a done deal, and that it would prevent Internet providers from charging higher prices for consumers who use their broadband accounts a lot.

Both statements are incorrect.

The FCC is only at the start of writing a formal Net Neutrality policy.  The basic tenets Chairman Julius Genachowski would like to see a part of a formal Net Neutrality rulemaking are on the table, but there is plenty of time between now and a final vote for telecommunications industry lobbyists to sweep several pages from Genachowski’s wish-list to the floor (and replace them with their own.)

Nothing in the proposed Net Neutrality policies would currently prohibit providers from moving to Internet Overcharging schemes like usage allowances, overlimit fees, and other pricing changes that are ultimately designed to reduce usage and extract higher pricing from consumers.

Rep. Eric Massa (D-NY) has a bill to put a stop the Internet Overcharging schemes that continues to need your support and advocacy with your member of Congress.  See the Take Action section for further details.

For the record:

Net Neutrality: A set of policies that prevents Internet providers from discriminating against certain broadband services or website content providers with speed throttles, blocks, or other impediments.  Providers would not be allowed to set up special premium traffic lanes with faster speed delivery of online web content for “preferred partners,” while leaving everyone else on a slower traffic lane.  It preserves the Internet we have today.

Internet Overcharging: Practices by broadband providers to limit usage of your broadband service and/or charge higher pricing based on arbitrary claims that consumers are “overusing” their unlimited broadband service.  These include usage caps or limits, usage allowances, consumption billing that includes usage allowances, overlimit fees/penalties for exceeding those limits, speed throttles that kick in when a user reaches their usage limit, and any accompanying services sold to consumers who think they might exceed their plan allowance (overlimit “insurance” policies, extra usage blocks sold at premium prices, etc.)

[flv width=”570″ height=”324″]http://www.phillipdampier.com/video/2009-10-21-CNN-FCC Net Neutrality.flv[/flv]

CNN’s Tony Harris talks with Nicole Lapin about Net Neutrality, and how the policy impacts small businesses that sell on the web.  (October 21 – 3 minutes)

Earlier today the two revisited the issue of Net Neutrality to explore the outcome of the FCC Net Neutrality decision:

[flv width=”570″ height=”324″]http://www.phillipdampier.com/video/2009-10-23-CNN-Net Neutrality Victory.flv[/flv]

CNN’s Tony Harris and Nicole Lapin discuss the “victory” for Net Neutrality proponents.  (October 23 – 2 minutes)

You know the time-honored argument that broadband traffic isn’t free, some broadband users out there are just using too much, costing the company its profits, clogging up the lines, and ruining it for everyone else.  That’s the company line we hear again and again from broadband providers who want to engage in Internet Overcharging schemes.  “It’s inevitable,” they say.  “Unlimited cannot go on like this,” they write.  “People should pay their fair share,” they demand.

We say nonsense — broadband providers are making billions in profits under existing plans that don’t annoy customers with gas gauges and overlimit penalties that typically range $1 per gigabyte, representing a several thousand percent markup.

While broadband providers continue their quest for a payday at your expense, web hosting companies, whose broadband traffic crosses the same lines your ISP uses, are doing the exact opposite.

The self-described “world’s largest web hosting company” 1 and 1 today announced it is abolishing its web traffic allowances across all of its web hosting plans.  Formerly, customers exceeding their traffic allowance were billed $0.49 per gigabyte.  Not anymore.

1 and 1’s action today calls out the illegitimacy of Internet Overcharging, and tells their customers they never have to worry about overcharges again.

Ralph de la Vega, CEO of AT&T Mobility

AT&T Mobility has news for its customers: “You’ll be hearing something from us in the near future,” says AT&T Mobility CEO Ralph de la Vega.  He was speaking about an end to “unlimited” usage of its wireless network.  Stop the Cap! reader Jeremy learned about it and sent word our way.

Of course, AT&T has always reserved the right to impose overlimit fees or terminate accounts that exceed 5 gigabytes per month, but most of the horror stories about enormous bills come from consumers using AT&T’s wireless broadband service on a computer.  For iPhone users, who are force-fed a mandatory $30 monthly “unlimited” data plan, their wireless usage has not been subjected to an AT&T crackdown for whatever they consider “excessive” that month.

But that is likely to change, and soon.  De la Vega warned listeners on a conference call held this week that AT&T’s considerations of ways to deal with extreme bandwidth users are “all in flux, but we will come up with ways that mitigate the [network] impact we’ve seen by a small number of customers who are driving inordinate usage.”

The company has been holding focus groups about Internet Overcharging schemes, trying to conjure up a public relations message that consumers will be duped into believing is fair.  They’ve tested everything from meal scenarios to toll roadways, comparing “heavy users” with 18 wheelers and ordinary light users with Mini Coopers, asking participants if they felt it was fair “for the truckers to pay more?”  One of our readers clandestinely participated in one of these, and managed to debunk their nonsense over a free lunch, with consumers incensed to discover the tolls they are charging are ludicrously profitable even at current rates.

When facts about Internet Overcharging are revealed, it’s not a question of who should pay more — it’s a demand to know why everyone isn’t paying less -and- why companies like AT&T aren’t investing a greater percentage of their fat profits in expanding their network.

As I’ve written on several previous occasions, it comes as no surprise to me that some companies in the broadband industry have been looking for an excuse to throw all of our “favorite” Internet Overcharging schemes on customers — usage allowances, overlimit fees and penalties, or just throttling your connection to dial-up speeds.  As I predicted, some will try an “either/or” scam on consumers, telling them they are “forced” to impose these kinds of profit grabs because the government is demanding Net Neutrality.  One has absolutely nothing to do with the other of course, but it’s a convenient excuse to help rally consumers against Net Neutrality now, and impose higher pricing on consumers anyway.  It is crucial that consumers do not fall for this ploy.  There is no fairness in being overcharged for Internet access, such plans never truly provide “only paying for what you use” pricing, and no one should be willing to give up one for the other.  In Canada, they ended up with no Net Neutrality -and- Internet Overcharging schemes, precisely what would happen here.

As has always been the case, AT&T blames a “small percentage” of their users for consuming massive amounts of bandwidth.  Earlier this summer it was “three percent of Smartphone users use 40% of AT&T’s wireless network.”  The us vs. them mentality is designed to divide consumers into finger pointing camps blaming their neighbors for “the problem” instead of asking pointed questions of the carrier making the claim.  Some questions are:

1. Exactly how much data do those “heavy Smartphone users” consume?
2. What is AT&T’s cost per megabyte/gigabyte to deliver that data to consumers?
3. Why does AT&T mandate iPhone customers purchase an “unlimited” data plan and then complain when customers utilize what they are paying for?
4. Will AT&T significantly reduce pricing for mandatory data plan customers, or simply throw a usage allowance on existing accounts and expect consumers to pay the same?
5. What percentage of AT&T’s profits are spent on their network and its expansion, and has that amount as a percentage increased or decreased in the last five years?
6. If AT&T is suffering from smartphone congestion, why continue an exclusive deal for the iPhone, which AT&T claims contributes to a significant amount of that congestion?
7. Why does AT&T marketing claim their wireless broadband plans are “unlimited” when, in fact, they are limited to 5 gigabytes of usage per month?

Jack Gold, an analyst at J. Gold Associates, told Computerworld carriers have a legitimate issue in considering an “overage charge,” for users who surpass a certain number of gigabytes of data per month.

“People will complain about an overage charge,” Gold said. “I guarantee complaints, but there’s no other way to deal with it short of building out more networks to give people the bandwidth they crave. There really are bandwidth hogs. You have 5% of the users taking up 90% of the bandwidth sometimes.”

Gold said he agrees with net neutrality rules that allow users to reach any Web site on the Internet, but argued that carriers can’t provide unlimited bandwidth to all users. Doing so “means everybody else is limited … The AT&Ts and Verizons have a legitimate point.”

Of course, Gold is in the business of representing business interests, not consumers.  Does Gold have direct evidence of his numbers, or does he simply repeat what he has heard carriers tell him?  Since consumers cannot easily find truly unlimited mobile broadband accounts in the American wireless industry today, de la Vega’s urgent statements about imposing limits on customers must target iPhone and other smartphone users specifically, because those are the only accounts AT&T hasn’t held hard to their 5GB usage cap.