Karma’s very expensive $150 startup equipment package.

After customers spent $150 on a mobile Wi-Fi hotspot device promising unlimited LTE wireless Internet access for $50 a month, Karma – the company offering the service – has put a stop to its “Neverstop” plan four months after introducing it.

“Karma is a bitch,” complained one customer who spent $250 with Karma trying to find a replacement for Clear’s now discontinued WiMAX service for his rural home. “After spending hundreds for nothing, it should be obvious to everyone why Karma turned off the comment section on its website.”

Neverstop customers have been through a rough ride during the brief life of the service, which started last November. Customers were promised unlimited 5Mbps service for $50 a month, after buying the $150 in required hardware. But not long after the plan was introduced, customers discovered their speeds were throttled to as low as 1.5Mbps to discourage customers from excessively using the service.

Insiders tell us the likely cause of the plan’s demise is Sprint, the wireless company Karma contracts with to offer the service. Sprint reseller contracts are closely guarded, but there is a clear track record of wireless companies taking action against resellers that place unexpected burdens on their networks. Millenicom, a similar provider that won customers largely through word-of-mouth, saw its unlimited offerings curtailed long before Karma announced its Neverstop plan, because wireless companies didn’t appreciate the fact some Millenicom customers relied entirely on the service for Internet access in the home.

Karma sold a plan that encouraged heavier data usage and then punished customers for using it.

Karma officials claim most of their customers never exceeded 15GB a month, but apparently enough did to get Sprint’s attention. Karma’s own internal research found that despite its insistence Neverstop was not a home broadband replacement, at least 60% of their customers used it exactly for that purpose. A handful of customers ran up hundreds of gigabytes of usage from online video, cloud storage/backup, and file trading. But a larger percentage used the service because they had no access to DSL or cable broadband, and used about as much data as the average household – an amount deemed by Sprint and/or Karma as “unsustainable.” Karma quickly moved to impose universal speed reductions on the service, dropping from 5Mbps to 1.5Mbps in an effort to curtail usage.

“Bait and switch,” complained Shannon Krakosky on Karma’s Facebook page. Many of the company’s earliest customers found the throttles arrived just as their 45-day return window for the expensive equipment expired, saddling them with a $150 paperweight. The company’s Black Friday offer inspired still more customers to sign up at a discount, only to find the equipment backordered, arriving at around the same time the traffic reduction speed throttles were announced.

Just one week before the speed reductions took effect, new customers were enticed with a year-end signup offer, further increasing traffic loads. Then customers received this:

[We] were surprised to learn how many of you are also using it heavily at home. We’ve seen lots of you binge watch Netflix in HD all day, back up your hard drives over the internet, and even connect your Xboxes through ingenious means. It’s a glimpse of how the internet should be, and we love it… but it’s putting a strain on the service and it’s not what the product is meant for today.​

After spending $150 on hardware for $50 unlimited LTE service, less than four months later these are your new choices.

But usage should have never surprised Karma, considering the firm marketed Neverstop in November and December as the perfect answer for “heavier usage, streaming, downloading….”

Only after imposing a speed throttle — later increased to 2.5Mbps — came changes in how Neverstop marketed its service. In early January, Neverstop was now sold as the perfect solution for “daily usage, worry-free browsing, on-the-go work, travel, occasional streaming, and more.” Also gone was the marketing that promoted unlimited usage. The new message to customers: lay off.

Many customers were unhappy about the sudden changes and have filed false advertising complaints with the Better Business Bureau and several state attorneys general.

Karma continued to modify its Neverstop plan later in January, claiming to relent on speed throttling and moving to impose a 15GB usage cap on Neverstop instead. The company claimed the usage cap would allow it to restore 5Mbps service, but most customers complained their speeds remained slow. In effect, customers were being asked to continue paying $50 a month for a shadow of the service originally advertised.

As of late last week, Karma revisited customers again to announce the once unlimited wireless data experience of Neverstop was being stopped… permanently.

van Wel

Karma CEO Steven van Wel told Verge the company came to the realization that Neverstop was unsustainable after observing a month of customer usage following January’s adjustments. Even with the restrictive throttling, half of Neverstop customers reached the 15GB cap before the end of their billing cycle, and there was no way for them to easily continue high-speed service, whether by changing plans or paying overage fees. Just one month earlier van Wel told Verge only a few customers were likely to exceed their 15GB cap.

“You bait and switched us again,” came a chorus of complaints before Karma switched off public comments on all but its Facebook page.

“Poor business at best,” added Daniel Frisch. “Sell a customer one thing and then switch it to something completely different. You sold me an unlimited data device at a reasonable price and now you have gone from throttling that data to a high-priced limited data plan like everybody else.”

Karma’s latest plan is called Pulse and Neverstop customers will gradually find their existing Neverstop service transitioned to the new plan over the coming month, which will sell 5GB of service for $40 a month. Many complain there are better deals available elsewhere.

Stop the Cap! will continue to seek out options for rural or on-the-go customers who depend on wireless Internet access where DSL and cable broadband are not available. For now, we cannot recommend Karma because of the company’s unstable service plans and the high upfront cost of equipment.

CenturyLink is planning to trial usage caps on its broadband service later this year, not to reduce congestion or to bank the extra money for service upgrades, but to boost revenue and profits.

Stewart Ewing, chief financial officer at CenturyLink, told Wall Street analysts the company was on board with usage caps and usage billing primarily because its biggest competitor (Comcast) is already implementing a similar program in many of its markets. It’s that kind of “competition” many customers say they could do without.

“Regarding the metered data plans; we are considering that for second half of the year,” Ewing told investors on a morning conference call. “We think it is important and our competition is using the metered plans today and we think that exploring those starts and trials later this year is our expectation.”

No details about the test markets or range of usage allowances were made available by Ewing, but CenturyLink is under pressure by Wall Street to improve its revenue after raising prices and tightening credit standards on its customers. The combined impact of rate hikes and a tighter credit qualification policy led CenturyLink to lose 22,000 broadband customers during the last quarter, many who simply stopped paying the bill.

CenturyLink has been under pressure by Wall Street to put usage caps and usage pricing on its broadband service for over a year.

David Barden from Bank of America called data caps “an opportunity” for CenturyLink to rake in more dollars from customers by using misleading pricing to trick customers.

Post

“We have been seeing a lot of the cable companies experimenting with data caps and metering higher-end usage,” Barden told CenturyLink executives on the conference call. “It seems like the FCC is not pushing back on this and it feels like it could be a big opportunity for telcos to, if nothing else, price underneath the cable umbrella and start to raise rates from high-end users.”

In plain English, Barden wants companies like CenturyLink to make customers believe they are getting a better deal from a lower price, at least until customers actually use the service. Then, the rate increases from usage caps and overlimit fees begin.

Glen Post, CEO of CenturyLink, is still committed to believing CenturyLink is in a good position to add broadband customers, despite the forthcoming trials of usage caps and overlimit fees. He defines 40Mbps broadband from CenturyLink as the speed that will “address most of our customers’ actual needs.”

CenturyLink now has 940,000 households connected to its Gigabit Passive Optical Network (GPON), many for its Prism TV service. Another 490,000 businesses also have access to CenturyLink’s GPON network, primarily for broadband. Post claims more than 30% of the company’s service area is now served with broadband speeds of 40Mbps or greater.

In 2016, CenturyLink expects to spend $1.2 billion on upgrades for its broadband network and capacity. In comparison, in 2015 CenturyLink spent $1 billion repurchasing shares of its own stock and another $1 billion on dividend payouts – both to benefit shareholders.

At present, CenturyLink has around a 15% market share in its GPON-enabled markets (the company didn’t say what its market share was where legacy copper wire infrastructure still dominates). Post believes that gives the phone company enormous room to grow, assuming its customers can pass credit checks and do not mind their broadband service data-capped. Like many phone companies looking for the biggest return on investment, Post noted CenturyLink will pay extra attention to wiring Multiple Dwelling Units (MDUs) — apartment buildings, condos, etc. — where the company can bring fiber service at a lower cost than wiring each home and business.

Kinzinger

Republican-sponsored H.R. 2666 — the “No Rate Regulation of Broadband Internet Access Act” — is drawing opposition from House Democrats because the measure, if it becomes law, could grant cable and telephone companies broad permanent exemption from oversight and consumer protection laws.

The bill, introduced last summer by Rep. Adam Kinzinger (R-Ill.), consists of a single sentence:

Notwithstanding any other provision of law, the Federal Communications Commission may not regulate the rates charged for broadband Internet access service (as defined in the rules adopted in the Report and Order on Remand, Declaratory Ruling, and Order that was adopted by the Commission on February 26, 2015 (FCC 15–24)).

Eshoo

Democrats worry despite the brevity of the bill, its language is broad and sweeping, and could be interpreted by the courts to grant deregulation and freedom from oversight to telecommunications providers that already rank at the bottom of customer satisfaction scores. It would also undercut the FCC’s reclassification of broadband from an information service to a telecommunications service, subject to Title II regulations, which gave the FCC increased authority to oversee the broadband industry.

Rep. Anna Eshoo (D-Calif.) has signaled her likely opposition to the Republican bill, noting the proposed law could “eviscerate the FCC’s authority to protect consumers against truth in billing practices and discriminatory data caps; to ensure broadband availability through [the Universal Service Fund] and E-Rate; to address rate-related issues in merger reviews; to ensure enforcement against paid prioritization; and other essential consumer protections.”

Several Democrats on the House Communications Subcommittee are introducing amendments that would likely keep Republican language prohibiting the FCC from directly regulating broadband prices, but also protect the power of the FCC to regulate billing practices, data caps and usage pricing, Net Neutrality, universal service requirements, merger reviews, and discriminatory and/or unfair business practices.

The Democrats are likely to have an uphill battle in a Republican-controlled House. Constituents may have more influence expressing their opposition to H.R. 2666 by reaching out to Rep. Kinzinger and the 18 Republican co-sponsors of the measure:

• Rep. Latta, Robert E. [R-Ohio]
• Rep. Bilirakis, Gus M. [R-Fla.]
• Rep. Barton, Joe [R-Tex.]
• Rep. Lance, Leonard [R-N.J.]
• Rep. Shimkus, John [R-Ill.]
• Rep. Blackburn, Marsha [R-Tenn.]
• Rep. Olson, Pete [R-Tex.]
• Rep. Pompeo, Mike [R-Kan.]
• Rep. Scalise, Steve [R-La.]
• Rep. Cramer, Kevin [R-N.D.]
• Rep. Collins, Chris [R-N.Y.]
• Rep. Long, Billy [R-Mo.]
• Rep. Guthrie, Brett [R-Ky.]
• Rep. Johnson, Bill [R-Ohio]
• Rep. Ellmers, Renee L. [R-N.C.]
• Rep. Walden, Greg [R-Ore.]
• Rep. Upton, Fred [R-Mich.]
• Rep. Allen, Rick W. [R-Ga.]

Despite claims satellite broadband has improved, our readers respectfully disagree:

“Most people don’t know what data caps really are until they’ve had satellite based Internet service where the bandwidth is shared,” Scott S. reminds Stop the Cap! He’s a subscriber of Exede, a satellite broadband provider powered by the ViaSat satellite platform serving about 687,000 residential customers nationwide.

Online life can be a lot worse when you are stuck with satellite-based Internet access:

• “I am only allowed to have 10GB per month total for everything and have a 12/3Mbps service. Anything over that and they either cap your flow or give you substantially lower bandwidth speed.
• “You can’t go online with more than three devices (including your phones).
• “You can forget Netflix or watching any shows online.
• “You can forget playing ANY video games online.
• “You can forget taking any college courses online without service interruptions (which I am).”

“And they still charge you as much as other ISPs do (at least $60/month) that provide no data caps and a MUCH faster speed,” Scott writes.

Exede offers most customers plans with 10, 18, or 30GB of usage per month. About one-third of the country, typically the most rural regions in the western U.S., can now choose faster plans at speeds nearing 25Mbps because those spot beams are underutilized. But most subscribers get considerably poorer service because about two-thirds of ViaSat’s residential satellite access beams are full. Despite that, Viasat still managed to find capacity to power in-flight Wi-Fi on JetBlue, Virgin America and some United Airlines aircraft.

Customers who have never had DSL or cable broadband tolerate the slow speeds and low caps better than those that move from an area served by a wired provider. Many of those customers call satellite broadband speed marketing claims “fraudulent” and complain low usage caps make it difficult to impossible to use the Internet to use multimedia content.

The Communications Workers of America has told the New York Public Service Commission it should reject Altice’s proposal to buy Cablevision for more than $17 billion, claiming it’s a bad deal for customers and employees alike.

Citing Altice’s massive debt and the company’s documented history of cutting expenses and investment, Dennis Trainor, vice president for the CWA-District One, said approving the deal would load Cablevision down in debt, making any significant investments in Cablevision’s future doubtful.

“This is a bad deal for Cablevision customers and employees,” Trainor said. “Altice overpaid for Cablevision, and is financing that overpayment by loading Cablevision with debt. That will inevitably lead to worse service for customers.”

The CWA also heavily criticized Altice and Cablevision for stalling sharing documentation with the labor union as ordered by a New York Administrative Law Judge. It filed initial comments opposing the transaction with the PSC under protest.

“As late as the morning of Feb. 5, [the Joint Applicants] have continued their grudging and incomplete disgorgement of relevant and probative material to which CWA is entitled,” the CWA wrote. “CWA now possesses documents and data which are contradictory and require reconciliation.”

The CWA considers the deal good for Altice and Cablevision’s owners and investors, but a raw one for customers.

“For example, Cablevision’s top five executives will have almost $160 million in ‘golden parachute’ compensation available to them under certain circumstances if the transaction is approved, of which almost $100 million will become automatically triggered and payable upon consummation of the merger,” the CWA stated. “In sum, after the transaction closes, Cablevision will be the same company, with the same plant and equipment, but with substantially more debt and relatively little cash on hand,” the CWA concluded.

The CWA also cited Stop the Cap!’s own reporting of the consequences of increasing debt and reduced investment at SFR, an Altice-owned telecommunications provider in France:

“We refer the Commission to publicly available reports of a collapse of service quality for customers of SFR, one of France’s largest telecom service providers, owned by Altice. This has caused a doubling of complaints from wired customers between 2014 and 2015 and a corresponding increase in complaints about wireless service of 50%. Altice had two responses: First, it blamed the company it purchased SFR from ‘we pay the price of underinvestment from the previous [owner]’. Second, it disputes whether the level of complaint is unacceptable ‘For now, we are not very good, but we are not bad.'”

New York City’s Office of the Public Advocate is no fan either. In its filing, the OPA also cited Altice’s enormous debt load, which has increased dramatically over the last four years.

“[Altice CEO Patrick] Drahi has already driven away customers and alienated employees in France since his acquisition [of SFR],” writes the OPA. “In SFR’s case, Altice eliminated costs to boost SFR’s profit margins. Among Altice’s practices with SFR were: efforts to stall payments for suppliers, initiating salary and job cuts, and a reduction in spending on meaningful service upgrades.”

The OPA also cites reporting by Stop the Cap! documenting how SFR performed after being acquired by Altice.

Leticia James, Public Advocate for the City of New York

“We know, for example, SFR was forced to completely stop paying suppliers in order to force a renegotiation for cheaper supplies,” writes the OPA. “The French government appointed a mediator to resolve the issues. Moreover, these business practices failed to effectuate Altice’s goals. Just four months ago, Altice reported ‘worse-than-expected’ third quarter results for SFR that drove the company’s shares down 10 percent. In fact, SFR lost one million customers in just one year. Investors correctly attribute customer losses to Altice’s aggressive cost-trimming. As one expert explains, ‘the savings came first immediately and now the churn (or customer defection) goes up.’ Another analyst describes Altice’s ‘dangerous’ actions as not only cutting out the fat, but also the meat and the bones.”

The PSC staff reviewing the transaction also expressed concern that Altice’s willingness to keep data caps at its other acquisition Suddenlink may result in similar data caps being implemented on Cablevision customers after the merger.

Especially notable to the PSC staff was the fact that under Suddenlink’s 1000/50Mbps data-capped plan, “if the connection is utilized at its rated speeds […] a customer could reach the data cap in less than two hours.”

“If Altice were to import Suddenlink’s pricing into Cablevision service territory and impose data caps on its existing plans, some customers would be forced to upgrade not for the increased speed, but for larger data caps,” the PSC staff wrote. “For example, customers on Cablevision’s low-end 5Mbps plan, if limited to a 250GB monthly cap, would technically be able to hit their cap after just five days of constant use. More practically, they would be limited to approximately 83 hours (a little less than three hours a day) of video streaming, if the connection were not used for anything else.”

“Simply put, the introduction of Suddenlink-type data caps in Cablevision’s New York service territory post-transaction would limit the ability of New York consumers to utilize their broadband connections at their own discretion, as they currently enjoy with Cablevision service today, and would lessen the ability of over-the-top voice and video providers to compete with Cablevision’s bundled services,” the PSC staff concluded. “The imposition of Suddenlink-type data caps would be a significant detriment to New York consumers, and should not be allowed as a condition of the transaction.”