AT&T’s enforces usage caps with overlimit penalties on its slow speed DSL service while waiving overlimit fees for its higher speed U-verse Internet service.

In 2011, AT&T introduced a 150GB monthly data cap on its DSL customers and a 250GB cap on U-verse Internet access, promising an overlimit fee of $10 for each 50GB customers stray over their allowance. Since that time, although AT&T continues to claim all customers have a usage allowance, it only penalizes DSL customers with overlimit fees.

What makes one customer subject to a higher bill while another can use as much data as they like without penalty? Competition.

Stop the Cap! has found AT&T’s DSL customers are among those least favored by the phone company. Subjected to a data cap with penalty fees for exceeding the allowance is just one of the issues bothering customers like Sheila Rivers, who lives on Houston’s west side. Her Internet bill has gone up year after year no matter how much data she uses. Her phone line with DSL used to cost her around $45 a month. Last year, it increased to $65 and AT&T has now informed her they want another $10 a month, bringing her phone bill to almost $75 a month. As long as it hasn’t rained recently, she gets just under 6Mbps speeds from AT&T. This past spring her connection barely exceeded 2Mbps.

When Rivers complains about her bill, she is quickly offered U-verse at about half the price for faster speeds. She’d take advantage of the offer, except she can’t. AT&T’s engineers tell her there are “no more ports” open in her neighborhood at the moment.

That’s also true for Jim in downtown Chicago. He’s an AT&T DSL customer and not by choice. AT&T was supposed to upgrade his building to U-verse more than a year ago, but it still has not happened. Comcast has a record of delivering appallingly bad service in his building, judging from his neighbors who cannot stay connected to Comcast’s Internet service. That leaves him with AT&T DSL with that 150GB usage cap. He regularly pays $30 in overlimit fees every month for exceeding it.

“AT&T won’t budge on waiving the extra fees on DSL, unless I agree to sign up for U-verse and then they will issue me a courtesy credit,” Jim tells Stop the Cap! “I keep telling them ‘yes, please’ and around a day later I receive another call canceling my order because U-verse is not available in the building. It’s clear the DSL usage cap is supposed to convince people to switch to U-verse for a bigger allowance.”

Except AT&T has not enforced its 250GB usage allowance with overlimit fees anywhere we could find. In fact, customers tell us they are specifically exempted from any U-verse caps based on a message they see on AT&T’s usage measurement tool:

Note: Enforcement of the 250GB data consumption threshold is currently suspended.

This week, the Houston Chronicle’s TechBlog reports usage caps for U-verse have been suspended across the city of Houston. AT&T’s current reasoning for harshly enforcing caps on its DSL service while not enforcing them at all for U-verse customers was murky:

“We’re educating our customers on Internet usage, and we inform them if their usage might affect their monthly bill.”

So what is different about AT&T’s lower speed DSL service that presumably generates less traffic than its higher speed U-verse counterpart?

The answer seems to be competition.

AT&T has aggressively upgraded many of their urban and suburban service areas to U-verse. That upgrade alone does not mean the end of DSL for customers in an upgraded area, but AT&T has clearly embarked on an effort to convince customers to abandon older DSL service in favor of U-verse. In most cases this is accomplished with promotional pricing, dramatically reducing the cost of U-verse and convincing customers sticking with DSL is an expensive mistake.

AT&T also faces cable competition in nearly 100% of their U-verse service areas — competition that has raised broadband speeds and cut prices for new customers. If the competition offers faster Internet speeds with no usage cap, toughing it out with AT&T U-verse may seem unwise. Enforcing that 250GB cap would likely drive a number of customers to the competition.

In contrast, more rural and outer suburban communities are less likely to have a cable competitor and much more likely to qualify only for DSL because AT&T has not upgraded those areas to U-verse. That leaves AT&T with a monopoly, where customers have no other choices for service. It is very easy to enforce usage caps in these areas.

“It doesn’t make any sense that AT&T would cap me to 150GB on my DSL line and charge me overlimit fees for using too much when my next door neighbor with U-verse can use the Internet 24/7 and never be asked to pay anything extra for doing it,” Rivers said. “It rubbed me wrong enough to call Comcast, where I was offered more than 10 times faster service with cable TV thrown in for $15 less than what AT&T has been charging me and no usage caps for now at least. I can’t stand Comcast but AT&T is worse.”

Rivers thinks AT&T is making a big mistake having usage caps at all.

“That one issue just cost them my business after eight years with them.”

The days of the wireless phone subsidy are numbered with today’s announcement Verizon Wireless will end all smartphone subsidies and service contracts next week. It’s a path we’ve predicted at Stop the Cap! since at least 2013.

In an effort to “simplify” wireless pricing, Verizon Wireless is radically shaking up its wireless plans starting Aug. 13 — raising prices for its lightest users, ending the two-year phone contract, and requiring customers buy or finance their devices at the full retail price. Instead, customers will pay $650 up front for a phone like Apple’s iPhone 6, or finance it for around $27 a month for the next two years.

Phone plans are changing as well. Eliminated are “individual” and “family plans.” In their place, there is just one plan with four data options:

• Access Fee (includes unlimited voice/text): $20/mo per phone, $10/mo per tablet or portable hotspot, $5 for connected devices (eg. watches)
• Shareable Data Option: $30 (Small – 1GB), $45 (Medium – 3GB), $60 (Large – 6GB), or $80 (X-Large – 12GB)  —  Overlimit Fee is $15/GB

Average and heavier users will save a few dollars with Verizon’s new plans. The “Medium” plan is $5 less than Verizon used to charge and the “Large” plan is $10 less. You get 2GB of extra data for your $80 comparing Verizon’s older plan and its newer one. The benefits seem less compelling when you realize just a few years ago Verizon charged $30 for unlimited use data plans.

Budget customers will find Verizon’s new plans the least attractive. Customers with 6GB or less data plans used to pay a $15 access fee. Now they will pay $5 more per phone. Those who want Verizon’s cheapest 500MB plan for $20 are out of luck. That plan is being dropped, according to Verizon, because customers were confused over the difference between MB and GB. Customers now on that low-end plan will probably be able to keep it, but may eventually have to choose a “Small” data plan for $10 more per month. Budget customers used to pay around $35 a month. Now they will pay at least $50.

Heavy data users may be concerned Verizon’s top data plan tops out at 12GB. The company plans to privately offer bigger data buckets to customers, but only if they visit a Verizon Wireless store to discuss their needs.

Current customers still on contract will not see any changes immediately. Verizon will continue to charge the $40 a month access fee for contract customers until the contract expires, after which the fee will drop to $20. Customers on More Everything plans can stick with their existing plans for now, as well as add lines. There are no plans to force customers to change service plans at this point.

Expect AT&T to take a similar path towards the elimination of subsidized devices. Because customers will likely finance their $600+ smartphones, it isn’t likely consumers will face dramatically changed pricing as a result of Verizon’s plan changes. But device manufacturers can no longer get away with promoting their phones at a $200 price point. In fact, the sticker shock of the retail price of smartphones may eventually force manufacturers to produce more affordable phones for the marketplace.

Sandra Hartman has been a Verizon DSL customer for more than 10 years. She doesn’t have much of a choice.

In her small town outside of Binghamton, N.Y., Verizon is her only option. Time Warner Cable doesn’t come close to providing service in this part of upstate New York and cell service is abominable, even with Verizon and AT&T.

“I live in an area just large enough to have given Verizon the justification to offer DSL, but 3Mbps service is about all we have ever been able to get, but it has been better than nothing,” Hartman tells Stop the Cap!

Hartman signed up for a package that included $19.99 DSL with her landline a decade ago, a price that went up $10 after the sign-up promotion ended but has remained stable for years.

“Then Verizon decided to raise the price without improving the service,” Hartman says.

In fact, the price hikes have been fast and furious lately, beginning last fall when Hartman received this notice Verizon was raising the price to $34.99 a month:

Dear Valued Verizon Customer,

We realize you have choices when it comes to choosing your Broadband provider, and would like to take this opportunity to say thank you for being a loyal customer and for choosing Verizon.

In order to continue to bring you quality service and product innovation, at times we need to raise our rates. Your monthly rate will increase by $5.00 and will be reflected on your bill within the next two months. This rate will remain in effect for one year. If you currently have any credits or discounts on your account, these will remain in effect until their original expiration date.

If you would like to review your account to see if you may qualify for additional savings or if you have any questions, please log on to verizon.com/myverizon or give us a call at 1.888.213.9932.

We value you as a customer and look forward to continuing to serve you.

Sincerely,
Your Verizon Team

“What choices?,” Hartman wondered. “We have no choice and after the rate increase, we’ve seen no improvement in the quality of the service or any evidence of Verizon’s ‘product innovation.’ It’s the same DSL service we’ve had for a decade — we’re just paying $60 more a year for the same thing.”

To save money, Hartman downgraded her Verizon landline to the cheapest possible plan and switched to Voice over IP provider Ooma, which works over her DSL line. But Verizon is now back for more with another rate increase notice — this time looking for another $7 a month starting this fall, putting the price of 3Mbps DSL up to $41.99 before fees, surcharges, and taxes.

“I called Verizon and they told me rates are reviewed ‘for competitive reasons’ and reflect the cost of providing the service, which is apparently now up another $84 a year,” she said. “Verizon’s equipment, sitting in the elements on a phone pole or humming away in their phone office actually appreciates in value it seems. I wish my 10-year-old laptop was worth more today than the day I bought it, but my laptop wasn’t made by Verizon.”

Hartman complained to customer service the successive rate increases do not seem to be spent on any improvements. In fact, it seems Verizon is no longer accepting new DSL customers in her area.

“A real estate agent friend of mine told me selling homes in this town has gotten difficult because Verizon will simply not sell DSL to new customers here, claiming they have no capacity,” Hartman said. “If you can’t get DSL from Verizon, you don’t have broadband service, it’s as simple as that.”

DSL availability from Verizon is not just a problem for Hartman. Several central offices in upstate New York no longer accept new Verizon DSL customers, claiming the service is at capacity. Some customers in the Finger Lakes region keep DSL service year-round at their seasonal cottages, fearing if they suspend service for the winter they will not get it back next spring. Time Warner Cable offers service to many lakefront properties, but those who own cabins and homes away from the lakeshore usually cannot get cable service and depend on Verizon for service.

The Verizon DSL forum on DSL Reports has more examples of customers that discover their entire exchange is no longer qualified to get Verizon DSL. One such example is in Purcellville, Va., west of Washington, D.C., a quick drive to the Maryland and West Virginia borders.

“DSL suddenly has disappeared from my wire center entirely – regardless if your 10 feet from the CO or out of a remote terminal with a DSLAM,” wrote Zenit. “Even the industrial section of town which has its own fiber fed DSL equipped RT shows negative for service, and there are plenty of vacant units there.”

Similar stories were reported in communities like Pittsfield, Mass. and Netcong, N.J.

Customers have been able to push back against Verizon’s price increases, especially in competitive areas. Some customers are switched to lower cost bundled packages while others are given straight service credits that lower a customer’s bill. Customers need only ask Verizon for a better price and let them know you are shopping around for a better deal.

Fans of the “hands-off” approach to broadband oversight finally have a country where they can see a deregulated free marketplace in action, where consumers theoretically pick the winners and losers and where demand governs the kinds of services consumers and businesses can get from their providers.

That country is the Philippines, which has taken the libertarian free market approach to Internet access in a dramatic leap away from the authoritarian Marcos era of the 1980s.

The Deregulation “Miracle”

Until 1995, the Philippines Long Distance Telephone Company (PLDT) maintained a 60-year plus government-sanctioned monopoly on telecommunications services. Its performance was less than compelling. Establishing landline service took up to 10 years on a lengthy waiting list. Getting a phone line was the first problem, making sure it worked consistently was another. Just over 10 years after the United States formally broke up AT&T and the Bell System, the government in Manila approved RA 7925 – the Public Telecommunications Policy Act of 1995, breaking PLDT’s monopoly and establishing a level playing ground for each of 11 regions across the country and its many islands in which private companies could compete with PLDT for customers.

To attract investment and competition, the government declared all value-added services like Internet access deregulated and guaranteed the complete privatization of all government telecom facilities no later than 1998. It also initially limited the number of companies that could compete against PLDT in each region to two new entrants. The government felt that would be necessary to attract competitors that knew they would have to quickly invest millions, if not billions, to build telecom infrastructure in the Philippines. It would be hard to make a case for investment in a region where a half-dozen companies all engaged in a price war fighting for customers while stringing new telephone lines and building cell towers.

To prevent cherry-picking only the wealthiest areas of the country, the government declared its desire for a privately funded nationwide telecom network and used the 11 regions, combining urban and rural areas in each, to get it. Competitors were required to support at least 300,000 landlines and 400,000 cellular lines in each region. That assured new networks could not simply be built in urban areas, bypassing smaller communities. After building their networks, companies largely operated on their own in a mostly-free deregulated market, slightly overseen by the National Telecommunications Commission (NTC) — the Philippines equivalent of the FCC.

The early years of telecom deregulation seemed promising. PLDT, much like AT&T in the United States, kept the lion’s share of customers (67.24%) after deregulation took effect, but new competitors quickly captured one-third of the market. But with lax regulation and oversight, some of the Philippines’ most powerful families, many benefiting under years of the Marcos dictatorship, managed to gain influence in the newly competitive Philippines telecom business. In the United States, telecom competition meant a choice between Sprint, MCI, AT&T or others. In the Philippines, you dealt with one or two of nine powerful family owned conglomerates, each operating with a foreign-owned telecom partner. It would be like choosing between companies owned by the Rockefellers, the Astors, the Carnegies, or the Morgans.

The NTC remained more “hands-off” than the FCC, avoiding significant involvement in critical interconnection issues — how competing telephone companies handle calls from subscribers of a competing provider. That was last an issue in the United States in the early 1900s, where rare independent competitors to the rapidly consolidating Bell System faced a telecom giant that initially refused to handle calls from customers of other companies. American regulators eventually demanded interconnection policies that guaranteed customers could reach any other telephone customer, regardless of what company handled their service. In the Philippines, the NTC eventually mandated less-demanding access, allowing companies to charge long distance rates to reach customers of other companies. In the 1990s, it was not uncommon to find businesses maintaining at least two telephone lines with different companies to escape long distance expenses and stay accessible to all of their potential customers.

PLDT initially fought the opening of the marketplace but benefited handsomely from it once it took effect. The company got away with setting sky-high interconnection rates to connect calls from other smaller providers to its customers. It also made access to its network a minefield of bureaucracy and often required competitors to sign unfair revenue sharing agreements.

It is Cheaper to Buy Out the Competition Instead of Competing With It

The investment community eventually balked at the cost of constructing competing telecommunications networks, especially after the dot.com crash in 2000, and a drumbeat for industry consolidation through mergers and acquisitions quickly grew too loud to ignore. Investors fumed over the amount of money being spent by providers to meet their service obligations in the 11 subdivided regions. Instead of building redundant or competing infrastructure, allowing competitors to merge would cut costs and enhance investor return. The NTC let the marketplace decide, as did the government, and it led to a frenzy of industry consolidation that ran far beyond what the FCC and American Justice Department would ever tolerate.

In 2011, the government backed a colossal merger that brought together the wireless networks of Pilipino Telephone Corporation, PLDT, and Smart under the PLDT brand. The three former competitors became one and controlled 66.3% of the Philippine’s wireless customers. The merger was comparable to allowing Verizon to buy out Sprint.

Additional mergers in response to the super-sized PLDT rapidly reduced the competitiveness of Philippine’s telecommunications marketplace to a duopoly. Just two companies — PLDT, Globe, and their respective house brands — dominate landline, DSL, cable, and wireless telecommunications service in the Philippines. The investment community celebrated the deal’s approval as a lucrative goldmine of future revenue gains from a less competitive market.

Philippine Broadband: Hey, It’s at Least Moderately Better Than Afghanistan

Broadband performance, under any measure other than financial success, has proved abysmal for Philippine consumers and businesses. The country’s broadband speeds are among the worst in the world, only beating Afghanistan in many speed tests. Look the other way–oversight led to a bribery scandal in 2007 that threatened to bring down the government. Officials exploring the development of a National Broadband Network were accused of soliciting kickbacks from Chinese equipment vendor ZTE, which would have been responsible for supplying equipment for the project. The government canceled the project as the scandal widened and some of the principals left the country or in at least one case were kidnapped.

Eight years later, broadband in the Philippines would be considered a North American nightmare. The free market approach has led to free-flowing profits and a profound lack of marketplace competition, with broadband ripoffs and broken promises rampant across the country.

Although both PLDT and Globe Telecom are spending large sums on infrastructure, much of it benefits their very profitable wireless networks and business customers. Despite the investments, residential customers are stuck with some of the world’s worst broadband speeds and performance.

An independent Quality of Service test revealed the bad news all around:

The findings of the Philippine QoSE tests were expected, but nevertheless still disappointing.

The best performing among the three ISPs delivered only 21% of actual versus advertised speed on average. This same ISP also offered at least 256kbps download speed (generally accepted definition of broadband) only 67% of the whole time it was tested, falling short of the required 80% service reliability.

The Broadband Commission defines the core concepts of broadband as an “always-on service” with high capacity “able to carry lots of data per second.” While there is no official definition of broadband locally, the Philippine Digital Strategy 2011-2016 defines broadband Internet service as 2Mbps download speed.

Finally, like the last nail in the coffin, Philippine ISPs performed the worst in terms of value for money when compared to select providers in South Asia and Southeast Asia. The highest value given by any of the three Philippine ISPs tested was a measly 22kbps per US dollar. This figure is too low when compared to similar mobile broadband ISPs that offer 173kbps per dollar in Jakarta, Indonesia and 445kbps per dollar in Colombo, Sri Lanka.

These results have huge implications on truth in advertising, consumer welfare, and the need for appropriate regulation.

My DSL Service is So Bad I Prefer 3GB Usage-Capped Slow Wireless Instead

Home DSL broadband is so bad that customers have increasingly dropped service in favor of tightly managed wireless service. Companies report DSL customer losses over the past few years, with no end in sight.

The telecom regulator has generally just shrugged its shoulders at the situation, suggesting competition between equally poor providers will somehow resolve the problem. That view is applauded by service providers who claim the Internet is “just a value-added service” not essential to basic living needs. But consumer groups wonder why providers are allowed to make false advertising claims about the speed of their service with no repercussions. A range of position papers appealing to the government to create a meaningful minimum broadband speed have been introduced and some are being pushed by members of the Philippine Senate.

Senator Loren Legarda joined scores of other frustrated customers complaining about unreliable and expensive Internet in the country. In a 2014 hearing Legarda complained she had once again lost her DSL Internet connection in her office and her wireless connection was so slow it was unusable.

“As we speak now, there is no Internet connection in my office,” Legarda said. “I received a message this morning from my staff on my way here because I may be e-mailing, etc. And for someone whose deadline was yesterday, I always want things done fast and I’m sure many of you want that efficiency too to serve our people better.”

[flv]http://www.phillipdampier.com/video/ANC Poor Broadband Internet 5-14.flv[/flv]

ANC aired this story about Sen. Legarda’s broadband problems and how Philippines’ providers oversell their networks back in 2014. (4:56)

We Oversold Our Networks So Sue Us, Except You Can’t

Providers blame the problem on oversold networks that attempt to manage too many paying customers on an inadequate network. In other words, they blame themselves with little fear any regulator will create problems for them.

Wireless service is no panacea either. Customers in the Philippines face draconian “fair use policies” on so-called “unlimited plans” that leave them throttled after 1GB of usage per day or 3GB of usage per month, whichever happens first. Providers suggest the policy is a benefit, promising them a better user experience. Besides, they suggest, even those that run into the speed throttle can still browse the Internet, albeit at as speed resembling dial-up:

Your internet speed will slow down if you use up 1GB of data for the day, or accumulate 3GB of data usage for the month.

If you hit the 1GB/day threshold, you’ll experience slower speed, but no worries because as we mentioned above, you can still surf! You’ll move up to normal speed at midnight. If you hit the 3GB/month threshold, your speed will move up to normal speed on the next calendar month (not based on bill cycle).

Say Hello to the “Promo Pack” – Your Net Neutrality Nightmare Come True

Remember the scary ads from Net Neutrality proponents promising a future of Internet add-ons that would charge you to surf theme-based websites without facing network slowdowns or stingy usage caps if Net Neutrality protections were not forthcoming? In the Philippines, the nightmare came true. Mobile providers sell added cost “promo packs” that bundle extra throttle-free usage with theme-based apps. A package with Spotify runs about $6.50US a month and includes 1GB of usage. Anyone can buy a Spotify premium membership in the Philippines for around $4.37US without the add-on. But even worse are app-based promo packs that bundle free-to-download-and-use apps in the U.S. with special designated usage allowances.

Want to use Google Maps on your wireless provider? A “promo pack” including it costs around $2.17 a month and includes 300MB of usage. That money doesn’t go to Google — it stays in the pocket of the provider – Globe Networks. Twitter will set you back $4.37US a month and includes 600MB of usage, which seems odd for a short message service when contrasted with an identically-priced promo pack for Facebook, that needs the extra usage allowance more than Twitter likely would. But then they also get you for Facebook Messenger, which costs an extra $2.17US per month and comes with its own usage allowance — 300MB.

While segmenting out popular mobile apps for special treatment, Philippine mobile providers have also taken Verizon and AT&T’s lead, pushing plans like myLIFESTYLE that bundle unlimited text and phone calls with expensive data plans.

Lifestyle Promo Packs:

Lifestyle Bundle	Price (Philippine Peso)	Consumable MBs/GBs	Description
Spotify	299	1GB	Premium membership to Spotify, with 1GB data
Work	299	1GB	Access to Gmail, Yahoo Mail, Evernote, + 10GB Globe Cloud Storage
Explore Bundle	99	300MB	Access to Agoda, Trip Advisor, Cebu Pacific, PAL
Navigation Bundle	99	300MB	Access to Waze, Grab Taxi, Google Maps, MMDA app, Accuweather
Shopping Bundle	299	1GB	Access to Zalora, Amazon, Ebay, OLX, Ayosdito
Facebook	199	600MB	Access to Facebook
Twitter	199	600MB	Access to Twitter
Viber	99	300MB	Access to Viber
FB Messenger	99	300MB	Access to FB Messenger
Chat Bundle	299	1GB	Access to Viber, Whats App, FB Messenger, Kakao Talk, Line, WeChat
Photo Bundle	299	1GB	Access to Instagram, Photogrid, Photorepost, Instasize

Extra Add-ons:

Basic	Price	Description
Consumable	100	Stackable Amounts of P100 denomination consumables
Unli Duo	299	Unlimited Calls to Landline/duo
Unli Txt All	299	Unlimited Texts to other networks
Unli iSMS	399	Unlimitend International SMS to one intl. number
Unli IDD	999	Unli IDD calls to one intl. number
DUO International	499	Unlimited calls to US landlines

The Philippines Should Regulate Under the American Example vs. The Philippines Should Not Regulate Under the American Example (It’s Obama’s Fault)

Providers in the Philippines have learned a lot from America’s telecommunications lobbyists. Their advocacy campaigns revolve around the theme that the United States has the best wireless networks in the world, developed under a largely hands-off regulatory philosophy that the Philippine government should follow.

The government and regulators largely acquiesced to that campaign until this year, when that idea came back to haunt providers. Earlier this year, the Obama Administration and the FCC began taking a more hands-on approach to telecom regulation after recognizing the marketplace is not as competitive as providers suggest. Strong Net Neutrality enforcement, limits on mergers and acquisitions and strong signals marketplace abuses would no longer be tolerated are now being pushed in Washington by the White House and the Federal Communications Commission. Providers in the Philippines no longer advocate following the American model, but it may now be too late.

The NTC is close to issuing new minimum broadband speed and performance standards and is now listening to Filipino consumers that launched Democracy.net.ph to fight usage caps in the Philippines back in 2011. The NTC may soon require providers advertise average speeds and performance, not “up to” speeds nobody actually receives. Those getting poor service would be entitled to refunds or rebates.

That could be the first step towards a more activist NTC that may have learned the lesson that listening to the broken promises of better service through deregulation has resulted in some of the worst broadband performance the world has to offer. The Philippines took the advocacy arguments of the deregulation crowd and doubled down, not only allowing providers to lie and distort in their advertising, but also permitting massive industry consolidation reducing the choice for most Filipinos to just two providers for almost all telecommunications services. The government looked the other way as corruption turned into a scandal and today it is left with two very powerful conglomerates that deliver third world Internet access while pocketing the generous proceeds.

A Better Way to Better Broadband

A deregulated, free market only works where healthy competition exists. Too few players always leads to reduced innovation, poorer service at higher prices, and a corporate fortress deterring would-be competitors that are unlikely to be able to survive in a fair, competitive fight. For the Philippines (and by extension the United States) to fully benefit from healthy competition, large conglomerates must be broken up and further mergers must be prevented above all else. Until sufficient competition can self-regulate the marketplace, strong oversight is necessary to protect consumers from the abuses that always come from monopolies and duopolies. Charging wireless customers for free apps and suggesting 3GB of usage is equal to unlimited broadband are two places to start cracking down, quickly followed by an investigation into where investment dollars are being spent and for whose benefit. It seems like customers are not reaping any rewards in return for high-priced service.

The Philippine government should also continue exploring a National Broadband Network strategy that puts the country’s broadband needs above the profit motivations of the current duopoly. Governments build roads and bridges, airports and railways. Broadband is another infrastructure project that needs to be developed in the public interest. If private companies want to be a part of that effort, that is wonderful. But they should not be dictating the terms or holding the country back from what may be the biggest scandal of all — broadband that barely performs better than what the Taliban can get these days in Helmand province.

Time Warner Cable will continue to offer customers unlimited data plans and further expand its Maxx upgrade program until it reaches the company’s entire service area or the merger with Charter Communications is approved by regulators.

CEO Robert Marcus told investors on a morning conference call the company has been “completely committed to delivering an unlimited broadband offering in connection with whatever else we do, because we know customers do place a value on the peace of mind that comes with unlimited plans.”

Marcus continued to admit his company’s experiments with voluntary usage pricing have largely failed, noting the “vast majority” of customers choose unlimited plans, and Time Warner “never had any intention of substituting the availability of unlimited with exclusively usage-based programs.”

The original goal for Time Warner’s voluntary usage pricing options “was to offer customers who use less bandwidth, who maybe just do e-mail, an opportunity to pay less and have an Internet offering that better meets their demands for both usage and price.”

Most broadband customers do not want usage-based billing or usage-capped Internet, but some providers force such usage plans on customers anyway.

“Different providers have had different philosophies on these things,” Marcus offered.

Marcus reported TWC Maxx deployment in Austin is finished, and the company is working on completing upgrades in Dallas, San Antonio, Raleigh, Charlotte, Kansas City and Hawaii by year-end. The latest markets to be upgraded — San Diego, Wilmington and Greensboro, N.C., will start this year, but speed increases will not begin until next year. The upgrades are improving customer satisfaction with a 35% drop in voluntary disconnects in Maxx service areas, but will cost an estimated $4.45 billion in spending this year by the country’s second largest cable operator.

Time Warner Cable Maxx has been very successful at bringing new customers to Time Warner, attracted by improved broadband speeds and better service, Marcus told investors. Maxx customers see broadband speed upgrades that dramatically boost speeds at no additional cost. Standard Internet speeds in non-Maxx markets are 15Mbps. In Maxx areas, customers receive 50Mbps. Customers signed up for 50Mbps “Ultimate” Internet in Maxx markets see that speed raised to 300Mbps.

Large sections of Time Warner Cable territory have yet to be upgraded, however. Marcus today said he plans to continue the Maxx upgrade effort as the Charter merger proceeds through a lengthy regulatory review process. If the merger is delayed or unsuccessful, Time Warner likely will announce additional cities targeted for upgrades in 2016, but customers should not expect speed changes until later that year or 2017. If the Charter merger is approved, areas bypassed for Maxx upgrades will likely get a more modest upgrade promised by Charter, with maximum broadband speeds of 100Mbps.

Time Warner Cable spent the last quarter pushing lower priced promotions to attract new and returning customers. That, combined with higher programming costs, increased spending on network upgrades, and pension expenses cut into the cable company’s profits, which declined 7.2% in the last quarter.

Time Warner Cable added 66,000 residential customers overall, its best ever second quarter and its first rise in any quarter since 2008, according to Marcus. Time Warner added 172,000 new broadband customers and 252,000 voice subscribers, primarily from a promotion that allows any subscriber to add phone service to their package for $10 a month. But Time Warner is not immune to cord cutting, and lost 45,000 video customers in the second quarter.

The cable company may have stepped up promotions to be certain it can report good results as investors wait for the Charter Communications merger to win or lose regulator approval. A triple play promotion for new customers runs as low as $89 a month and despite touting an earlier philosophy the company did not see much value promoting cheap phone service, it has apparently reversed course, boosting triple play upgrades as a result of reduced pricing.

It is also continuing strong customer retention policies, a sign Time Warner Cable will continue to respond when customers threaten to cancel unless they get a better deal.

“Our whole view of retention hasn’t really changed since the middle part of 2014,” said William F. Osbourn, Jr., acting co-chief financial officer. “Our view is that we will always rather save the customer than lose the customer, but I think we’re pretty disciplined about not giving away the farm in doing that.”

Some other highlights:

• Programming costs rose 11%, a sure bet another rate increase will be forthcoming in the future;
• Marcus loves mergers: “The only thing I’d add to that is that from an industry structure perspective, in roughly a quarter of our footprint, the deal [between AT&T and DirecTV] results in two competitors becoming one. And, generally speaking, that’s a positive for all the players in the industry”;
• Time Warner Cable will continue to encourage customers to use their own set-top box devices (Roku, Apple TV, etc.) as an alternative to the traditional cable set-top box;
• Roughly 12% of customers now own their own cable modems to escape Time Warner’s rental fee;
• Despite the clamor for “skinny bundles” 82% of Time Warner Cable customers subscribed to the full video package;
• In Maxx areas, customers need set-top boxes on all of their connected televisions. Most are opting for the cheapest option, taking an average of two less-capable DTA boxes instead of more expensive set-tops. DVR subscriber numbers have remain largely unchanged after Maxx upgrades.