Life's for sharing... just not on our wireless network.

British T-Mobile wireless broadband users got — how shall we put it — an “abrupt” and uncharacteristically rude notice about a change in the company’s “Fair Use” policy that takes effect in February (underlining ours):

Browsing means looking at websites and checking email, but not watching videos, downloading files or playing games. We’ve got a fair use policy but ours means that you’ll always be able to browse the internet, it’s only when you go over the fair use amount that you won’t be able to download, stream and watch video clips.

So what’s changing? – From 1st February 2011 we will be aligning our fair use policies so our mobile internet service will have fair use of 500MB.

What does this mean? – We’ll always let you email and browse the internet and you’ll never pay more than you agree to. We do have a fair use policy but ours is there to make sure we deliver the best service possible to all our customers.  This means that you’ll always be able to browse the internet.

So remember our Mobile Broadband and internet on your phone service is best used for browsing which means looking at your favorite websites like Facebook, Twitter, Gmail, BBC News and more, checking your email and looking for information, but not watching videos or downloading files.

If you want to download, stream and watch video clips, save that stuff for your home broadband.

T-Mobile's warning to customers to avoid watching videos on their network flies in the face of their own smartphone promotions.

As our regular reader “Jr” observes, broadband carriers want customers to use their broadband connections to browse web pages and read e-mail — and little else.  Rarely has a carrier come right out and said it, though.

Not only has T-Mobile “aligned” their fair use policies to deliver you less service (down from 1-3GB per month), but they’ve kept the same high price.  T-Mobile is the same company that routinely markets smartphones and other multimedia-equipped handsets specifically for the services they don’t want you to use on their network.

T-Mobile illustrates once again how Internet Overcharging schemes really work:

1. They implement a usage cap and suggest it is “generous” and that the majority of customers will never come close to hitting it;
2. They gradually reduce the usage allowance when revenue needs eclipse the needs of customers;
3. They still claim the new, lower limit is still “generous.”
4. They suggest almost nobody is likely going to hit the limit, no matter what it is.

Of course, had T-Mobile customers really come nowhere near the old limits, what problem was resolved lowering it?  T-Mobile claims the vast majority of customers don’t exceed 200MB of usage per month, an exceptionally low amount in comparison to other carriers.

The telecoms regulator Ofcom told ZDNet UK on Monday that, “if consumers are being notified of a change likely to cause them material detriment, the provider must give the customer one month’s notice of the change, and at the same time they must also inform the customer of their right to terminate their contract without penalty if the proposed change is not acceptable to the customer”.

As the changes take effect from 1 February, T-Mobile has given less than one month’s notice.

“We encourage unhappy consumers to speak with their provider about their concerns,” Ofcom’s spokesperson said. “If the problem relates to a particular term or condition that you feel is unfair, then you can log your complaint with Ofcom. We monitor complaints about the behaviour of communications providers and if there is a high volume of complaints about a particular issue, we do investigate and take action as required.”

(Thanks to our reader “PreventCAPS” for sharing the story with us.)

Filipinos looking for reasons why broadband providers want to limit their Internet usage can find all the explanations needed in the financial reports of companies enthusiastically supporting Internet Overcharging proposals.

As ABS/CBN News noted, “To say that 2010 was a difficult year for the Philippine telecommunications industry is an understatement.”

“Consumers are demanding an unlimited telecommunications experience,” says Renato Razón, an investor and telecom industry watcher for more than 30 years. “The wireless sector and the growth of the Internet, and the companies that compete to provide both, have turned telecommunications in this country on its head.”

Razón tells Stop the Cap! the privatization of telecommunications initially showed a lot of promise for investment and development to get the country on the Asian economic fast track.  But increasingly in recent years, companies have grown fat and lazy, trying to compete with existing networks in need of upgrades — in search of quick profits and no costly capital expenses.

“They learned what they think are important lessons from the huge amounts of money that were spent to build and upgrade wireless networks in the Philippines,” Razón tells us. “They were convinced it was worth countless billions to build wireless infrastructure and wait for the enormous profits that would come later, but then everyone wanted to get into the business and the big profits they thought they’d get never materialized.”

Razón says wireless competition that exploded across major cities in the Philippines was initially a boon to consumers, who today benefit from heavily marketed unlimited calling and texting plans at declining prices.  But now that profits are taking a hit, investors and company executives learned what they feel is a bitter lesson.

As wireless becomes a mature market in the Philippines — with more than 80 percent of consumers already using wireless devices, almost all of the marketing from existing providers targets customers of their competitors.  Customers threatening to switch force providers to offer steeply discounted retention deals that are often infinitely renewable.

Such fire sale pricing enrages investors, who are calling for greater industry consolidation among the three largest operators.  With a fourth provider possibly on the horizon, the chorus demanding that some of the players get out of the market through mergers and acquisitions for the “good of all” could soon grow too loud to ignore.

“Heavy competition is your worst nightmare — it results in price wars and everyone, except consumers of course, are hurt in the end,” he admits.  “I admit I have to divorce myself from the fact my family and I are also consumers — and we love the lower prices — but as an investor, I understand the loud demands to improve shareholder value.”

Razón says executive compensation, often tied to financial performance, delivers the ultimate incentive that executives answer first to shareholders, not customers.

“If a handful of customers get angry at you, that doesn’t cost you the company-paid vacation on the French Riviera and a healthy bonus — an angry compensation committee answering to a dispirited Board of Directors could,” Razón says.

Razón says it’s the same story wherever private companies control telecommunications with few regulations governing their operations.  He believes private market solutions without regulatory oversight helps him more than it helps you.

“I understand what the Philippine government wants — regulations to promote better broadband, but they are only hearing from industry people on how to accomplish that,” Razón believes.  “They answer to shareholders who think about short term results and the health of their investment, not the overall health of the broadband marketplace.”

With financial results for 2010 showing the impact of price competition and predictions of another year of anemic profits, providers are looking for new revenue streams.  Broadband offers one of the few major growth opportunities available to telecom companies in the short term, Razón says.

“At least half this country doesn’t have meaningful broadband, so if you can deliver service over existing infrastructure, keeping capital costs low, you couldn’t count the money coming in fast enough,” Razón says.  “DSL from the phone companies delivers it all — existing phone wires delivering a value-added service to existing phone customers.  It’s not fast, but it’s cheap.”

Rafael Aguado, the chief operations officer of Bayan Telecommunications, agrees the real revenue is in broadband:

“2010 was a challenging year for the telcos, as competition intensified and the Internet/social media and new technologies influenced the shift on consumer behavior on how to communicate, putting pressure on traditional revenue sources like voice calls and international long distance calls. Data and internet subscribers continued to increase and is expected to accelerate to the next level of sustained growth.  It was a difficult year for Bayan but performance was consistent with the industry trend. Total revenue decreased due to lower voice revenues but residential internet and corporate data services posted revenue growth. With sound operating expense management, we expect the year to end in double digit growth in EBITDA. Our growth drivers next year would continue to be data and internet services for both consumer and corporate sectors.”

Philippines Long Distance Telephone Co.

Razón believes usage caps are just another mechanism to protect companies from performing costly upgrades.

“If you can limit usage, you don’t have to spend as much capital upgrading,” Razón says.  “Investors don’t mind if you spend to expand DSL into new territories, because the costs are relatively low.  They will get upset if your support and ongoing costs increase, however.”

That could explain the growing burdens of wireless traffic on the country’s cellular networks.  Some providers have been accused of deliberately overselling access to their networks while refusing to upgrade them to meet growing demands, because the return on “unlimited use” doesn’t deliver:

“The telco industry had a good year but its profitability was greatly reduced due to the highly competitive ‘unlimited plans’ that each provider offered its subscribers. This trend would continue this coming year,” said Ivan Uy, chairman, Commission on Information and Communications Technology (CICT). “What needs to be looked into is the deteriorating service availability or accessibility due to network congestion brought about by the unlimited plans. Customer dissatisfaction has been rising because of higher frequency of dropped calls, delayed SMS, and line unavailability.”

When given a choice how to solve this problem, most companies prefer to advocate for usage limits, not mass scale upgrades.

Even long distance companies, which played through a price war more than a decade ago, see the flow of investment heading into broadband.  Unfortunately, in their eyes, usage demands are coming along as well:

“Competition intensified in the cellular business. Broadband grew strongly. Margins came under pressure even as demand for more network resources increased. For PLDT, 2010 has been a year when it maintained its market leadership in the face of these challenges. Our focus has been managing this transition where traditional revenue sources such as fixed toll revenues like IDD and NDD were on the decline while new revenue sources such as broadband were on the rise. We preserved margins by strengthening cost management given the modest top-line growth.

“We expect the challenges of 2010 to carry into next year. Demand for bucket and unlimited offers in the cellular space will continue. We expect that broadband will keep growing given the growing popularity of social networking and new access devices such as tablets and smartphones. PLDT will continue to invest in its network in order to fortify its market leadership.” — Napoleon Nazareno, president and CEO, Philippine Long Distance Telephone Co.

For a long term investor like Razón who has seen this all before, there is a better answer: invest in your networks and grow them faster than your competitors.

“You have to spend money to earn money I have always found and there is a ton of money to be spent and made on broadband in this country,” Razón says. “The low hanging fruit has already been picked — now we must spend to get broadband into towns and villages and we should also be investing in content and products we can sell to broadband customers.”

Razón thinks Internet Overcharging schemes are a foolish mistake.

“You can’t create value-added services on an artificially limited network and expect consumers to buy,” Razón said.  “If you limit usage, you discourage people from using the services that get them addicted to using it in the first place.  Get them hooked, keep them happy and you have a customer for life.”

What would you do if your broadband bill was the same as your monthly rent?

That’s a question 21-year-old Notre Dame de Grace resident Amber Hunter has been dealing with since the neighbors began hacking their way into her wireless router, gaining access to her cable modem service from Videotron, Ltd., and running her bill into the next province.

It’s the predictable outcome of what happens when Internet Overcharging schemes gain traction, leaving ordinary consumers literally holding the bill.

Videotron sells usage limited broadband service across Quebec, but heavy users who routinely exceed their arbitrary usage caps knew there was a limit on the overlimit fees Videotron charged.

Not anymore.

Videotron left the usage caps on, but removed the limit on how much they can charge customers who exceed their monthly usage allowance.

Videotron sets prices like the OPEC of the Internet -- the sky is the limit

“The sky is the limit, or at least your bank account,” writes our Montreal reader Hei.  “The only thing unlimited with Videotron are the overlimit fees.”

Hunter had no idea she was being hacked.

“I had no idea what a gigabyte was, so when I started getting higher bills, I just assumed it was from watching TV shows online,” Hunter says.

Her boyfriend told her otherwise, making it clear it was impossible for her to be running up 350GB a month in usage just from watching a few movies and TV shows.

Since August, Hunter has accumulated more than $1,800 in broadband bills stemming from parties unknown who hacked their way into her wireless router and “borrowed” her Internet account.  Videotron itself is directly responsible for part of this debacle, encouraging Hunter to upgrade to a higher tier of service that upgraded her from a 30GB usage allowance to a 100GB usage allowance, with a major catch.

Hunter had become accustomed to paying her usual broadband bill plus the $50 maximum penalty charged for her “overuse.”  So a Videotron representative suggested a higher usage allowance plan might lower her bill.  But somehow, the Videotron customer service agent forgot to mention that the new plan no longer included a limit on overlimit charges.

When Amber switched plans, her broadband bill exploded.  Now the waitress hands over most of her weekly salary to Videotron.

“I’m a student, and I work at a bar, and now most of the money I have goes to pay my Internet bill,” Hunter told the Montreal Gazette. “It’s more than I pay for school and books, and I don’t have a lot of money left for food.”

She still owes the cable company $506 and they aren’t interested in providing her any service credits beyond the $313 they gave her a few months ago.

It took a Videotron help desk employee to finally unravel the mystery of the Internet Overcharges — someone was hacking into her wireless network.  Exactly who has been living their online life usage-limit free at Amber’s expense may never be known. Those living in apartment complexes and other multiple dwelling units can often find a dozen or more wireless connections, some password protected, others not.

Hunter’s wireless network was secured with a difficult to guess password using a four year old Linksys router.  Unfortunately, older routers often lack robust security and are easily hacked.

A handful of Canadian ISPs still offer unlimited broadband accounts.

As far as Videotron is concerned, it’s all Hunter’s fault — she should have understood what a gigabyte was, how many she was supposed to be using, what the security capabilities of her router were, that they were properly enabled, that she checked her usage on a daily basis looking for anomalies — investing her time, effort, and energy to stop the cable company before it billed her an enormous amount… again.

Speaking for Videotron, Isabelle Dessureault said, “It’s a case where Videotron showed some understanding and listened to what happened. We’re well-renowned in the industry for our technical support team. We credited her account for $313, but at a certain point, we need to share the responsibility. We don’t like these kind of situations.”

Videotron’s responsibility to their customers stopped where their profit margin began.  The company could have sent Amber a bill for the wholesale cost of her Internet usage, which she could have paid with a few of her bar tips.

Because Hunter’s broadband bills were now rivaling her monthly rent she decided to invest in her financial future, buying a new router and making sure the wireless was turned off.  Today she runs dozens of meters of Ethernet cable between all of her computers, just to keep the neighbors off her connection.

Although Videotron has become intractable, demanding Amber pay up, one of their competitors used the opportunity to score public relations points that Videotron sacrificed.

Jarred Miller, the president of the Internet Service Provider YOUMANO offered to cover all of Hunter’s overage fees amassed over the past year that also includes a free year of Internet service with his company, a generous offer Hunter will take.

YOUMANO is one of a handful of Canadian ISPs still offering unlimited Internet access, and do not think of themselves as the OPEC of the Internet.

The entire affair is a warning to Americans.  If you think Videotron is an Internet evildoer, imagine what Verizon, AT&T and Comcast could do to your bank account.  If they have their way, you’ll need to become intimately familiar with your router, the concept of a gigabyte, and take a class in “negotiating to win” when fighting over your future enormous broadband bills.

Listen to an interview with Amber Hunter. She appeared on this morning’s Daybreak on CBC Radio Montreal to discuss her experience with Videotron Internet Overcharging. (8 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Hammer Time: MetroPCS introduces 4G/LTE service plans that establish pay walls for familiar web content.

Want a sneak preview of America’s Internet experience without real Net Neutrality?  Look no further than MetroPCS which has managed to turn the clock back to the early days of “mobile web,” where carriers pre-selected content and blocked much of the rest.  Want access anyway?  Then spend some time with a spreadsheet to figure out what service plan you’ll need and start counting out some ten dollar bills because MetroPCS promises a Long Term Expensive 4G  experience.

The business press focused on MetroPCS’ new pricing — delivering what the company calls “a selection of data access levels to meet customers’ lifestyles.”  But some public interest groups considered today’s announcement the first gauntlet thrown in the Net Neutrality war since the FCC voted to approve a watered down version of the open Internet policy last month.

MetroPCS called their new plans a boon to customers.

“Our customers told us they wanted more video, more sharing of their content and more Web browsing capabilities – they want to have it all with the value and no annual contract that only MetroPCS can deliver,” said Roger D. Linquist, president, CEO and chairman of MetroPCS. “Our 4G LTE network can deliver unlimited voice and mobile broadband data services and, with these new service plans, consumers are in the driver’s seat on how much additional data access and real-time entertainment content they want to pay for on a monthly basis.”

But many customers will discover the company’s road to good intentions pitted with potholes, toll booths, roadblocks, and diversions.

Just getting on this data highway to hell could be very confusing to customers who will need to think about what websites and services they need, want, or can live without, and then finding the corresponding service plan that makes it all work.

MetroPCS says it has three new pricing levels to consider:

• The $40 service plan offers unlimited talk, text, 4G Web browsing with unlimited YouTube access.
• The $50 service plan includes the same unlimited talk, text, 4G Web services and unlimited YouTube access as the $40 plan. Additional features include international and premium text messaging, turn-by-turn navigation with MetroNAVIGATOR™, ScreenIT, mobile instant messaging, corporate e-mail and 1 GB of additional data access, with premium features available through MetroSTUDIO™ when connected via Wi-Fi, including audio capabilities to listen and download music and access to preview and trial video content.
• The $60 service plan provides the same premium features as the $50 plan, plus unlimited data access and MetroSTUDIO premium content such as 18 video-on-demand channels and audio downloads.

You'll need a smart phone to figure out what pricing plan actually delivers the services you need.

A customer could be forgiven if they assumed the $40 plan provided “unlimited web browsing,” which will be interpreted to mean they can access all of the content contained on those websites, but they would be wrong.  Beyond YouTube, MetroPCS customers will need to spend at least $10 more to access embedded video and audio, play online gaming, and access other rich media services.  Want to view videos from a website that isn’t among the carrier’s “preferred content partners?”  Forget it.

What about Skype, Netflix and other popular services?  Nuh uh.

Only the $60 monthly plan delivers unlimited data, along with pre-selected video and audio you can access… or not.

Free Press Policy Counsel M. Chris Riley called MetroPCS’ foray into the toll highway business a profit padding scheme.

“In December, the FCC chose to disregard wireless protections in its Net Neutrality order, and MetroPCS’s new scheme is a preview of the wireless future in a world without protections on the mobile Web. Such blocking of websites, services or applications would clearly be prohibited and deemed unreasonable on a cable or DSL network. Are these the kinds of restrictions the FCC really wants to promote on wireless networks?

“The open Internet order approved in December stated that the FCC was not implicitly approving practices on the mobile Web that violate its rule against unreasonable discrimination – and now we’ll see whether the agency is willing to do anything about such practices. Silence in the face of ongoing violations is no different from outright approval. If MetroPCS is allowed to engage in rampant discrimination and blocking of Internet applications and services, will Verizon be next? Will AT&T extend its history of blocking services like VoIP and Sling on its LTE network in the future?

“MetroPCS’s plan will restrict consumer choice and innovation in a developing mobile market, all for the sake of further padding its bottom line. The FCC must not stand idly by while carriers are engaging in anti-consumer and anti-competitive behavior, and we urge the agency to investigate.”

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/MetroPCS 1-4-10.flv[/flv]

It’s too bad the company that regularly lampooned their wireless competitors in witty commercials has now adopted the same “gotcha” tricks and traps that will leave customers trying to figure out why they can’t access the web content they thought they paid to receive.  Watch a series of amusing MetroPCS ads and a brief review of the company’s new 4G phone courtesy of TheStreet TV.  “Hello. Hello. Hello.”  (7 minutes)