HP's Snowjob: The company that brought you the $70 ink cartridge supports an end to flat rate Internet service to "save" you money.

HP’s Joe Weinman argues consumers are behind the drive to abandon flat rate, “all you can eat” broadband pricing.

Weinman, whose company sells products and services to some of America’s largest broadband providers, has taken up their position that flat-rate Internet service is bad for you, claiming many are paying too much for Internet service they use too little.

In an essay posted on GigaOM, Weinman brings back the all-y0u-can-eat buffet metaphor:

For the record, I like unlimited Internet access just as much as anyone else. However, such plans appear to be on their way out, and here’s why. As I’ve explored in ”The Market for Melons” (PDF), pay-per-use is not an evil plot by greedy robber barons, but a natural outcome of independent, rational consumer choice. Consider a town with an all-you-can-eat (flat rate) buffet and an a la carte (pay-per-use) restaurant. Smart shoppers on diets will save money by patronizing the a la carte restaurant, whereas heavy eaters will save money by visiting the buffet. As patrons switch, the average consumption of the buffet will increase, driving price increases for the luncheon special, causing even more users to switch to pay-per-use.

Bottom line: it is not the proprietors driving this dynamic, but the customers themselves acting out of pure, rational self-interest—light users, by deciding not to subsidize the heavy ones, foster the vitality of the pay-per-use model.

Unfortunately for Weinman, most American broadband customers don’t believe a word of this, and even he was forced to admit as much when he noted consumers “often prefer to overpay for flat-rate rather than save money but risk bill shock.”

Karl Bode at Broadband Reports wasn’t suckered for a moment either, noting:

[…]Cable industry lobbyists would like the public to believe that such a shift isn’t about making more money, it’s about helping the poor. Not only is the metered billing push absolutely about making money, it’s about artificially constricting the pipe to protect uncompetitive carriers and TV revenues from Internet video. But instead, there’s a very concerted effort afoot to portray this shift as necessary, inevitable, and even altruistic.

Most consumers prefer the simplicity of flat rate pricing, and understand that ISPs are perfectly profitable under the flat-rate pricing model. They also understand that this is a pipe dream forged by never-satisfied investors, and once implemented ends with ever soaring per gig fees and ever shrinking usage caps.

Weinman’s essay completely ignores the reality his preferred pricing model already delivers to those who live under it in Canada.  Canadian broadband rankings continue to decline as customers there pay higher prices for a lower level of service, with usage caps that actually decline when new competitive threats from online video emerge.

Just what the doctor ordered: HP's Rx for American Broadband

We had to take time out to respond directly to Weinman and his cheerleading friends (see the comments section), some who wrote comments below the piece and couldn’t be bothered to disclose they owe their day jobs to industry-backed dollar-a-holler groups that are committed to delivering on behalf of their provider benefactors:

When Big Telecom comes ringing with promises of savings from metered or capped broadband, hang up immediately.

These plans save almost nobody money and expose dramatic overlimit fees to consumers, creating the kind of bill shock wireless phone users endure.

The OPEC-like Internet price-fixing on offer from big players delivers broadband rationing and sky high prices, while retarding Internet innovations that providers don’t own or control.

Consumers are forced to double check their usage and think twice about everything they do online out of fear of being exposed to huge overlimit fees up to $10 a gigabyte for exceeding an arbitrary limit ranging from 5-250GB.

Americans already pay too much for Internet service and now the providers want more of your money. The rest of the world is moving AWAY from the pricing schemes Weinman would have us embrace. It’s such a serious issue in the South Pacific, the governments of Australia and New Zealand are working to address the problem themselves.

Providers are already earning BILLIONS in profits every quarter from their lucrative broadband businesses. Now the wallet biters are back for more, with the convenient side benefit that limiting consumption is a great way to prevent Internet-delivered TV from causing cord-cutting of cable TV packages.

As far as consumers are concerned, and Weinman admits as much, people are happy with today’s unlimited price models. When Big Telecom complains people are overpaying for broadband, wouldn’t their shareholders be telling them to shut up and take the money? There is more to this story.

Weinman defends the extortion proposition Big Telecom would visit on us: either give us limited use pricing or we’ll raise all of your prices.

But as consumers have already figured out, these providers never reduce prices for anyone. When was the last time your cable bill went down unless you dropped services?

Don’t be a sucker to Big Telecom’s “broadband shortage” or pricing myths. Broadband is not comparable to water, gas, or electric. The closest comparison (and the one they always leave out) is to telephone service, and as we’ve seen, that business is increasingly moving TOWARDS flat race, unlimited pricing.

Want to know what metered pricing does to the wallets of consumers? Just ask Time Warner Cable customers in Rochester, Greensboro, San Antonio, and Austin what they thought about the cable company’s “innovative” pricing experiment that tripled the price for the same level of broadband customers used to get for $50 a month. After the torches and pitchforks were raised over $150 a month broadband service, Time Warner backed down.

Either with or without metered pricing, the cable company raised its prices three times last year alone.

The industry’s meme that “usage-based pricing” in inevitable is only true if consumers allow it to happen.  The parade of Internet Overcharging advocates all share one thing in common — they earn a living from the providers that dream about these pricing schemes.  Always follow the money.  As we’ve exposed repeatedly, the vast majority of defenders of these kinds of pricing schemes are not consumers.  They are:

• The providers themselves;
• Wall Street banks, investors, and the business media catering to them;
• Non-profit groups receiving substantial contributions from providers;
• Industry-funded “think tanks” and research that can carry the industry’s public policy agenda, hoping the media that quotes them are too lazy to follow the money;
• Equipment and service vendors, unions, and other groups who depend on the business or jobs they get from providers.

If you are a Frontier DSL customer, your unlimited Internet service is at risk of being arbitrarily limited by a company that wants to cut costs and increase revenue… at your expense.

Suburban Sacramento residents deemed to be “using too much” Frontier Internet service are being told they have to ration their Internet usage or pay more — a lot more — for the same speed service.  Even worse, many customers are paying extra for a “Price Protection Agreement” from Frontier that protects Frontier’s profits while your Internet bill doubles.  That’s a price protection racket only the Sopranos could love.

Frontier’s own representatives are literally at a loss for words when told it’s easy to exceed their “5GB” limit just by web browsing and checking e-mail.  But they are even quieter when customers report Frontier’s own video website – my fitv, a “free online video service” heavily promoted by Frontier, is ultimately responsible for their looming $99.99 monthly Internet bill.

Frontier wants to get tough with some of their best customers.  As a result, many are exploring disconnecting service for a cable competitor.  The best way to fight these Internet Overcharging schemes is to make it clear to Frontier you will not submit to them.  The first step is to bring wider media attention to the issue.

Sacramento-Elk Grove Customers

• Contact the Sacramento Bee, the Elk Grove Citizen and other local newspapers and ask them to write a story about this;
• Contact KOVR-TV’s consumer reporter and ask him to do a story;
• Contact other stations and local call-in shows and draw attention to Frontier’s abuse of its customers;
• If you are on a “price protection agreement” contact the California Public Utilities Commission and file a complaint.

Points to consider raising:

• Frontier’s usage caps are easily broken using the company’s own video website, my fitv;
• What the company suggests most people will not exceed today is not reasonable tomorrow.  Besides, how much customers actually use is considered proprietary and we have to take their word on it;
• Customers on price protection agreements are being asked to pay more than double for the exact same quality of service they used to receive for less.  Where is the price protection?;
• Frontier is generous with their shareholders, paying outrageously high dividends out of step with their earnings, but are notoriously stingy with the customers that deliver them that revenue;
• Where’s the fire?  This is the same company that said it had more than enough capacity to take on millions of ex-Verizon broadband customers, but now suddenly can’t deliver the same level of service to existing customers in Elk Grove without doubling the monthly price?;
• Customers are being asked to pay $1 a gigabyte for a service that costs Frontier far less to actually provide;
• At a time when Frontier continues to lose landline customers, can they afford to alienate more, who take all of their business elsewhere?

Frontier alienating its own customers who pay for their landline and broadband DSL service does not sound like a winning business strategy.  Let Frontier know you will not do business with a company that abuses its big-spending customers.  Let them know in clear terms you will cancel all of your services if the company maintains its Internet Overcharging practices and you will encourage your friends and family to take their business elsewhere as well.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Connection Blocked PSA.flv[/flv]

Net Neutrality is the free speech issue of our times. Save the Open Internet! Visit http://wgaeast.org/savetheinternet to send a message to the FCC.  (1 minute)

America’s largest cable company, the one seeking permission to become even bigger with a buyout of NBC-Universal, has spent the last two weeks alienating customers, vendors, and some members of Congress.  After Stop the Cap! reported on another cable company’s service outage, our reader Jared wrote to say Time Warner Cable customers should feel lucky because they can get service credits for outages.  Good luck getting them from Comcast.

He, along with more than a million other Comcast customers spent the early hours of CyberMonday offline thanks to a widespread Comcast outage on the eastern seaboard.  Outages happen, but what annoyed Jared was Comcast’s “Don’t Care” attitude, which began when he picked up the phone to call the company.

WBUR Radio in Boston explored, in plain English, the reasons for the Comcast CyberMonday outage and how it affected customers. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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“I, along with probably several hundred thousand other people called Comcast’s 800 number to find out what was going on,” he writes.  “After more than a dozen minutes of busy signals, when I finally got through, a recording came on literally telling me to go to Comcast’s website for assistance!  Duh!”

Moments after that, another recording came on the line telling him Comcast was too busy to take his call (or even leave him on hold) and he should call back later, at which point the line disconnected.

Infuriated, he called back and managed to navigate the voice menu to a human being who seem offended he was forced to take Jared’s call.

“This guy told me he didn’t know about any outage, which must have meant he was sitting in some call center well away from the region,” Jared says. “By now, anyone trying to use Comcast broadband in the northeast who still had a pulse knew it was down.”

But Comcast never misses an opportunity to miss an opportunity, further alienating Jared when the representative tried to change the subject and sell him Comcast phone service.

“I was stunned,” Jared says.  “I asked him if he was serious — why would I want to buy phone service from a cable company that cannot even manage its own phones and hangs up on customers?”

Jared asked if he could obtain a service credit for his Internet downtime.

“No,” came the reply.  “Your service has to be out for at least 24 hours.”

Jared countered he might not be a Comcast customer in 24 hours.

“That’s your choice,” said the voice on the other end of the line.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WMUR WBAL Comcast Outage 11-28-10.flv[/flv]

WMUR-TV in Manchester, N.H., and WBAL-TV in Baltimore were just two of many television stations that reported on Comcast’s CyberMonday outage.  (4 minutes)

Getting a copy of Comcast’s terms and conditions is not easy for non-customers.  The company wants your contact and customer information before it will admit you to its online forum and other website documents.  We found numerous instances of customers getting rejected for service credits on several websites covering the story.  But not all.  Those escalating their demands to a service manager or ending up connected to a customer retention specialist have managed to grab up to $10 in credit for the multi-hour outage, but prying them loose from the cable giant is not easy.

Our efforts to get a Comcast representative to explain the service credit procedure for the benefit of their customers reading Stop the Cap! met with silence.

Meanwhile, the Chicago Sun-Times got into it with Comcast and managed to get a spokesperson to relent — customers could get a credit by applying for one individually, but don’t count on a big payback.  Spokeswoman Angelynne Amores told the newspaper subscribers were eligible to receive a $1 credit for the trouble, but only if they asked.

Comcast does provide a flowery feel-good customer guarantee that includes a link to a customer contact form, which might cut through some red tape for customers seeking a refund, even if just a dollar, for the service they did not receive.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WWLP Springfield Comcast Outage 11-28-10.flv[/flv]

No credit for you from Comcast, notes WWLP-TV in Springfield, Mass.  Their viewers in New Hampshire will get nothing from Comcast for their broadband troubles.  (1 minute)

Because so many stories break throughout the day, many of which we have insufficient time to cover, we are introducing some News in Brief-pieces which will briefly summarize the main points of a story and invite you to follow a link to learn more.  We will still be producing long-form articles which expand and explain the implications of stories impacting the broadband world, from a consumer perspective.

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