Karl Bode over at Broadband Reports offers an additional detail on Frontier’s Internet Overcharging experiment which is now being tested in Minnesota:

Late last week, someone familiar with business operations at Frontier Communications indicated to Broadband Reports that the company was going to begin testing a new capping scheme for heavy users. “Just wanted to let you know that Frontier is sending out letters to the top 50 bandwidth users in Mound Minnesota,” said the individual.

The city of Mound, a suburb located 19 miles to the west of Minneapolis/St. Paul, is home to 9,800 residents.  Mound is the birthplace of the Tonka truck, named after Lake Minnetonka, which surrounds Mound.  Residents of Hennepin County have watched their local phone company change hands several times over the years from Contel to GTE of Minnesota to Verizon to Citizens Telecommunications Company of Minnesota, which does business as Frontier Communications. Frontier has served this part of Minnesota since the end of August, 2000.

Hanus

For a community aggressively pursuing a downtown revitalization and redevelopment program designed to make the community attractive to new residents and businesses, news that the local DSL provider is now going to limit broadband usage and overcharge those who exceed their arbitrary limits is not good.

Among city officials, Mayor Mark Hanus and councilman David Osmek are both Frontier broadband customers.  The city is proud to stream its regular city council meetings online, something Frontier DSL customers will now have to avoid if they want to preserve as much of their 5GB monthly usage allowance as possible.

Action Alert and Alternatives for Mound, Minnesota

For Mound residents who do not want to be forced to limit their broadband activities to the ridiculously low 5GB allowance Frontier is now enforcing, we recommend these actions:

1) Call Frontier Communications at 1-800-921-8101 and tell them you will not keep your Frontier broadband service with a usage cap and you are prepared to take your business elsewhere immediately if they do not rescind their “experiment.”  If they attempt to charge you an early termination fee or cancellation fee if you do decide to cancel, let us know through the Contact link at the top of the page or in the comments attached to this article.

2) Contact your local media — the Minneapolis Star-Tribune, the Lakeshore Weekly News, The Laker, local news radio and television stations and let them know you think they should be covering this story and its potential impact on the local economy in Mound.

3) Your best alternative broadband provider is cable operator Mediacom which does not have a usage limitation on their broadband accounts.  Their speeds and pricing are also much better, based on Frontier’s advertised pricing of  “as low as” $49.99 a month for Frontier High-Speed Internet Max 3Mbps service or “prices starting at” $39.99 a month for Frontier High-Speed Internet Lite 768kps service.

Mediacom offers 3, 12 and 20Mbps broadband service in Mound.  Here are the details:

For New Mediacom customers:

Mediacom offers soon-to-be-ex Frontier customers free standard installation and a 12-month introductory offer for 12/1Mbps service for $49.95 a month.  Telephone service is also available through Mediacom with a bundled service discount.  Customers looking for a budget broadband alternative can sign up for 3Mbps service for $29.95 a month if they also take digital cable or digital phone.  For customers looking for the highest speeds, Mediacom offers 20/2Mbps service for $59.95 a month if you also get digital cable or phone service.

Mediacom is Mound's incumbent cable company

For Current Mediacom Non-Broadband customers:

If you have cable from Mediacom but use Frontier for broadband, you can switch to Mediacom cable modem service and obtain special discounts.  Add Mediacom’s 12/1Mbps service to your existing cable TV account for $19.95 a month for 12 months, or 20/2Mbps service for $59.95 a month for 12 months.  Installation is done by the customer.

Questions about Mediacom service in Mound can be directed to 1-800-332-0245.  Mediacom’s local offices in and around Mound are at:

4) Customers who are absolutely stuck with Frontier broadband who anticipate approaching or exceeding the 100/250GB usage levels should explore a business broadband account with Frontier.  Although pricing may vary from city to city, residents of Rochester who confronted the original effort to impose a 5GB usage cap in western New York found business account DSL service was not much more expensive than residential service, and carried no usage limitations.  Pricing is likely to be less than the punitive rates Frontier wants to charge residential customers for exceeding their allowances.

Frontier Communications has quietly begun testing an Internet Overcharging scheme in Minnesota designed to charge confiscatory prices to residents who exceed the company’s usage allowances, demanding customers pay up to $249.99 a month to keep their broadband service running.

Stop the Cap! has learned Frontier has begun measuring customers’ broadband usage, and for those in Minnesota who exceed 100GB of usage during a month, Frontier is dispatching e-mail messages telling them they’ll have to agree to pay more — much more — or their service will be cut off in 15 days.

Two e-mail messages are being sent to customers who break the 100 and 250GB usage barriers.  Both reference Frontier’s 5GB usage allowance that Stop the Cap! has strongly and repeatedly criticized the company for implementing in the first place.  Using that usage allowance as a baseline, Frontier calls out its customers using more demanding they switch to a higher priced service plan if they want to continue service with the company.

• For those achieving 100GB of usage, the new monthly rate is $99.99 per month
• For those achieving 250GB of usage, the new monthly rate is an incredible $249.99 per month

Sources tell Stop the Cap! the Internet Overcharging scheme Frontier is running is an experiment to gauge customer reaction.  If the furious customer e-mail reaching us is any indication, it’s another public relations disaster for Frontier Communications.  One customer didn’t even realize there was a 5GB usage allowance to begin with, much less a vastly higher new monthly price if he wants to stay with Frontier DSL.  He’s not.

"You can earn this much money just from overcharging Minnesotans for their Internet service!"

Ironically, the experimental pricing plan comes at a time when Frontier is still trying to get state regulators to approve its deal with Verizon to assume control of landline and broadband service in several states.  Residents in West Virginia and a dozen other states might be a bit concerned that their unlimited Verizon DSL broadband service, often the only service provider available, could be replaced with a company that is willing to punish its customers with $250 in monthly charges once a customer hits 250GB in usage.  Even worse, Frontier takes the overlimit penalty concept to a whole new level, telling customers that new high price represents their new monthly rate plan, not just a temporary penalty.

To add insult to injury, Frontier continues to mislead its customers about the experimental pricing on its own website.  As of this writing, Frontier’s Acceptable Use Policy still states:

Customers may not resell High Speed Internet Access Service (“Service”) without a legal and written agency agreement with Frontier. Customers may not retransmit the Service or make the Service available to anyone outside the premises (i.e., wi-fi or other methods of networking). Customers may not use the Service to host any type of commercial server. Customers must comply with all Frontier network, bandwidth, data storage and usage limitations. Frontier may suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period. The Company has made no decision about potential charges for monthly usage in excess of 5GB.

For customers receiving Frontier’s Scare-o-Gram, it sure sounds like they made up their minds… to charge a lot more for the exact same level of service.

For state regulators, watching Frontier charge ludicrous pricing for broadband service that would make most providers blush should be more than enough evidence that approving Frontier’s plans to take over Internet and landline service in their state is not in the best interests of consumers.  For many, it saddles them with a broadband provider that can charge these kinds of prices knowing full well many customers have nowhere else to go.

Copy of E-Mail Sent to Minnesota Customers Exceeding 100 GB of usage a month [emphasis in bold is ours]:

Dear [Customer]:

Frontier is focused on providing the best possible internet experience across our entire customer base.  We bring you a quality service at a fair price, dependent upon an average monthly bandwidth usage of 5GB.  Over the past months, your account is in violation of our Residential Internet Acceptable Use Policy.

Our policy states that Frontier reserves the right to suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period.

We realize there are times when our customers use the internet for services such as video and music downloads, however your specific usage has consistently exceeded 100GB over a 30 day period.

We would like to provide you with the option of keeping your Frontier internet service at a monthly rate of $99.99 which is reflective of your average monthly usage.  Please call us within 7 days of the date of this email at 1-877-273-0489 Monday – Friday, 8AM – 5PM CST to review your options.  If you do not wish to switch to this new rate plan, you can have your service disconnected.  If we do not hear from you within 15 days, your internet service will be automatically disconnected.

We continue to manage our network to ensure all of our customers have equal access to the internet and the ability to enjoy all of its available content, at our committed level of service quality.

Sincerely,

Frontier Communications

Copy of E-Mail Sent to Minnesota Customers Exceeding 250 GB of usage a month [emphasis in bold is ours]:

Dear [Customer]:

Frontier is focused on providing the best possible internet experience across our entire customer base.  We bring you a quality service at a fair price, dependent upon an average monthly bandwidth usage of 5GB.  Over the past months, your account is in violation of our Residential Internet Acceptable Use Policy.

Our policy states that Frontier reserves the right to suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period.

We realize there are times when our customers use the internet for services such as video and music downloads, however your specific usage has consistently exceeded 250GB over a 30 day period.

We would like to provide you with the option of keeping your Frontier internet service at a monthly rate of $249.99 which is reflective of your average monthly usage.  Please call us within 7 days of the date of this email at 1-877-273-0489 Monday – Friday, 8AM – 5PM CST to review your options.  If you do not wish to switch to this new rate plan, you can have your service disconnected.  If we do not hear from you within 15 days, your internet service will be automatically disconnected.

We continue to manage our network to ensure all of our customers have equal access to the internet and the ability to enjoy all of its available content, at our committed level of service quality.

Sincerely,

Frontier Communications

A survey released this week by Arbitron Inc. and Edison Media Research found, for the first time, that Americans are more willing to give up TV than the Internet.

Asked to choose the ”most essential” medium, 42 percent of the survey’s 1,753 respondents picked the Internet, 37 percent picked TV, 14 percent said radio and 5 percent said those dead-tree format newspapers.

That represents more evidence that major telecommunications companies will need to lasso control of the Internet before the cable television profit train derails.  That’s because the Internet delivers the prospect of a two-for-one deal.  Enjoy your online web surfing -and- stream your favorite television shows online at the same time — no more ever-increasing cable-TV bill for channels you never asked for and don’t watch.

Even more worrying for big cable — young people are increasingly never bothering to sign up for cable television in the first place.  In the 18-24 age group, 74 percent said they would quit TV before surrendering the Web, and many never bothered with subscription television to begin with.

The last time Arbitron and Edison posed this question in a survey was in 2001, back when dial-up access still predominated.  Back then, 72 percent of respondents said they could do without Internet and 26 percent said they’d give up TV.

“The shift over these nine years has been steady and profound,” said Edison Research president Larry Rosin.

Some consumers don’t want to watch television over their computers and would prefer to be entertained in a comfortable chair in the living room.  But Internet video innovation is increasingly solving that problem by coupling your television or DVD player to the web.  Several providers like Netflix even deliver their streaming video service through video game consoles.

How do cable companies stop the herd mentality to broadband video, leaving those big cable TV bills behind?  Stick a meter on broadband service, and charge consumers for every TV show they watch or simply put a limit on their broadband service.  The broadband usage cap or meter can, indeed, kill the online video star.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WJW Cleveland The Download Internet More Important Than TV 4-9-10.flv[/flv]

WJW-TV in Cleveland reports that more people are ready to ditch their televisions than being willing to part with their Internet connection.  (3 minutes)

Phillip "The only New Deal my cable company brought to the table was a $150 monthly broadband bill for exactly the same level of service I had when paying $50" Dampier

Joe, a regular Stop the Cap! reader noticed the National Review this morning published another one of their “in the pocket of big telecom” editorials proclaiming Net Neutrality is “anti-consumer.”  Right into the first paragraph, it was clear the editors either fundamentally misunderstand the reality of today’s broadband industry or honestly didn’t care as long as it suited their business-friendly agenda.

Readers, you need not go along with the charade.  While the publishers of National Review can probably afford to buy their way around anything the phone and cable industry can dream up, you probably cannot.  What those opposed to Net Neutrality frame as “freedom from government intrusion” is in reality an attempt to keep your broadband provider from screwing around with your connection in hopes of charging you more for the same service you used to have.

Turn on your TV these days and within minutes you are likely to see several commercials from your local cable, satellite, or telecommunications company trying to convince you that their cable, DSL, or mobile broadband services are superior to those of their competitors. That’s because the market for broadband service is robustly competitive: If service providers didn’t advertise, they would lose business.

Actually, most of the advertising I see on my television comes from free ad inserts Time Warner Cable hands themselves during ad breaks on national cable channels.  My local phone company, Frontier Communications, hasn’t advertised on television for quite awhile.  The mobile broadband advertising I see fights over coverage and who has the coolest new device.  They aren’t advertising on price because they almost all charge exactly the same $60 for 5 GB of usage per month.

None of this represents “robust competition” when one of the players on the wired side is absent from the airwaves and the wireless folks have convenient cartel-like pricing for wireless broadband.

They would also lose business if they did something that made their customers unhappy, such as slowing or blocking the delivery of popular content over the Internet. Or they might gain customers if they created a model that, for a fee, guaranteed uninterrupted high-speed access to certain services, such as telemedicine, video conferencing, or some other use of the Internet we have yet to imagine. This competition directs broadband toward its most efficient uses. It is pro-consumer in that it allows for the proliferation of choices and pressures companies to offer a variety of pricing options.

Of course, the editors who wrote this did not have to fight back a 300 percent rate increase with an Internet Overcharging scheme that would have limited broadband access in at least five cities to start.  Let’s test their theory by asking a few questions.  First, did anyone ask for this kind of pricing to begin with?  Answer: No.  Second, did the plan make customers unhappy?  Answer: Emphatically yes.  Third, upon hearing from customers that they did not want this kind of pricing, did they discard the plan?  Answer: Not on your life.  Fourth, did it take two members of Congress to drive the company to finally pull back their plan?  Answer: You bet.

Now ask the same types of questions about slowing down your web connection to make room for the neighbor up the street willing to pay more to get more while you enjoy less for the same price you’ve always paid.

Lesson learned: when you effectively have a duopoly or monopoly in your market, you don’t have to listen to customers — they have to listen to you.  Indeed, even where competition exists, there is every indication the competitors would themselves increase prices or limit service to rake in additional revenue.  That happens routinely even in more competitive industries like the airlines — something you realize when you try and check bags and are asked for a credit card.  In Canadian broadband, foreshadowing a non-Net Neutral USA, when one player limits usage and throttles connections, the competitor more often than not joins in.

The other fallacy raised in this useless editorial is that Net Neutrality somehow bars companies from offering all of those wonderful innovative Internet applications.  It’s a common talking point straight out of the industry’s playbook.  Nothing precludes the broadband industry from expanding and improving their networks to offer all of these services.  Under Net Neutrality, they simply wouldn’t be allowed to do it on the backs of their other Internet customers, whose connections are automatically impeded to make room for that “innovation.”  The saddest part is that the only innovation at work here is price-gouging customers instead of upgrading networks.

It would be a huge mistake to impose by fiat a single business model on the carrier side of the Internet.

Tell that to AT&T and Verizon who have exactly the same pricing in their business model for mobile broadband service.  Is it a huge mistake for them?

Specifically, they want the government to prohibit broadband providers (such as Comcast) from discriminating against content providers (such as Google) by, for instance, charging them different rates for different levels of network service. They argue that, in the absence of such regulation, broadband providers can act as self-appointed censors, slowing down or blocking content they don’t like. Keep in mind that in no instance has this actually happened. So far, broadband providers have acted only to slow down noisome bandwidth hogs in order to manage traffic and ensure a high quality of service for the majority of their customers. Net-neutrality proponents counter that other customers — those unhappy about the slowdowns — lack meaningful options; that is, that the market for broadband service is not sufficiently competitive.

It is -shocking- the government would want to make sure broadband providers don’t block or discriminate against other people’s content.  We can’t have that!

The National Review needs to consider studying up on history.  The cable industry, for example, is notorious for blocking competitor access to its content.  To this day, the industry is fighting to keep the cable networks they own off competitors’ lineups.  The same company that provides your broadband service wants to make sure their telephone competitor cannot show a regional sports channel they own.  At least one broadband provider in the United States tried to block competing Voice Over IP phone companies from being used on their broadband service.  The same “blocking” mentality popped up in Canada where a broadband provider purposely blocked a website critical of that company.  Want access to cable programming online but don’t have a cable-TV package?  Good luck.  TV Everywhere projects are specifically designed to block non-cable TV customers from accessing that programming online.

National Review‘s afterthought admission that providers like Comcast were diddling with customers’ Internet speeds is waved away as somehow the fault of bandwidth piggies, another common meme in the talking points packet provided by the broadband industry.  Never mind the company had effectively spied on customers to determine what they were doing with their connections, that they first denied reports they were throttling, effectively throttled everyone — piggies or not — and then quickly stopped when the FCC protested.  If Comcast wasn’t doing anything wrong, why not inform customers first?  After all, the “majority of customers” would want throttling to preserve their “high quality of service,” right?

Of course they don’t, and when customers found out the company charging them good money to provide a service was also trying to systematically reduce its value with speed throttles, they howled in protest.  Who knows what online application would fall next to the throttle?

This would effectively mean applying to broadband providers the rules designed for landline telephone companies in the 1930s. We know Obama wants to emulate FDR, but this is getting ridiculous.

Oh now see how they tried to be funny with the slap against Obama and FDR?  The National Review would have been the magazine defending the railroad robber barons and utility trusts — unregulated monopolies — back during FDR’s day.  They’d be just as wrong then as they are now.  The only New Deal my cable company brought to the table was a $150 monthly broadband bill for exactly the same level of service I had when paying $50.

The current regulatory framework for broadband was constructed by Michael Powell’s Republican-majority FCC, classifying broadband as an “information service.”  It was bureaucratic incompetence because it relied on vaporware authority that a court found, to nobody’s surprise, didn’t exist.  The court does recognize the FCC’s authority to regulate “telecommunications services,” so by simply reclassifying broadband as such, the basic question of authority is solved.  The National Review pretends this will automatically mean 1930s-like regulations as applied to copper wire-phone companies, but that’s not true.  The National Review simply doesn’t want the FCC to have any authority in the first place.

But the FCC’s authority to reclassify broadband to suit its desires is also open to legal challenge. As a result, we are sure to hear louder calls for Congress to regulate the Internet or to grant the FCC the explicit authority to do so. These calls should be ignored. The Internet has thrived in the absence of homogenizing federal regulations, and this organic development should be allowed to continue so long as competition can act as a check on anti-consumer practices.

The calls to enshrine Net Neutrality, stop Internet Overcharging, and force open broadband markets and expand service all do not come in a vacuum.  They are ideas born from past provider abuses that have demanded consumer protections in response.  Who would have dreamed up Net Neutrality if AT&T’s Ed Whitacre didn’t insist Internet traffic could not use his pipes for free.  What about when the industry started toying with developing premium tiers of service that relied on slowing down the connections of their other paying customers.  Why worry about forcing markets open to additional competition?  Oh yeah, because of statements like those from Landel Hobbs (Time Warner Cable COO) who told investors Time Warner Cable could use its market position in broadband to jack up prices whenever they chose.  And they did.

The National Review‘s “hands off” attitude is the same one they’ve had towards banks, and now every American is paying for that mistake.  Let’s not repeat it.

Besides, as it stands these companies compete vigorously against one another in a way that is beneficial to consumers. If one of them makes an unpopular business decision, its customers can go elsewhere. If, however, an unelected FCC chairman dictates uniformity in the services these companies provide, then there is nowhere Americans can turn for innovations the government may have strangled in the cradle.

Where exactly do consumers in rural areas go for alternative broadband when their monopoly phone company provider limits their service or charges them confiscatory pricing?  Where do residents go when both providers limit service?

Consumers have far more power to deal with the “unelected FCC Chairman” than dealing with intransigent phone and cable companies.  Elections every few years have consequences.  There are no elections for Comcast, Verizon, Cox or AT&T.  They’re effectively Providers-for-Life in the communities they serve.

The National Review has little to fear from a broadband dark ages where innovation disappears.  Somehow, an industry that rakes in billions in revenue every year will manage to get by living under basic guidelines that require them to earn their money fairly and spend some of those profits to keep up with very profitable demand.  They’ll sue anyway, of course.  But that could buy us enough time to spur additional competitive choices in a duopolistic market for broadband, helping put to work those free market principles of fierce competition the National Review believes in.

[Article Correction 4/15/2010: The original piece laid blame for the classification of broadband as an “information service” on former FCC Chairman Kevin Martin.  In fact, the classification was made by former FCC Chairman Michael Powell, who served during the first term of the Bush Administration.  We regret the error.]

Today marks the first anniversary of news that Time Warner Cable planned to expand an Internet Overcharging scheme being tested in one Texas city to four additional cities within its service area.

Residents of Rochester, New York, the Triad Region surrounding Greensboro, North Carolina, as well as Austin and San Antonio, Texas first learned of the planned expansion of so-called “metered broadband” from a Business Week article dated March 31st, which has since accumulated more than 450 comments to date:

Web users, the meter is running. In a strategy that’s likely to rankle consumers but be copied by competitors, Time Warner Cable is pressing ahead with a plan to charge Internet customers based on how much Web data they consume. Starting next month, the company will introduce tiered pricing in several markets.

In April, Time Warner Cable will begin collecting information on its customers’ Internet use in the Texas cities of Austin and San Antonio and in Rochester, N.Y. Consumption billing will begin in those cities later this summer. In Greensboro, N.C., the billing changes will begin sooner. Spun off from Time Warner this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont, Tex., since last year.

Proposed pricing models created by Time Warner Cable would have tripled broadband bills to an unprecedented $150 a month for consumers seeking the same level of broadband service they enjoyed a month earlier.  For a cable industry that was used to pushing through rate increases well above the annual rate of inflation, such an enormous rate increase was unprecedented, even for them.

For consumers willing to ration their broadband use, the news was slightly better — you’d still pay more for less service, and be exposed to overlimit fees and penalties should you exceed your monthly allowance, which was as low as a 1 GB per month for one proposed plan.

While residents of Beaumont, Texas had to endure these prices for several months prior to the announced expansion of experimental Overcharging, once news hit tech-savvy cities in Texas, New York, and North Carolina, an all-out consumer rebellion began.  Residents in Austin met with city officials to discuss alternatives to a cable company that threatened Austin’s high tech status.  For residents in Rochester, already coping with a 5 GB usage allowance for Frontier Communication’s DSL service, it was a clear-cut case of monopolistic greed.  In North Carolina, working to transition its way towards a digital economic future, an Internet rationing plan would hurt the economy of the entire Triad region.  San Antonio residents were equally unimpressed with the cable operator as well, demanding alternative providers.

Former Congressman Eric Massa (D-NY)

Consumers banded together on Stop the Cap! and other consumer-oriented websites to coordinate the pushback effort.  Protests were held, the media was engaged, and at least in New York, the politicians were not going to sit back in Time Warner Cable’s favor.  Former Rep. Eric Massa expressed outrage at the company for its new pricing plan and Senator Chuck Schumer personally called Time Warner Cable CEO Glenn Britt.

A few lapdogs in the trade press and “dollar a holler” astroturf groups praised Time Warner Cable’s price gouging plans.  One even went as far as to suggest Time Warner Cable “took one for the team” — referring to a cable industry just waiting to test some Internet Overcharging of their own.

Time Warner Cable dispatched some of their social media minions to try and explain away the outrageous price increases, offering to “listen” to consumers with suggestions about how to “improve the plan.”  One, like TWCAlex offered “proof” consumers wanted this kind of pricing.  The disingenuousness of the effort rivaled Lord Haw Haw’s Germany Calling propaganda broadcasts on the Reichssender Hamburg.  Company officials ignored the overwhelming consensus that consumers didn’t want metered or capped service and then weeks later those who did submit comments were notified they were “deleted without being read.”

Meanwhile, Rep. Massa’s office began drafting legislation to ban the unprecedented pricing schemes, culminating in a bill introduced in 2009 to ban unjustified usage caps and metered billing.

On April 9th, Landel Hobbs, Chief Operating Officer of Time Warner Cable, issued a recitation of the reasons why Time Warner Cable felt justified in exposing customers to up to 150 percent rate hikes — reasons we’ve managed to debunk over the past year’s coverage:

With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially. That’s a good thing; however, there are costs associated with this increased Internet usage. Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40% a year. As a facilities based provider, we’ve built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself.

As we’ve since proven, Hobbs statements to the public obscure the facts in his own company’s financial reports which are remarkably consistent quarter after quarter: revenues for broadband service are increasing while the costs to provide it are falling.  In fact, broadband is rapidly becoming the most important element of the cable industry’s quest for fat profits.  Time Warner Cable, as well as others, have plenty of financial resources from the billions in profits they earn from broadband every year to provide cost-effective upgrades that benefit them as well as consumers at today’s flat rate prices.

Just a few weeks ago, Hobbs told investors consumers are so devoted to their broadband service, the company could raise broadband prices anytime they like.  Funny how “increasing costs” never came into the discussion there.

This is a common problem that all network providers are experiencing and must address. Several other providers have instituted consumption based billing, including all major network providers in Canada and others in the U.K., New Zealand and elsewhere. In the U.S., AT&T has begun two consumption based billing trials and other providers including Comcast, Charter and Cox are using varying methods of monitoring and managing bandwidth consumption.

As Stop the Cap! has illustrated repeatedly, such consumption billing schemes are despised by consumers -and- most countries see them as hampering their digital economy.  Australia and New Zealand have government initiatives to improve broadband service to the point where consumption billing and usage caps are a distant memory.  Canada’s usage based billing schemes come from market concentration, particularly from Bell which is by far the largest wholesale supplier of bandwidth in the country.  Their quest for profits, along with a compliant regulatory body (the CRTC) has made such ripoff pricing commonplace.  The result on Canada’s broadband rankings are clear as the country continues to fall further behind other OECD nations.  Canadians do not want such pricing, but when a duopoly is allowed to exist unfettered by appropriate oversight, the end result is always the same – higher prices for poorer service.  In the United Kingdom, several flat rate plans are available, with more on the way as the UK embarks on its own Digital Economy plan.

There are other reasons why such consumption billing schemes are in place in other countries – namely insufficient international capacity to move traffic back and forth outside of the region.  That too is being addressed.

That other cable operators are overcharging consumers or limiting their usage is hardly a surprise considering insufficient competition in the marketplace makes that possible.  However, Comcast’s 250 GB limit is far more generous than anything Time Warner Cable proposed, Cox rarely enforces their limits, and Charter recently announced it had abandoned theirs.

For good reason. Internet demand is rising at a rate that could outpace capacity within a few years. According to industry analysts, the infrastructure may not be able to accommodate the explosion of online content by 2012. This could result in Internet brownouts. It will take a lot of money to fix the problem. Rather than raising prices on all customers or limiting usage, we think the fairest approach is to move to a tiered model in which users pay more if they use more.

Hobbs’ reliance on the “exaflood” or the “zettabyte” theory of Internet brownouts comes courtesy of the prostituting, industry-backed Discovery Institute — the people who will cough up bought and paid for “research studies” that say anything the buyer wants them to say and Cisco, which makes a handsome buck off selling broadband network equipment to providers they panic with stories of Internet data tsunamis and brownouts.

Hobbs

Two weeks after the Business Week article, Senator Schumer flew to Rochester and joined a few of our local Stop the Cap! members and myself to announce the end of the nightmare — no more Internet Overcharging consumers in any of the three states. Even Beaumont was soon freed from the ripoff pricing experiment.

But Time Warner Cable promised that one day, they could be back with the same schemes, after “educating their customers.”  Stop the Cap! has spent the last year assembling an extensive record of just how unjustified these pricing schemes really are, and we’ve been educating consumers about how an duopolistic broadband industry is seeking to monetize and control as many aspects of America’s online experience as possible.

We’ve exposed dozens of astroturf and other industry-backed groups trying to peddle the broadband industry agenda, often trying to hide who is paying the bills.  Whether it’s scare stories about broadband brownouts, fear that oversight and regulation will drive away investment and reduce service, or the need to stop Net Neutrality — it’s all designed to protect provider profits, not help consumers.

There is nothing fair about Internet Overcharging schemes.  There has never been a true consumption billing scheme that charged consumers nothing if they didn’t use the service, and the prices being charged for consumption above one’s allowance are often several thousand percent above actual cost.  Indeed the CEO of Crown Fibre Holdings CEO Graham Mitchell, admitted the truth about such pricing schemes when he told Techday that where ISP’s engage in such pricing schemes, they don’t make their money in providing access to broadband; they make it out of data caps.

We have no illusion providers won’t be back for a second bite at your wallets, which is why the education effort continues.  Over the last year, we’ve expanded our coverage to promote better broadband, and to expose bad actors among the broadband cable, telephone, wireless, and satellite industry.  We’ll continue to expose lobbying efforts to legislate away oversight, consumer protection, and limit potential competition.  Stop the Cap! also continues to fight for improved rural broadband that moves beyond today’s satellite fraudband that delivers woefully slow, heavily limited and expensive service.  We’ll also coordinate efforts to push back whenever Internet Overcharging schemes appear on the horizon, and we won’t let go until such language is banished from customer agreements and Acceptable Use Policies, whether they are formally enforced or not.

One year later, America’s broadband users are safer from such schemes, but not yet safe.  Thanks to all of our readers for staying engaged.