AirRunner Wireless serves a small portion of central Wisconsin from its headquarters in Marathon.

A wireless Internet provider serving central Wisconsin has banned online video streaming from its wireless Internet service, telling its customers WISPs are not designed for it.  To drive home the point, the service is jumping on the bandwagon of AT&T’s mobile network 2 GB usage limit with some stringent limits of its own.

Bill Flood, owner of AirRunner Networks LLC dispatched e-mail to every one of its central Wisconsin customers informing them some are violating the company’s use policies by streaming online video on its service, which it cannot accommodate.  Flood blamed companies like Netflix for forcing him to carry the costs of transporting movies and TV shows to his customers:

Hello! Over the past month we have been seeing an increasing issue on the network during peak times. From our investigation we have determined these problems stem from customers who are streaming Netflix or other ‘instant movie or movie on demand’ type services.

These types of products should not be used on the network for these reasons:

First, a wireless network uses access points, those by design do not handle continuous connections without affecting the other customers of that access point. Because the movie stays connected for a longer period of time, eventually other customers simply get less access and as a result see a severe network degradation.

Our Acceptable Use Policy over the years has grown as a result of new technology.

Not all new technology works well on every type of Internet platform. Although some customers have told me they have been using this type of service in the past, the increased usage spurred on by recent Netflix advertising, a CD for Wii devices and now by one of the satellite TV companies has brought this issue to the forefront.

These companies see the Internet as a means to save their resources and push the load onto the Internet.

Welcome to the Internet circa 2010.  The days of a voice declaring “You’ve got mail” from your AOL account are long gone.  Customers are demanding access to a much richer multimedia experience available online today.  That demand is beginning to regularly collide with the limitations some networks have to deliver the service.

To make sure his customers understand the implications of streaming video, Flood is also introducing one of the most punitive Internet Overcharging schemes we’ve yet to encounter, starting with a monthly usage limit of 5 GB accompanied by some vicious overlimit fees:

All non-business customers will be allotted 5 GB of total aggregate usage.

If the customer exceeds 5GB of total aggregate usage on any given monthly billing cycle, they will be assessed an additional $30.00 to cover their bandwidth use.

If any customer exceeds 10GB of total aggregate usage on any given monthly billing cycle, they will be assessed an additional $60.00 to cover their bandwidth use.

If any customer exceeds 15GB of total aggregate usage on any given monthly billing cycle, they will be assessed an additional $90.00 to cover their bandwidth use.

Although these additional charges seem excessive, we are not alone on making such changes as the rest of the ISP’s [Internet service providers as well as cellular providers] are also implementing similar programs on their networks to deal with network congestion issues caused by ‘on demand’ type products. The good news is, the typical Internet customer never exceeds 5GB of aggregate usage. Only a small percentage of our customers are involved in this ‘on demand streaming activity’. Here is what can be done by the typical customer while not exceeding the 5GB threshold: Our basic residential Internet packages will offer 5GB of usage — that’s the equivalent of 500,000 basic text e-mails, 2,500 photos, 40,000 web pages, over 300 hours of Online game time, 1,250 downloaded songs, or a mixture of the above! 1,000 megabyte (MB) = 1 gigabyte (GB) We will send out a notice to everyone again when we are ready to implement these changes.

Flood’s e-mail doesn’t tell the whole story to his customers, however.

First, his imposed overlimit fees are ludicrously high.  A customer using 16 GB for the month would face an overlimit penalty of $90.  Considering AirRunner’s pricing, that’s a potentially enormous bill:

AirRunner offers six rate plans for residential and small business:

• $15.00 256K/256K, tiered access. New accounts only

The below programs require a contract.

• $19.00 1.0 Mbps/768K, tiered access. New accounts only
• $45.00 2Mbps/1Mbps, tiered access
• $55.00 2Mbps/2Mbps, tiered access Bi-direction connection; useful for working from home.
• $65.00 3Mbps/1Mbps, tiered access
• $75.00 5Mbps/1Mbps, tiered access

Second, “the rest of the ISPs” are not in fact imposing similar programs.  AT&T just abandoned theirs for DSL customers in two cities.  Attempts to ration broadband access typically meets resistance from consumers, if not an outright revolt.  As soon as customers get a bill with a $90 overlimit penalty on it, they will revolt as well.

It is true that wireless providers do face bandwidth challenges, but that’s not always disclosed to customers until after they sign up for service.  In 2010, would you sign a two year contract for a broadband service that banned online video?  Of course, if Flood offers the only service in town, for all practical purposes he can dictate the terms of the service provided.  But many customers have long memories and when another provider does arrive, they’ll take their business elsewhere.

Therein lies a potential problem for Flood.  A considerable part of central Wisconsin has been served by Verizon North, one of the divisions Verizon has sold to Frontier Communications.  Verizon dramatically cut investment in Wisconsin broadband expansion as soon as it became apparent they were leaving.  Frontier Communications is betting its long-term survival on bringing at least 1-3 Mbps DSL service to areas just like central Wisconsin.  It’s a safe assumption at least some parts of Flood’s service area will be challenged by Frontier DSL within the next year.

At that point, perhaps Flood will adopt a less hostile attitude towards his own customers.  Some of those who departed didn’t appreciate Flood’s tone or actions and shared some of his hostile communications on the subject.  Taking an adversarial stance even with former, paying customers never works well.  Among the thoughts Flood has shared:

• If you don’t like his caps, move to the city;
• One customer was told his service was canceled because he just doesn’t get it — besides, Flood wrote, he can do whatever he wants;
• Customers who are caught streaming are gone;
• If you complain too much, watch out.

Third, Flood follows the discredited playbook of trying to convince customers a 5 GB usage limit for the Internet in 2010 is reasonable with generous-sounding e-mail and web page browsing allowances.  Flood himself exposes the real issue — customers want to watch YouTube, Netflix, and Hulu and his network can’t handle it.  Of course, his marketing materials never bother to mention any of this.  Only after customers sign up, many under a two-year contract, does the truth come out (underlined emphasis ours):

In the case of ‘streaming video/movies or on demand type products or services’ recent weeks shows exactly what happens when these types of products are used. Everyone who uses ‘on demand or streaming products or services’ also knows there is an alternative which does not have an affect on any other user. We suggest the alternative as the best solution. We would appreciate everyone’s cooperation in resolving this current issue. If you are streaming movies you are making everyone mad!! Someday you may want to use the Internet and your neighbor will be streaming, then you won’t work. Wireless Internet was not designed to watch TV or movies.

If you are a ‘on demand user’ you may want to look at other options in lieu of streaming movies over the Internet. A basic resolution movie is typically 700Mb of data. So 1000Mb is equal to 1GB. So roughly 3-6 on demand or streamed movies will draw and additional charge to your account. All paying customers have the right to access their Internet connection, however any customer cannot deny any other customer access as the result of their usage. When this occurs policy is made to correct such actions. We make every effort to provide the best service we can, sometimes new Internet based programs and products do not work well on this type of network, that is not the fault of AirRunner Networks LLC and we cannot guarantee that any type of program or product will work properly or as advertised.

At least Flood was finally honest about the implications of watching online video from a provider with a low monthly usage allowance.  Just watching 3-6 online movies blows right through it, even fewer if it’s an HD title.

Unfortunately for Flood and other WISPs with similar network constraints, the evolution of the Internet and its online resources will increasingly place pressure on many networks that were built for a 1990s-era Internet.  As advanced video game streaming technology, online movies and television, online file backup, and other high bandwidth innovations not yet envisioned become increasingly popular, companies like AirRunner will be forced to upgrade their network or add new applications to the ban list, eventually facing obsolescence if a better provider arrives in town.

Senator Queen worked hard to try and strip the one year moratorium out of Senator Hoyle's anti-consumer bill

With the League of Municipalities essentially cutting a deal to sit on a municipal broadband study group that includes no actual consumers, voting for big telecom’s favorite bill of the year became a no-brainer.  It was a real shame to see the voting results on S.1209, despite pleas from consumers and some of North Carolina’s most rural representatives demanding to keep the municipal broadband option open.  They understand reality — while a handful of politicians in Raleigh cash big corporate contribution checks from the cable and phone companies, those out in the rural real world live with the results — no broadband.

We don’t need a one year moratorium on municipal broadband.  If the state government wants to study the issue, so be it, but a one year suspension on municipal broadband is a stall technique that big telecom providers are celebrating across the state.

Residents across North Carolina owe Sen. Joe Sam Queen a special thank-you for leading the charge for better broadband for rural residents.  He offered an amendment that would let the study go forward, but stripped out the anti-consumer moratorium.

Mark Binker of the Greensboro News & Record explained what happened next:

During the debate Monday night, Sen. Joe Sam Queen, a Waynesville Democrat, offered an amendment to allow the study to go forward but remove the moratorium.

Sen. David Hoyle, a Dallas Democrat and the Rules Committee chairman, offered a substitute amendment that essentially altered the bill’s language a bit but kept the moratorium around. Hoyle is one of the bill’s primary architects.

“We do not need a moratorium on the expansion of broadband across North Carolina,” Queen said. “This will only pour cold water on a very innovative sector.”

Now for a word on substitute amendment: When a substitute amendment is offered and accepted, it has the effect of wiping out the first amendment, which then can’t be offered again during the debate. It’s a way of doing away with things that the majority really doesn’t want to vote on.

During the past five years, I’ve mostly seen it used in the Senate my Democratic leaders to do away with Republican amendments they view as noxious – typically politically charged measures that could be awkward votes for rank and file members. I can’t recall the last time I saw a Dem on Dem substitute amendment.

I don’t know what, if any, conclusion can be drawn other than Hoyle was going to make darned sure his bill went through as is. Vote for the final measure was 41-7.

When big telecom pays the way, Senator Hoyle knows their needs must be met at all costs, no matter that his transparent shilling for the industry steamrolls over his fellow Democrats.  Besides, with his retirement looming (we’ll be watching to see where he lands next), who cares if his constituents are upset?  Certainly not Hoyle.

Fifteen Senate members stood against Hoyle’s ridiculous moratorium and deserve some recognition as well:

Senator(s): Allran, Atwater, Boseman, Dickson, Dorsett, Foriest, Goss, Jones, Kinnaird, McKissick, Purcell, Queen, Shaw, Snow, and Vaughan

Courtesy of Mark Turner, here is the audio from the Senate floor debate over S.1209 and the arguments for and against a municipal broadband moratorium. (June 7, 2010) (30 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Tomorrow, the fight in the House begins with a call to action to start flooding members of the House Ways and Means/Broadband Connectivity Committee with calls and e-mails.  In the short House session, there are plenty of opportunities for us to derail this anti-consumer gift to the state’s cable and phone companies.  I’ll have a contact list up tomorrow.

LUS Fiber is a municipally-owned provider competing in Lafayette, Louisiana

Lafayette Utility Systems’ LUS Fiber has filed a formal complaint with the Federal Communications Commission accusing the cable industry co-op of blocking the company from getting the favorable discounts and access to cable networks its competitor Cox Cable receives.

LUS Fiber Director Terry Huval said the blockade against LUS Fiber could ultimately cost the city millions and deny subscribers access to popular cable networks.  Huval accused its rival, Cox Cable, of being behind the repeated denials of membership for the Louisiana municipal cable system.

The municipal provider issued a news release stating that its complaint to the FCC originally was joined by municipal providers in Wilson, N.C., and Chattanooga, Tenn., but the National Cable Television Cooperative has since admitted those systems, while keeping LUS Fiber out.

“The NCTC opened membership to two other municipally-owned telecommunications companies that are very similar to our own Lafayette operation and in the same week refused to admit us on the same terms and conditions,” Huval said. “The only difference among the three systems is that our major cable competitor is NCTC’s largest member as well as a member of NCTC’s board of directors.”

LUS Fiber's primary competitor is Cox Cable

The NCTC is critically important to many medium and small sized cable companies who together collectively bargain access and the best possible volume discounts for hundreds of cable networks and broadcasters.  Those discounts are substantial, considering only Comcast gets larger discounts than the NCTC’s group membership.  NCTC membership also frees members from the tedious one on one negotiations cable systems would otherwise be required to conduct to obtain and maintain agreements with cable programmers.

Keeping LUS Fiber out means the municipal provider could be left charging higher prices than Cox charges for cable-TV in Lafayette.

Federal law appears to be on the side of LUS Fiber as part of the 1992 Cable Act that consumer groups fought for:

It shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers.

The NCTC operates a spartan website at nctconline.org

As someone who personally was involved in the passage of that legislation, the ironic part is we were fighting -for- the NCTC back then.  Of course, those days the cooperative was made up of wireless cable providers, utility co-ops, municipal co-ops, and other independent cable systems that were constantly facing outright refusals for access to cable programming or discriminatory pricing.  Satellite dish-owners were also regularly targeted.  NCTC was a friendly group in the early 1990s but has since become dominated with larger corporate cable operators, especially Cox Cable and Charter Communications.

LUS builds a compelling case:

NCTC and its dominant members have not only grown significantly in size and power, but they have become increasingly anti-competitive themselves. They are now undermining Congress’s pro-competitive intent by using denial of membership in NCTC as an anticompetitive device to insulate NCTC’s existing members from competition by new entrants.

Specifically, in 2007 and 2008, NCTC imposed a “moratorium” on new members, claiming that it needed time to review its membership policies. In late 2008, NCTC supposedly lifted the moratorium, posting new application procedures on its website. These procedures, NCTC stated, would ordinarily result in admissions within 60-120 days. LUS promptly applied for membership, furnishing all of the information that NCTC required. In reality, NCTC only lifted the moratorium for private-sector cable operators, including Cox and Charter. For LUS and other municipal cable operators, NCTC’s claim to be open to new memberships turned out to be little more than a deceptive sham.

In short, as of April 2010, despite publishing procedures suggesting that new members would be admitted within 120 days, NCTC had not admitted a single new public communications provider during the year and a half since it supposedly lifted its moratorium.

Without access to programming at competitive prices, no one would consider switching to a municipal provider that charged higher prices than the incumbent.  The NCTC’s increasingly secretive and erratic admission of new municipal members provides ample ammunition for those on the outside looking in to accuse the group of unfair practices.

AT&T has made it a whole lot easier to learn who has bought Apple’s transformative iPad.  An AT&T security lapse permitted a third party to access and obtain the e-mail addresses and individual iPad ID’s of all 114,000 current owners of the device.  That third party, Goatse Security, then promptly handed over the entire list — some 2,000 pages long, to Gawker — who exposed some big name iPad owners last week.

More importantly, several high officials in government and the military were also identified as iPad owners, even as the security lapse could have given access to the exact location of any of them.

In the media and entertainment industries, affected accounts belonged to top executives at the New York Times Company, Dow Jones, Condé Nast, Viacom, Time Warner, News Corporation, HBO and Hearst.

Within the tech industry, accounts were compromised at Google, Amazon, Microsoft and AOL, among others. In finance, accounts belonged to companies from Goldman Sachs to JP Morgan to Citigroup to Morgan Stanley, along with dozens of venture capital and private equity firms.

Some of the movers and shakers exposed (Image: Gawker)

In government, affected accounts included a GMail user who appears to be Rahm Emanuel and staffers in the Senate, House of Representatives, Department of Justice, NASA, Department of Homeland Security, FAA, FCC, and National Institute of Health, among others. Dozens of employees of the federal court system also appeared on the list.

While Gawker considers the implications of a widespread security breach and whether Apple or AT&T is to blame, others are focusing more intently on AT&T’s role in the misadventure.

AT&T e-mailed every iPad owner notification of the security breach only after it became public news:

“On June 7 we learned that unauthorized computer ‘hackers’ maliciously exploited a function designed to make your iPad log-in process faster by pre-populating an AT&T authentication page with the email address you used to register your iPad for 3G service. The self-described hackers wrote software code to randomly generate numbers that mimicked serial numbers of the AT&T SIM card for iPad – called the integrated circuit card identification (ICC-ID) – and repeatedly queried an AT&T web address. When a number generated by the hackers matched an actual ICC-ID, the authentication page log-in screen was returned to the hackers with the email address associated with the ICC-ID already populated on the log-in screen.

The hackers deliberately went to great efforts with a random program to extract possible ICC-IDs and capture customer email addresses. They then put together a list of these emails and distributed it for their own publicity.

As soon as we became aware of this situation, we took swift action to prevent any further unauthorized exposure of customer email addresses. Within hours, AT&T disabled the mechanism that automatically populated the email address. Now, the authentication page log-in screen requires the user to enter both their email address and their password.”

AT&T’s damage control has been one-part victim, two-parts minimize the impact, sprinkled with “attack the messenger” all over the top.

AT&T’s characterization of the security team that exposed the security flaw as malicious hackers brought a swift response from Goatse:

AT&T had plenty of time to inform the public before our disclosure. It was not done. Post-patch, disclosure should be immediate– within the hour. Days afterward is not acceptable.

[…] The potential for this sort of attack and the number of iPad users on the list we saw who were stewards of major public and commercial infrastructure necessitated our public disclosure. People in critical positions have a right to completely understand the scope of vulnerability immediately. Not days or weeks or months after potential intrusion.

In addition AT&T says the person responsible for this went “to great efforts”. I’ll tell you this, the finder of the AT&T email leak spent just over a single hour of labor total (not counting the time the script ran with no human intervention) to scrape the 114,000 emails. If you see this as “great efforts”, so be it.

AT&T’s mistakes just keep on coming, ranging from ongoing billing errors amounting to hundreds of dollars to threatening customers with cease and desist orders just for e-mailing concerns to the company.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Bloomberg Goatse Owens Calls ATT Security Flaw Egregious 6-10-10.flv[/flv]

Bloomberg News ran this interview with a representative from Goatse Security that got a bit over-technical for the average Bloomberg viewer.  (4 minutes)