Time Warner Cable last week intimated the only thing keeping faster cable modem speeds from Kansas City customers is consumer demand and they are not worried about the arrival of Google Fiber’s 1Gbps broadband speeds.

The cable operator claims they have the advantage in Kansas City, as the first provider to offer a triple play package of voice, broadband, and television service. Time Warner also says they are constantly working on new, innovative services, including the much-touted “tablet remote” the company says it already offers customers in Kansas City in the form of apps available on the Android and iOS platforms.

“We always have the ability to adjust our network to keep up with demands from consumers [for faster broadband speeds],” Time Warner Cable said.

Cable operators and phone companies have traditionally argued there is little consumer demand for gigabit broadband speeds because the services most customers access online don’t need or cannot support that level of speed. Cost has also usually been a factor, and many operators point out the majority of their customers are satisfied with speeds of 20Mbps or less.

“We’re ready to compete any day, anytime, anywhere, with anyone,” said Time Warner Cable spokesman Mike Pedelty.

AT&T, which has been providing U-verse in parts of Kansas City since 2007 says it isn’t threatened by Google Fiber either.

Chris Lester from AT&T Media Relations notes AT&T now offers U-verse to more than 400,000 households in and around Kansas City and claims the company has gotten a “great response” from consumers, but declined to specify exactly how many of those households have actually signed up for service.

Both the dominant cable and phone company in Kansas City are betting on subscriber loyalty and consumer resistance to change to maintain their subscriber numbers. Statistically, they have a good chance of holding most of their current customers, at least for now.

The threat of Google’s fiber fast speeds may not be limited only to Kansas City, however. The Wall Street Journal has learned Google may be intending to bring its fiber network to other American cities, as long as they are not already served by Verizon’s FiOS fiber-to-the-home network.

Incumbent cable operators facing new competition from phone company IPTV (AT&T U-verse, Verizon FiOS) have not lost as much business as they first anticipated. In most cases, only 25-35% of customers eventually left for a satellite or phone company competitor. The older the subscriber, the less likely that customer is to consider a change, unless the service is poor or the price becomes unaffordable.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCTV Kansas City Competition for Google Fiber 7-26-12.mp4[/flv]

KCTV in Kansas City talks with AT&T and Time Warner Cable about their newest competitor.  (2 minutes)

No cable operator has reported alarming results from subscriber defections, either from competition or cord-cutting behavior, and Wall Street analysts are watching subscriber numbers closely.

So far, reports on the ground indicate AT&T and Time Warner Cable are following the playbook first established when any new broadband provider arrives on their turf — aggressively market discounts tied to a contract with a stiff early termination fee to discourage customers from switching. At least one local provider has been reportedly sending salespeople door to door to try and lock customers in with a multi-year service contract. When that does not work, both companies use their customer retention departments to offer customers cheaper service in a last ditch effort to keep them from heading for the door.

Even with those defensive measures, some investors still see Google’s new fiber service as something new and different in the broadband marketplace — “the most disruptive thing since Gmail,” concludes Business Insider‘s Matt Rosoff.

Rosoff says Google Fiber could completely change the broadband landscape in the United States much the same way Gmail changed e-mail.

Back when Gmail launched, the other free email providers like Hotmail and Yahoo Mail were offering less than 5MB of storage — that’s five megabytes,” Rosoff writes. “Google trumped them all with 1GB of free storage. With so much storage, there was no need to trash anything. You could archive it and keep it forever.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Fox Business News Google Stirs It Up 7-26-12.flv[/flv]

Fox Business News explores Google Fiber and finds phone companies telling reporters consumers don’t need 1Gbps broadband.  (2 minutes)

Gmail has since captured a large share of the email market, while also paving the way for Google’s increasingly profitable business apps. Some also argue Google’s “save everything online” approach was like training wheels for the cloud computing concept, where consumers think less about local storage and more about going online to access content. Google Fiber’s speeds make accessing online content effortless, and with no usage caps, customers need not ration their usage.

As of Monday, Google has already achieved the minimum number of needed homes to install Google Fiber in several, mostly affluent, Kansas City neighborhoods.

Rosoff says much like Gmail exposed the weaknesses of former email leaders like Hotmail, Google Fiber embarrasses incumbent Internet Service Providers and illustrates just how slow they have been to innovate.

“Google Fiber makes the cable-based ISPs look pathetic,” says Rosoff. “It promises to offer speeds up to 1,000Mbps downstream and upstream, for only $70 a month.”

In comparison, Time Warner Cable charges $100 for 50/5Mbps service in Kansas City. AT&T’s U-verse can only offer up to 24/3Mbps service, and it charges well over $50 a month for that, except on a new customer promotion. Both Time Warner and AT&T also sell “lite use” packages from 1-6Mpbs for $20-25 a month — service Google intends to give away for free after a $300 installation fee.

Many industry observers suggest Google is using its new fiber network in part as a hedge against market abuse from dominant cable and phone companies who are fiercely opposed to Net Neutrality and favor monetizing broadband usage.  Both are serious threats to Google’s business model which seeks more usage, not less. The more time consumers spend online, the more likely they will be exposed to a Google ad, use a Google product, or purchase a current or forthcoming service owned or partnered with the search engine giant.

Early indications from Kansas City show the cable and phone companies do have something to be concerned about. In more affluent areas of Kansas City, Google passed the minimum number of households willing to commit to the fiber service in just two days. Enthusiasm has been so overwhelming, tech entrepreneurs drooling for fiber service are hiring door-to-door promoters to visit nearby residents to encourage them to show their interest, in some cases even paying Google’s $10 pre-registration fee on their behalf.

More than 20 percent of the eligible “fiberhoods” in Kansas City, Mo. have already passed their signup goals. In poorer, mostly minority neighborhoods, Google is still waiting for their first pre-registration. In less affluent Kansas City, Kan., Google is finding considerably less interest, and pre-registrations are running below goal in all but three “fiberhoods.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WDAF Kansas City Competitors Gear Up For Google’s Challenge 7-26-12.flv[/flv]

WDAF says competing cable and phone companies cannot deliver the speeds Google Fiber will offer, but they are betting consumers don’t need or care about faster broadband speeds. (3 minutes)

Dispensing with “all-you-can-eat” data plans was the first step towards monetizing mobile broadband. Now some mobile operators are considering how to implement stage two: charging different pricing for different online applications to boost profits.

At the TM Forum Management World conference in Dublin, Ireland, mobile operators discussed managing and monetizing data usage, charging customers different rates for using various online services and applications. Total Telecom covered the conference and found mobile operators conjuring up new pricing schemes to maximize revenue opportunities.

Vikram Chadha, senior marketing director at United Arab Emirates-based Du, offered that mobile operators should bill for video traffic separately from standard data.

″Video is another beast,″ Chadha told the audience of executives. ″Operators need to look at video data in a totally different manner. It’s important to treat video as a different data element.″

Monetizing video streaming can “get high value out of that customer,” Chadha said.

Chadha

He also believes as general browser traffic declines, real money can be made charging different rates for customers accessing different apps. Providers could charge higher data pricing when customers use certain non-preferred apps, at the same time discounting traffic from apps that partner with wireless phone companies.

Chadha pointed to NTT DoCoMo’s partnership with Hulu. Both Hulu and the service provider market the service, with the one making the sale the beneficiary of most of the proceeds. That technically takes revenue away from Hulu and diverts it to NTT, which can engineer customized marketing efforts to target customers for the service.

But it does not stop there, according to Chadha. Mobile operators can generate even greater revenue by introducing Quality of Service (QoS) technology and billing customers extra for additional priority on the company’s wireless network, an important consideration for online video.

Chadha says his company now charges $1.25 for 30 minutes of video streaming from YouTube using “best available” network protocols. Customers who want to assure minimal buffering can buy a VIP Pass from Du for $2.50 for the same 30 minutes, and get priority on Du’s network.

″The [VIP pass customer] is assured of the bandwidth he gets and that gives the operator the opportunity to maximize his revenue,″ he said. ″[Apply] different QoS for different apps and you can charge differently. Or use location, and sell data more cheaply where networks are less congested, or at less busy times of day.”

Chadha’s worst enemy would be a strong Net Neutrality policy, which would prohibit operators from discriminating against or prioritizing different types of traffic. None of these pricing schemes would likely work if Du provided a flat rate mobile service either.

In the absence of such net protections, revenue and profit opportunities abound.

″Application-based charging is going to be very important and so is value-based charging,″ he predicted.

Phillip Dampier

The Federal Communications Commission has announced the composition of its new Open Internet Advisory Committee to help track and evaluate the effects of the agency’s Net Neutrality policies, but has no member directly representing the interests of consumers.

The OIAC will focus on important Net Neutrality policies like transparency, reasonable network management practices, the differences governing policies for wired and wireless broadband, and issues like usage caps and speed throttling. But there are no voices on the committee that speak directly on behalf of end users — individual customers who use the Internet in their daily lives.

The FCC instead packed the panel with business, social policy and educational interests, many with direct financial ties to large telecommunications companies.

Selected members include:

• Harvey Anderson, Vice President of Business Affairs & General Counsel, Mozilla
• Brad Burnham, Founding Partner, Union Square Ventures
• Alissa Cooper, Chief Computer Scientist, Center for Democracy & Technology
• Leslie Daigle, Chief Internet Technology Officer, Internet Society
• Jessica Gonzalez, Executive Board, Media and Democracy Coalition; Vice President for Policy & Legal Affairs, National Hispanic Media Coalition (representing NHMC)
• Shane Greenstein, Professor and Kellogg Chair of Information Technology, Kellogg School of Management, Northwestern University
• Russell Housley, Chair, Internet Engineering Task Force; Founder of Vigil Security, LLC (representing Vigil Security, LLC)
• Neil Hunt, Chief Product Officer, Netflix
• Charles Kalmanek, Vice President of Research, AT&T
• Matthew Larsen, CEO, Vistabeam
• Kevin McElearney, Senior Vice President for Network Engineering, Comcast
• Marc Morial, President & CEO, National Urban League
• Elaine Paul, Senior Vice President, Strategic Planning, The Walt Disney Company
• Jennifer Rexford, Professor of Computer Science, Princeton University
• Dennis Roberson, Vice Provost & Research Professor, Illinois Institute of Technology (representing T-Mobile)
• Chip Sharp, Director, Technology Policy and Internet Governance, Cisco Systems
• Charles Slocum, Assistant Executive Director, Writers Guild of America, West
• Marcus Weldon, Chief Technology Officer, Alcatel-Lucent
• Michelle Zatlyn, Co-Founder & Head of User Experience, CloudFlare

Missing are the voices of consumers who want an open Internet and do not believe in Comcast and AT&T’s definitions of “reasonable network management” that include Internet Overcharging schemes like usage caps and overlimit fees.

Consumers will instead have to depend on Internet businesses and institutions that coincidentally share an active dislike of traffic control measures, primarily for their own business reasons.

By excluding the consumer’s voice in policy debates, it is no wonder FCC Chairman Julius Genachowski increasingly seems amenable to the companies he is supposed to independently oversee — spending a considerable amount of time opening industry conventions with keynote speeches, reviewing lobbyist briefs about various communications issues, and talking directly with the corporate leadership of the companies involved. It is disturbingly clear he is listening less and less to consumers. A clear sign of that was his vocal support for the kinds of usage-based Internet pricing schemes that consumers generally loathe.

Genachowski and his staff need to spend more time listening to individual Internet users and the customers of providers and less time attending industry-sponsored events.

The OIAC is a good place to start. Consumers deserve a seat at the table in a debate that will impact every American Internet user.

A bizarre allegation (and theft-of-service complaint filed with local police) that a Voice Over IP service provider was “stealing” access to its fiber network has triggered the nation’s first formal Net Neutrality complaint under new Federal Communications Commission rules.

The complaint was triggered after Albany (Ga.)’s Water, Gas, and Light Commission (WG&L) filed a report with Dougherty County Police accusing L2Networks of accessing its municipal fiber network without paying.

If the FCC finds the city was correct asserting its claims of theft of service, other broadband providers could begin assessing additional fees for consumers who wish to access Google, Facebook, and Netflix, according the VoIP provider.

The case could create an “irreversible ripple effect along with the creation of various legal challenges across nearly every national content and application provider,” L2Networks CEO Kraig Beahn said in a press release. “We are deeply concerned that the alleged claim could potentially change the landscape of the national Internet marketplace as residential and commercial consumers see it today.”

Beahn's booking photo

In the view of L2Networks, the incident represents a direct and indisputable violation of the Federal Communications Commission’s Net Neutrality policies, which forbids providers from blocking service or selectively charging competitors additional fees to reach customers.

But details about the background of the complaint remain murky and a series of past disputes between Beahn and other telecommunications companies in Albany may require further exploration by federal officials investigating the complaint.

L2Networks is a small Albany-based telecommunications company that provides service to area businesses. L2Networks CEO Kraig Beahn is, however, well-known to both WG&L and local cable operator Mediacom, both of which have previously raised questions about his business practices.

L2 counters WG&L has made life increasingly difficult for the company since the two entities had a falling out in 2011.  That year, WG&L dumped L2 from its plans to deliver a competitive cable television service for Albany residents after the utility’s general manager accused Beahn of not fulfilling the promises he made with WG&L.

In January 2012, Beahn was arrested and charged with felony theft of service after Mediacom discovered an illegal tap on their cable line, which investigators learned was being used to provide Internet and phone service to L2 customer Adtran Logistics. Beahn called the charges “frivolous” and were part of an ongoing dispute with WG&L.

Mediacom vice president of legal and public affairs Tom Larsen noted the company did learn about the suspicious connection from the local utility.

“When our local team went to investigate, they discovered a Mediacom modem connected to two car batteries that was wired into our cable plant and being used [allegedly by L2] to serve a nearby business,” Larsen said.

[flv]http://www.phillipdampier.com/video/CNBC FCC Chairman on Spectrum Crunch TV Everywhere 5-22-12.flv[/flv]

FCC Chariman Julius Genachowski spent the day hobnobbing with cable industry executives at the Boston Cable Show. In an interview with CNBC, Genachowski defended usage-based pricing, claiming it will bring lower prices to light users, spur “innovation” and enable consumer choice. Verizon Wireless customers on the cusp of being thrown off their grandfathered unlimited data plans may have a bone to pick with the FCC chairman about how innovative and enabling such policies have on them. Genachowski also suggests his controversial Net Neutrality policy is working, despite recent attempts by Comcast to exempt its content from the company’s usage cap and the wireless industry toying with toll-free data for preferred partners. Genachowski had little to offer consumers in the interview, instead suggesting his deregulatory stance on “innovation” will eventually benefit them.  (5 minutes)