This message appears in place of the original websites that were formerly hosted under the domains seized by the U.S. government.

Just days before the Super Bowl, the U.S. Department of Homeland Security temporarily disrupted several popular online video websites that showed live streams of major sporting events.  Late last week, the agency launched “Operation In Our Sites,” which redirected site visitors to a notification claiming the “domain name has been seized.”

But critics charge the effort ultimately was a waste of U.S. taxpayer dollars and questions are being raised about the legality of interfering with one of the websites based in Spain, deemed legal by that country’s courts.

Rojadirecta, a Spanish website, does not actually host any live web streams itself, instead publishing links to other websites that do.  In operation since 2005, the enormously popular site today attracts more than one million visitors a day, most looking for live streams of game coverage.  After two Spanish courts found the website operating within Spanish law, the site’s profile and popularity only increased.

Since the domain names affected were registered through a U.S. registrar, it opened the door for the Department of Homeland Security to obtain a seizure warrant through the United States Attorney’s Office for the Southern District of New York.

An affidavit filed with the court stated that piracy threatens “the leagues’ ability to sell game tickets and secure local television and radio carriage, and the value of advertising revenue generated by broadcast, radio and new media partners.” The agency also blamed online video piracy for high prices charged for stadium admission and for cable networks showing sporting events. “Sports fans are also victims, as the costs expended by sports leagues in an effort to address online piracy are passed on to fans when they purchase tickets or subscribe to sports networks.”

Rojadirecta wasn’t alone.  Other web addresses seized included:

• ATDHE.net
• Firstrow.net
• ChannelSurfing.net
• HQ-streams.com
• Ilemi.com

The agency’s actions commenced without any prior notification to the website owners.

“We have not been notified,” Rojadirecta’s Igor Seoane told TorrentFreak, a BitTorrent news site. “In our opinion the U.S. authorities are completely despising the Spanish justice system and sovereignty.”

Critics have attacked the agency for wasting taxpayer money chasing the video websites instead of finding Osama bin Laden.

Thanks to lobbying from Hollywood studios, language was inserted in the Patriot Act directing the agency to enforce U.S. copyright law at home and abroad.

U.S. Senator Ron Wyden (D-Oregon) called the web domain seizures “alarmingly unprecedented,” and could “stifle constitutionally protected speech.”  Wyden’s office has been in touch with the agency seeking clarification and justification for the domain seizures.

Questions about how worthwhile the effort ultimately was are also being raised, considering virtually all of the affected websites were restored and re-indexed by major search engines under new domain names within hours, sometimes minutes, after being seized.

• Rojadirecta is now Rojadirecta.es
• ATDHE.net is now atdhenet.tv
• Firstrow.net is now p2p4u.net
• ChannelSurfing.net is now Channelsurf.eu
• Ilemi.com transferred over to Ilemi.tv

Several of our readers who shared this story with us suggest the move by the federal agency backfired, because it gave new prominence to these websites many never heard of before last week.  We sure didn’t.  There are no sports enthusiasts here at Stop the Cap! HQ, but we were intrigued to find several of these sites linking live-streaming news channels, including CNN, CNBC, MSNBC, BBC World, and Fox News.  In fact, a few are even streaming ABC, CBS, and NBC stations for free.  Quality varies considerably.  The MSNBC feed has audio sync problems and CNN stutters.

At least one angry fan of the websites compiled a guide recommending websites be removed from Hollywood’s copyright enforcement ‘overreach’ by registering domain names through overseas providers.  They do not answer to the Department of Homeland Security.

Have we got a deal for you!

You’ve heard all the excuses:

• Internet traffic has grown and unlimited pricing threatens to make broadband unprofitable;
• We need these pricing schemes to help pay for improved infrastructure to handle traffic;
• If we don’t adopt this pricing now, a great data tsunami — an exaflood — will wash broadband down the sink;
• It’s not fair to make light users pay for heavier users.

Despite the fact provider financial reports show a trend towards reduced spending on infrastructure, data transport costs continue to drop, and debunking of exaflood horror tales, providers persist in demands for this so-called “fairer pricing” for broadband service.

But what is fair?

As Canada contends with an Internet Overcharging scheme that limits consumption to an average of 40-60GB per month, with $1-5 per gigabyte in overlimit fees, does this represent fair pricing?

The Toronto Globe & Mail decided to investigate, and the results will come as no surprise to readers here.

Fact: Usage is growing exponentially, especially among users streaming online video.  Canadians, just like Americans, are swarming towards multimedia-rich content from YouTube to Netflix.  Usage growth of 50 percent per year is not out of line.  But as the newspaper discovered, extraordinary growth alone does not deliver the whole story.  The capacity to handle that Internet traffic has not only kept up with growth, it has exceeded it, at levels of unprecedented efficiency.

The Globe & Mail notes:

[…] Processing power, hard disk densities and transmission rates grew at rates closer to 60 per cent per year over the same period. In addition, the servers and routers and other electrical equipment that are the backbone of the Internet are much more energy efficient than they were ten years ago, which has dramatically reduced the cost of operations.

In simple terms, the bandwidth explosion is real, but it’s been more than offset by more powerful and more energy-efficient machines. So, we can reject the notion that increased usage is the a significant rationale for huge Internet price increases and usage-based billing.

Costs down, but prices going up?

Among virtually every provider, the percentage of average revenue spent on broadband network expansion per customer has dropped.  Even Verizon, which suspended expansion of its fiber to the home network, has not faced an avalanche of new costs to deliver large amounts of data to FiOS customers.

But what about the “fairness” proposition.  Should light users pay less than heavy users?  Historically, even in countries where usage-based pricing is the norm, usage-limited customers still pay comparatively high prices for broadband service, particularly when measured on cost per megabit per second against the usual lower caps cheaper plans provide.  So-called “light usage” plans also have natural usage caps built-in — they come with far slower speeds that, at their worst, discourage use of high bandwidth services.

The Globe & Mail concluded: “Rather than ensuring consumers receive fair Internet pricing, the Canadian Radio-television and Telecommunications Commission seems content to line the pockets of cable and telecommunications companies by forcing Canadian consumers to pay Internet data rates that have no basis in reality.”

Here’s why:

Wholesale Data Costs

The “fairness” argument falls apart when the truth is revealed about the wholesale costs large providers pay for their Internet connections.  Assuming the providers’ arguments that pay-per-use pricing is fair, the prices they ask Canadians to pay for that use certainly are not.

The Globe & Mail again:

Approximately four years ago, the cost for a certain large Telco to transmit one gigabyte of data was around 12 cents. That’s after all of its operational and fixed costs were accounted for. Thanks to improved technology and more powerful machines, that number dropped to around 6 cents two years ago and is about 3 cents per gigabyte today.

Are these valid numbers? After the recent CRTC decision regarding UBB, it was announced that effective March 1st, Bell will be charging Third Party Internet Access (TPIA) providers $4.25 for a 40 GB block of additional data transfer.

The fact that Bell is able to sell 40 GB of data to wholesalers for $4.25 and still make a profit demonstrates that the true cost of data transfer is well below the 10.5 cents per gigabyte they are charging wholesalers. One TPIA provider agreed the 3 cents per gigabyte figure is probably close to the true cost.

So why are Internet service providers charging consumers $1 or more per gigabyte of data used beyond their respective data caps? That’s a good question.

The “good answer” is: profits.

With providers charging overlimit fees from $1 per gigabyte on Bell’s most generous plans to $5 per gigabyte for Rogers’ Ultra-Lite plan, this represents overcharging of at least 10-50 times what it actually costs the providers to deliver that data.

Broadband costs in the United States are dramatically lower than in Canada, in part because of a larger marketplace and because of greater capacity and more competition, yet proposals from some American providers sought similar limits and overage pricing.

But considering the true cost of the service, charging closer to 10 cents per gigabyte — not $1 or more — would represent a fair price.  So long as regulators like the CRTC cater to providers, consumers will pay considerably more.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/CTV Usage Based Billing 2-1-11.flv[/flv]

CTV News explores Usage-Based Billing, and why it will makes an expensive broadband experience even more costly in the days ahead.  (6 minutes)

High gain Wi-Fi antennas like this one allowed one Ontario couple to leave Canada's cable companies behind and sign up for Time Warner service in the United States.

Last week, Stop the Cap! compared prices from two Internet Service Providers — Rogers Communications on the western side of the Niagara River — in Ontario, and Time Warner Cable on the eastern side in Niagara Falls, N.Y.

The price disparity is no secret to one Canadian family who read our piece and let us know they import their broadband service, thanks to long distance Wi-Fi, from the United States.

The couple, Neil and Michelle (we’ve been asked not their reveal their real names) and their three boys have lived along the Niagara River, which divides the United States and Canada, for over a decade.  Jim has been fascinated with low power, long distance communications since his days in amateur radio.

“I’ve always been trying to see what stations I can pick up, especially low power ones,” Neil tells us.

That curiosity came with Neil to his interest in broadband wireless communications.  Living along the river, Neil was fascinated to see Wi-Fi signals make their way across the river from the United States’ side.

“Thanks to a clear shot across the river, and a lot of businesses located adjacent to the Robert Moses Parkway, it’s easy to pickup Wi-Fi signals from businesses on the American side,” says Neil.

Neil discovered many networks wide open for public use and began to consider the implications of “importing” his broadband service from the United States to escape Rogers’ high prices.

“For Canadians, the idea of escaping the country’s communications providers is not that unusual,” Neil says.  “Some already have ‘gray market’ satellite dish accounts with America’s DISH or DirecTV, and some even use American prepaid cell phones, which are much cheaper than our own services and get good local reception across Niagara Falls down to Fort Erie.”

“So I began wondering what would happen if we could install a decent Wi-Fi system high enough on the house to get a good signal from a partner on the other side of the river,” Neil pondered.  “We started by putting a test signal up and driving through some Niagara Falls neighborhoods on the American side and found some good prospects.”

A long-shot advertisement on a well-known “for-sale/trade” website paid off, when an American family responded, intrigued by the experiment.

“The fact we were willing to pay their cable bill as compensation didn’t hurt either,” Neil suggests.  “The chances appeared very good for success, because we can see some of their trees from our roof.”

Niagara Falls, Ontario (left) and Niagara Falls, N.Y. (right), divided by the Niagara River.

Neil guessed right because today, with the help of two raised directional, roof-mounted high-gain Wi-Fi antennas that can literally “see” one another, the Ontario family enjoys its cable-TV and broadband service from Time Warner Cable.

“The signal is rock solid and the only time we get some speed problems is if someone in one of the bed and breakfast places nearby ends up on our channel,” Neil says.  “We can even watch television with the help of a Slingbox we installed on the American side which works perfectly fine on a Wireless N connection.”

Since the rise of Canada’s exchange rate against America’s declining dollar, the savings are dramatic. A comparable cable-TV plan with Rogers runs $80 a month for standard service, equipment fees, and HD service charges.  Add another $50 for broadband service with the modem rental fee and Neil would pay Rogers $130 a month before taxes for the two services.

“And we would be limited to just 60GB of usage per month before the $2/GB overlimit fee started making the bill even higher,” Neil says.

Time Warner Cable currently charges Neil’s adopted family $87 a month for television and broadband on a promotion.

Today, Neil’s conscience (and savings) led him to decide “borrowing” another family’s account wasn’t fair, so now he pays for -two- accounts with Time Warner, one for the New York family, the other belonging to him.

“Time Warner thinks of us as apartment renters and bills a post office box,” Neil says.  “The other family doesn’t care about cable-TV anymore so we’re just paying for their broadband account.”

The neighbors are certainly amused.

“When they come over, they call us ‘the American Embassy in Niagara Falls’ because of all the ads for Time Warner they see across the cable channels we get and because American cable systems ignore virtually all Canadian TV networks.”

Why go through all this?

“Now that we’re paying for two accounts, it’s a matter of principle,” Neil says. “I will not do business with a company that slaps usage limits on broadband, and now I don’t have to.”

In fact, now that the family’s sons are getting close to teen years, their Internet use is growing.

“We almost don’t care about the cable-TV anymore ourselves — we’re watching shows online, on-demand in this household,” Neil says.  “For my kids, they are growing up with the concept of television being always on-demand and it works around their schedule, not the other way around.”

Besides, Americans have access to Hulu, and Canada does not.

“Hulu is very important, and Netflix was even before it was sold in Canada,” Neil says.  “Now we can watch what we want, as much as we want, and pay a fair price for unlimited broadband.”

Neil can’t complain about Time Warner Cable, except for the fact it provides him with a U.S. IP address, which locks him out of a lot of Canadian online video-on-demand services from the CBC and other networks’ websites.

“They do a much better job than Rogers ever did with consistent broadband speeds and fewer outages, and we can live without replays of 18 to Life and Little Mosque on the Prairie,” Neil says. “I’m just glad you folks at Stop the Cap! convinced Time Warner to abandon the kind of pricing that is ruining the hell out of Canada’s broadband.”

Verizon Wireless isn’t entirely rolling out the welcome mat for new iPhone customers.  PreventCAPS, one of our regular readers, dropped us a note indicating Verizon quietly added something new to the terms and conditions for new customers as of Feb. 3rd, which just so happens to coincide with the date the company started taking orders for the Apple iPhone — it reserves the right to throttle your speeds and “optimize” your browsing experience with caching and network management techniques that could reduce the quality of online videos and other bandwidth-intensive graphics.

Important Information about Verizon Wireless Data Plans and Features

As part of our continuing efforts to provide the best experience to our more than 94 million customers, Verizon Wireless is introducing two new network management practices.

We are implementing optimization and transcoding technologies in our network to transmit data files in a more efficient manner to allow available network capacity to benefit the greatest number of users. These techniques include caching less data, using less capacity, and sizing the video more appropriately for the device. The optimization process is agnostic to the content itself and to the website that provides it. While we invest much effort to avoid changing text, image, and video files in the compression process and while any change to the file is likely to be indiscernible, the optimization process may minimally impact the appearance of the file as displayed on your device. For a further, more detailed explanation of these techniques, please visit www.verizonwireless.com/vzwoptimization

If you subscribe to a Data Plan or Feature on February 3, 2011 or after, the following applies:

Verizon Wireless strives to provide customers the best experience when using our network, a shared resource among tens of millions of customers. To help achieve this, if you use an extraordinary amount of data and fall within the top 5% of Verizon Wireless data users we may reduce your data throughput speeds periodically for the remainder of your then current and immediately following billing cycle to ensure high quality network performance for other users at locations and times of peak demand. Our proactive management of the Verizon Wireless network is designed to ensure that the remaining 95% of data customers aren’t negatively affected by the inordinate data consumption of just a few users.

These kinds of “network management” techniques, which include speed throttles, reduced quality graphics, and caching (which can result in stale web pages being served to your mobile device), are all made possible by the Federal Communications Commission’s failure to implement Net Neutrality protections for wireless providers.  While Verizon stresses it will treat all content to the same network management techniques equally, the “improved” broadband experience Verizon claims to offer is more likely to improve the company’s bottom line from reduced spending on network upgrades.

Like most providers, Verizon isn’t willing to be specific about what amount of usage is likely to trigger the throttle, why it needs to be maintained for the remainder of the billing cycle even when network congestion is not a problem, and what speed customers will be stuck with for the rest of the month.

Broadband Reports reached out to Verizon for specifics and discovered the provider has not actually implemented these measures… yet:

“The notice yesterday simply reserves the right for new customers or renewing their contracts,” Verizon spokesman Jeffrey Nelson tells Broadband Reports. “We’re reserving the right to actively manage the network in specific ways should that need exist – and only for customers who are under contract that includes that provision,” he says. “Because this is down the road – if at all – it’s too early to tell what those triggers might be, or what throughput limitations would look like.”

Verizon may be concerned about the potential impact millions of data-craving iPhone customers will bring to its network in the coming weeks.  Existing customers with Android devices or Blackberry handsets are safe for now — the provision only impacts customers who sign new contracts as of last Thursday.

Verizon says it will retain its unlimited data option (with the right to throttle service) for a “limited time only.”

Prime Minister Harper's government is facing an open revolt by Canadian consumers over Internet Overcharging.

A full-scale revolt among consumers across Canada has brought the issue of Internet Overcharging to the highest levels of government.

A spokesman for Prime Minister Stephen Harper said the government is very concerned about a decision from the Canadian Radio-television and Telecommunications Commission that has effectively forced the end of unlimited use broadband plans across the country.

Both the Liberal and NDP parties have made a point of protesting the CRTC decision, which happened under the Conservative Party’s watch.  Harper’s Industry Minister Tony Clement stepped up his remarks this morning which hint the government is prepared to quash last week’s decision by the CRTC, which has already forced price increases for broadband service across the country.

“The decision on its face has some pretty severe impacts,” Clement told reporters in Ottawa after NDP and Liberal critics in the House of Commons repeatedly pounded the government on the issue of so-called “usage-based billing.”

“I indicated the impacts on consumers, on small business operators, on creators, on innovators. So that’s why I have to work through a process, cross my T’s, doc my I’s. When you’re dealing with a legal process, that’s what you have to do. But I will be doing that very, very quickly, and getting back to the prime minister and my colleagues very, very quickly,” said Clement.

As of this morning, more than 286,000 Canadians have signed a petition protesting the Internet Overcharging schemes.

The protest movement has now been joined by small and medium-sized business groups who fear the impact new Internet pricing will have on their businesses.

Richard Truscott, with the Canadian Federation of Independent Business, normally a group that prefers less government action, said his members are demanding a stop to the pricing schemes before they get started.

“The vast majority of small businesses rely on reasonably-priced Internet service to conduct their operations,” he said. “Generally this is the sort of thing that hits the most innovative sector with higher costs.”

Most cable and phone companies are lobbying Ottawa politicians to keep the new usage-based billing schemes, and several are pretending the protest movement doesn’t exist.

AgenceQMI, a cable-company owned wire service, is also coming under fire for misrepresenting Clement’s positions on the pricing schemes in a news report issued yesterday.  The wire service claimed Clement supported the CRTC’s position, something Clement adamantly denied this morning.

The National Post, a self-described conservative newspaper, this morning published an editorial supporting usage-based pricing, claiming a handful of users were creating a problem that light users should not pay to solve.  But many readers leaving comments on the article strongly disagreed, claiming the newspaper is out of touch.

Although the regime of usage caps, speed throttles, and overlimit fees have been in place with most major providers for at least two years, the culmination of several events in the last six months have brought the issue to the boiling point:

1. The arrival of Netflix video streaming, which provides unlimited access for a flat monthly fee;
2. The ongoing limbo dance among several providers who are reducing usage allowances when competitive threats arrive;
3. The increase in providers now enforcing usage limits by billing consumers overlimit fees that spike broadband bills;
4. Recent examples of bill shock, which have left some consumers with thousands of dollars in Internet charges.

Bill Shock

Kevin Brennan, a graphic designer who works from home and downloads large files from clients, was first hit with extra charges in November, which cost him $34 above his usual Shaw bill.

“I’d never been contacted about going over before,” he told the Calgary Herald, adding he was also over in December. “Thirty-four dollars doesn’t seem like much, but over the course of a year it adds up.

“What concerns me, outside my own business, is the lack of innovation people will be able to do. And it makes Shaw a monopoly. . . . if you watch TV or the Internet, you pay more to them.”

Shaw reduced its usage allowance for customers like Brennan late last year from 75 to 60GB on its most popular broadband plan.  It also now enforces a $2/GB overlimit fee.

John Lawford, counsel for the Public Interest Advocacy Centre, told the Herald the concern isn’t just that smaller companies can no longer offer unlimited plans, which reduces competition.

“The phone and Internet and cable companies of the world are playing it both ways. They’re saying, ‘Well, there’s these big data hogs that are using too much, we’ve got to punish them to keep the price down.’ On the other hand they’re buying media companies so they have stuff to shove down the wires, which doesn’t count toward your cap,” Lawford said. “That’s anti-competitive.”

Most Canadian media companies are now tightly integrated with large telecommunications companies.  CTV, Canada’s largest commercial network, is now owned by Bell, the country’s biggest phone company.  Rogers, Shaw, and Videotron — the largest cable companies in Canada own cable and broadcast stations, newspapers, and magazines.  They also control cellphone companies, Wi-Fi networks, and have interests in satellite providers as well.

When a competitor like Netflix arrives to challenge the companies’ pay television interests, turning down consumers’ broadband usage allowances discourages cord-cutting.

The CRTC’s decision to allow Bell to charge usage-based pricing for wholesale accounts was the final death blow to unlimited Internet according to several independent service providers, because virtually all of them rely on Bell — a company that received taxpayer subsidies to build its broadband network — for access to the Internet.

Canadian Parliament

TekSavvy, a company that used to offer unlimited use plans, can do so no more.  In a statement to customers, TekSavvy laid blame on regulators for being forced to increase prices.

“From March 1 on, users of the up to 5Mbps packages in Ontario can expect a usage cap of 25Gb (60Gb in Quebec), substantially down from the 200Gb or unlimited deals TekSavvy was able to offer before the CRTC’s decision to impose usage based billing,” read a statement sent to customers.

TekSavvy spokeswoman Katie do Forno said the CRTC decision is a disaster for Canadian broadband in the new digital economy.

“This will result in unjustifiably high prices and a reduction in innovation,” said do Forno. “I think it’s going to change behavior about how people use the Internet.”

The company underlines the point by including “before and after” pricing schedules on its website, an unprecedented move.  Shaw, western Canada’s largest cable company, was heavily criticized for trying to hide their reduction in usage allowances.

Ottawa residents are planning direct action to protest the decision this Saturday.  Shawn Pepin is organizing the protest rally.

“What they’re doing right now looks like a cash-grab scheme, and people aren’t going to take it,” he said.

[flv width=”640″ height=”388″]http://www.phillipdampier.com/video/CBC News Pay As You Go Tony Clement 2-1-11.flv[/flv]

Minister of Industry Tony Clement was pressed by CBC Television about the Harper Government’s stand on Internet Overcharging.  The CBC asks why Canadians are paying some of the world’s highest prices for broadband and why Clement is finally getting involved.  Watch as he mysteriously avoids stating the obvious: Canadians are in open revolt and politicians from competing parties are taking their side.  (9 minutes)