Joe Brown was obviously not the right person for G4TV’s Attack of the Show to talk to about the issue of Internet Overcharging.

As AT&T begins notifying their DSL and U-verse customers they are about to face usage limits on their broadband service, G4TV sought out reaction from the features editor of Gizmodo.com, who was wholly unprepared to inform viewers about the facts behind AT&T’s usage caps and their implications for customers.

While Brown and G4TV were joking about users having to curtail game downloads, for millions of AT&T customers, it’s no laughing matter.

AT&T’s announced 150-250GB limits will eventually cost customers $10 or more for each extra 50GB allotment, on top of their already-expensive broadband service package.

“It really had to happen eventually I think,” Brown told viewers.  “People are using a lot of bandwidth.”

But Brown’s observation conflicts with AT&T’s own claim “only a tiny minority of customers” will use more than the company wants to allow, with the average AT&T customer consuming 18GB per month.  AT&T isn’t telling the full story about that either.

For those “heavy users” AT&T wants to restrict first, the implications go well beyond curtailing Netflix and playing online games.

“As a software developer who works under a Linux environment and is forced to telecommute from home one week per month, these caps would absolutely kill me,” writes Joe Stein from Sparks, Nev.  “If you are a retired person using your computer to check e-mail and browse the headlines, you will obviously never exceed AT&T’s caps, but for technology innovators and those like me in the software development field, 150GB is nothing.”

Stein downloads regular updates for Linux, exchanges software back and forth with the office several times a day, and uses video conferencing regularly when he works from home.

“Not all online video is about adult entertainment or downloading movies,” Stein says.  “Usage caps hurt anyone who has to work with large files or business-related video, and after the events this week, AT&T can afford to leave off the caps.”

Brown claims AT&T conducted “a study” in two cities which found that 98 percent of their customers used far less than the usage caps would allow.  What Brown does not know is that those two cities are Beaumont, Texas and Reno, Nevada — hardly superstars in the tech revolution.

“Nobody moves to greater Reno to be a software superstar, which is why I am in San Jose, Calif., all the time,” Stein says.  “But there is more to this area than casinos.”

Stop the Cap! has been helping consumers in both cities avoid AT&T because the company’s “study” came at the same time it was experimenting with an Internet Overcharging scheme that limited customers to as little as 20GB of usage per month — a strong incentive for customers to avoid high bandwidth services,  or better yet AT&T.  So it’s no surprise broadband users who know better chose an alternative provider, including Stein.

“I first became aware of the usage cap debacle a few years ago when AT&T tested usage caps in the Reno area, which covers Sparks,” Stein says.  “I saw the impact first hand when customers started getting notified they would have to pay substantially more for basic Internet service.”

Stein left for the cable company — Charter Communications, and they have usage caps too, but they are rarely enforced and much higher than what AT&T offers DSL customers, Stein says.

Brown claims AT&T is trying to “get out ahead of people using too much,” a point in conflict with the fact AT&T is willing to sell consumers additional bandwidth on its “overcongested” network.

Brown’s suggestion that “bandwidth costs money” is partially true, but not in the context of AT&T’s usage limits.  The company that can afford fiber optic upgrades to deliver limitless television and telephone service apparently cannot afford the pennies in bandwidth costs customers consume as part of their broadband service, which can run $50 a month or more.

Pondering broadband usage “fairness” is a losing proposition for consumers… and reporters, too.

Once someone blindly accepts the premise AT&T needs data caps, with no evidence usage presents a technical or financial challenge for the company, the debate is quickly reduced into a numbers game about “how much usage is fair.”

Clearly for Brown and his friends, who admit they are dangerously close to reaching or exceeding AT&T’s limits, the answer to Brown wondering aloud if the caps would “do it for him” should be no.

Stop the Cap! believes no cap is worth living with, especially on AT&T’s enormous-sized broadband network, now increasingly designed to handle the multimedia rich Internet and their U-verse platform.

It is doubtful many will be assuaged by Brown’s comments that “AT&T sounded pretty cool” about how they will deal with those who exceed their arbitrary usage limits.  Why?  Because after the “fair warnings” AT&T will provide customers on its artificially limited network, they will drop the sledgehammer of higher bills on top of customers’ heads.

Brown should know better, especially after finding AT&T unwilling to discuss how often it intends to revisit its usage cap levels.  AT&T’s counterparts in Canada have already foreshadowed the answer.  Once the cap regime is in place, several companies lowered them, sometimes repeatedly, to further monetize broadband usage.  They also raised the prices of overlimit fees, often substantially.

AT&T depends on uninformed consumers and reporters not understanding the true facts about Internet Overcharging schemes.  It’s not too late for reporters like Joe Brown to undo the damage, however.

Stop the Cap! strongly encourages everyone to examine the evidence we have compiled here over the past two and a half years.  It’s not hard to discover AT&T’s usage caps have nothing to do with fairness, are arbitrary and unnecessary, and come as a result of providers seeking higher profits in an undercompetitive marketplace.

If we do not uniformly and loudly oppose usage limits, America’s broadband rankings, digital economy innovation, and high technology jobs are all at risk, just to satisfy AT&T’s insatiable appetite for higher profits.

(P.S. – Joe: How did you miss Comcast has been capping their customers at 250GB for two years now.  Say it ain’t so, Joe!)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/G4TV Attack of the Show ATT Caps Their Data Usage 3-15-11.flv[/flv]

G4TV’s ‘Attack of the Show’ misses the boat on AT&T’s Internet Overcharging scheme.  They did better covering Time Warner Cable’s attempt at Internet Overcharging in 2009.  It’s time to revisit this issue and get involved in the fight that could hurt the very audience watching this show.  (6 minutes)

Rep. Julia Howard (R-Davie, Iredell) threatened to get up and leave an interview with a Raleigh television reporter if the NBC station didn’t “switch the camera off” after she was questioned about her support of an anti-consumer, anti-broadband bill written by the same telecommunications companies that donated more than $7,200 to her political campaign.

Howard was being interviewed by WNCN-TV in Raleigh about her strong support for legislation that would likely end community-owned broadband in one of America’s least-wired states.  The reporter asked Howard to explain her support for H.129, the so-called “Level Playing Field” bill that has received a considerable push from the state’s largest telecommunications companies, including Time Warner Cable, AT&T, and CenturyLink.

At first, Howard tried to defend her support for the bill, despite claims from the watchdog group Democracy North Carolina that the legislation raises ethical questions about the influence of money in state politics.

“I don’t care what they say. That’s not who I am,” she said. “As long as I’m here, I’m going to do what I feel like is right for the people of the state.”

But moments after being confronted with the fact she has received considerable financial support from all three companies, Howard demanded the reporter turn the cameras off.

“I wish you’d turn the camera off now because I am going to get up and leave if you don’t,” Howard told the reporter.

Bob Hall, director of Democracy North Carolina called the bill a classic example of “pay to play” politics — where large companies pay to get legislation favoring their businesses before the state legislature.

“The relationships that are built because of money that’s given, that then warps the whole discussion,” Hall said.

Howard chairs the Finance Committee that will hear the bill tomorrow morning after a week’s delay.  Surprise amendments that would help hold existing networks exempt from the onerous provisions of the legislation and an easing of the bill’s requirements for unserved areas upset cable industry lobbyists.  In the interim, a growing number of media reports have called attention to the corporate contributions that seem to be helping drive the bill forward.

“There are a handful of politicians in the legislature that are either on the take or wear blinders when it comes to the real interests of voters like myself,” writes Raleigh resident Susan, who follows Stop the Cap! “Watching Julia Howard squirm in her chair when being asked pointed questions serves her right.”

Susan, who notified us of tonight’s news report, doesn’t believe for a moment Howard’s “feigned shock” over questions being asked by the reporter.

“Anyone pushing H.129 is a shill for Time Warner Cable, because there is not one single part of this bill that brings one new Internet connection, it just guarantees we will all pay higher rates so the cable company can donate more money to Howard’s campaign.”

Stop the Cap! continues to recommend North Carolina residents contact members of the Finance Committee and tell them to vote NO on H.129.  Tell Rep. Howard and others it is not too late to do the right thing and withdraw this bill from further consideration.  Explain to her that if her word is her bond, she can prove her honorable intentions by asking Rep. Avila to pull the bill because it is a mistake and won’t bring better broadband to anyone.  We want Rep. Howard to retain the goodwill of the people of North Carolina, but that becomes increasingly difficult if she can’t even defend what she is doing to a reporter asking if there is a connection between her support and the thousands of dollars of campaign contributions she has received from the industry that wrote the bill.

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WNCN-TV caught Rep. Julia Howard off guard when she was confronted with thousands of dollars in campaign contributions from large telecommunications companies and asked if this played a role in her support for their custom-written proposal to abolish community-owned networks in the state.  (2 minutes)

Finance Committee Members

(click each name for contact information)

Senior Chairman	Rep. Howard
Chairman	Rep. Folwell
Chairman	Rep. Setzer
Chairman	Rep. Starnes
Vice Chairman	Rep. Lewis
Vice Chairman	Rep. McComas
Vice Chairman	Rep. Wainwright
Members	Rep. K. Alexander, Rep. Brandon, Rep. Brawley, Rep. Carney, Rep. Collins, Rep. Cotham, Rep. Faison, Rep. Gibson, Rep. Hackney, Rep. Hall, Rep. Hill, Rep. Jordan, Rep. Luebke, Rep. McCormick, Rep. McGee, Rep. Moffitt, Rep. T. Moore, Rep. Rhyne, Rep. Ross, Rep. Samuelson, Rep. Stam, Rep. Stone, Rep. H. Warren, Rep. Weiss, Rep. Womble

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/UBB is Nonsense.flv[/flv]

François Caron produced this video succinctly smashing the myth that “usage-based billing” and “usage caps” are about fairness or fight congestion.  In this case, Caron refers to Canadian providers, but the story is much the same south of the border.  These Internet Overcharging schemes are nothing more than an effort to control what you can do with your broadband connection.  AT&T wants a 150-250GB usage cap on broadband, but has limitless capacity for television and telephone service.  They also have $39 billion to buy T-Mobile, but need to overcharge you for broadband service.  Bell in Canada wants -every- broadband user in Canada to pay this ripoff pricing.  Share with anyone who thinks paying for usage is anything like paying for water, gas, or electricity.  It’s not!  (6 minutes)

This morning’s announced deal of a merger between AT&T and T-Mobile is what antitrust rules were made to prevent.  This bold merger would not have even been attempted had the two companies believed they could not get it past supine regulators and members of Congress who receive substantial contributions from AT&T.

Ordinary consumers can see right through AT&T’s business plans, so why can’t our regulators and policymakers?  In a word, money.

The FCC’s own National Broadband Plan delivers clear warnings that the growing concentration in the wireless industry will hamper better broadband in the United States, not enhance it.  Reduced consumer choice and competition takes the pressure off carriers to innovate, expand, and keep wireless costs under control.

Reducing the number of players on the field delivers countless benefits to carriers and their shareholders.  But for consumers, there is nothing but a few promised spoonfuls of sugar to help the industry’s agenda go down — with vague promises of better rural service, faster wireless data, and new handsets.

In a truly-competitive marketplace, Washington regulators need not exact promises of better service from mega-sized carriers: the much-vaunted “free market” would deliver them naturally, as competitors invest and innovate to succeed.  But that kind of market is increasingly disappearing with every merger.

Nowadays, officials at the FCC and Justice Department are willing to accept deals if they promise some token bone-throwing, at least until the company lobbyists inevitably manage to get those conditions discarded during the next round of deregulation — cutting away rules that “tie the hands” of companies picking your pockets.

Money makes the impossible very possible, and AT&T intends to spend plenty to earn plenty more down the road.  Let’s review how the game will be played, and what you can do to stop it.

The “Free Market” Crowd Sells Out

When the chorus of capitalism capitulates on the most important formula for success in a deregulated marketplace — robust competition on a level-playing field, we know there is a problem.  Take Randolph May.  He works for the free market think tank Free State Foundation.  Watch what happens when even the most ardent supporter of ‘letting the marketplace sort things out’ twists and turns around admitting America is facing a future duopoly in wireless:

“In an ‘idealized’ marketplace, the more competitors the better. But the telecom marketplace is not an idealized market. It is one that requires huge ongoing capital investments to build broadband networks that deliver ever more bandwidth for the ever more bandwidth-intensive, innovative services consumers are demanding,” he says.  “My preliminary sense is that the benefits from the proposed merger, with the promise of enhanced 4G network capabilities implemented more quickly than otherwise would be the case, outweigh the costs. Even after the merger, the wireless market should remain effectively competitive with the companies that remain.”

That’s a remarkable admission for someone who normally argues that marketplace fundamentals are more important than individual players.

May is willing to sell a robust competitive marketplace down the river in return for 4G — a standard AT&T is hurrying to bring to its customers threatening to depart for better service elsewhere.  With this deal, disgruntled customers will have one fewer choice to turn to for service.

Make no mistake: a free, unregulated wireless marketplace requires more than two national carriers and a much-smaller third (Sprint) to deliver real competition.

The Dollar-A-Holler Phoney Baloney Astroturf Groups

AT&T will waste no time trotting out comments from non-profit groups essentially on their payroll who will peddle filings with regulators promoting AT&T’s business agenda in return for substantial sized donation checks to their causes.  The usual suspects, which include groups serving minority communities, will tout the “wonderful things” the deal will bring to their constituencies.

Already out this morning is this curious remark picked up by Broadcasting & Cable from Debra Berlyn, who claims to represent consumers as part of a group called the Consumer Awareness Project:

“Wireless acquisitions over the course of the past decade have not led to price increases for consumers and, in fact, the statistics show that prices have declined during this period. While some consumer voices have focused on the loss of a wireless competitor in relation to AT&T’s recently announced plans to acquire T-Mobile USA, the news for consumers should be seen in another light with a focus on the benefits that this merger can bring to consumers across the U.S.”

Perhaps the first goal of any group trying to make consumers aware of anything is to actually have a website associated with your group.  The “Consumer Awareness Project” forgot this important first step, but we eventually found the “group” using a re-purposed web address, “consumerprivacyawareness.org,” and note they have only recently become significantly active on this issue, now peddling AT&T’s agenda with gobbledygook.

When Berlyn isn’t pounding out prose to benefit AT&T, she is making guest appearances in Comcast’s corporate blog or being a favorite source of industry-connected groups like the nation’s largest broadband astroturf effort, Broadband for America.

In fact, after some digging, one learns there are no actual consumers involved with the “Consumer Awareness Project.”  The entire affair is actually a project of a Washington, D.C., lobbying-consultancy firm — Consumer Policy Solutions, which counts among its services:

• Federal advocacy: Legislative and regulatory advocacy work before Congress, federal agencies and the administration.
• State and local advocacy: Policy development and implementation and grassroots mobilization.

That is the very definition of interest group “astroturf.”  But my favorite section of this company’s website is the promise paying clients will get Berlyn’s experience “in communicating complex language and issues into easily understandable, applicable messages for consumers.”

Such as: AT&T’s merger with T-Mobile is good for consumers, even if it raises prices and reduces competition.

I’m sold.

The Cowardly Lion & A Myopic Justice Department

The first hurdle this deal will need to overcome is among Washington regulators, most of whom are either way over their heads understanding the implications of super-sized mergers like this or are simply terrified of going out on a limb with a multi-billion dollar company that can create headaches for your agency in Congress.

AT&T will sell this deal within a very limited context of the deal itself, and urge regulators to ignore “emotional” issues about the increasingly concentrated wireless marketplace.  Verizon did much the same with its acquisition of Alltel — urging regulators to ignore the fact they were removing a player in the market and focus instead on the benefits Verizon’s size and scope could bring to existing Alltel customers.  Of course, in many areas Alltel served, customers were free to do that themselves simply by signing up for Verizon service.

Dan Frommer, a senior staff writer at Business Insider, delivers a TripTik outlining AT&T’s roadmap to deal approval:

“AT&T believes its experience with regulatory review has given it a good picture of what’s realistic and what isn’t from an approval standpoint, and believes it can frame the deal in a way that won’t be rejected,” he writes.  “AT&T says the Feds are looking at “the facts” — hinting that they aren’t acting based on emotions or politics. Though, no doubt, there will be plenty of jockeying in the press and among lobbyists from those on both sides of the deal.”

But Frommer wades in too deep and drowns his credibility claiming the combination of some of the largest wireless carriers in the country still leave plenty of competitors.  Besides Verizon, there is just a single national player of consequence remaining – Sprint.  MetroPCS and Cricket deliver service in urban areas in selected cities. US Cellular, Cellular South, and several others deliver service to an even smaller number of communities, entirely dependent on large carriers for roaming coverage.

The Justice Department’s typical solution to antitrust concerns is to force limited concessions like divestiture of assets in particularly concentrated markets.  In most cases, companies agree because those assets are often redundant and would be sold anyway, or cover such a limited area as to be inconsequential to the greater deal.  Former Alltel customers found themselves traded first to Verizon and then divested away to AT&T.

Most of the customers divested away from T-Mobile’s future with AT&T will likely end up switched to Verizon, hardly a success story for increased competition.

FCC lawyers will likely review this transaction with a narrow scope, too.  Instead of contemplating the implications of the inevitable duopoly that could result, the FCC will likely find itself negotiating over individual details of the deal without considering an outright rejection of it.

At the FCC, Julius Genachowski’s performance as a regulator has been nothing short of a disaster, pleasing almost nobody in the process.  His “cowardly lion” approach to regulation has delivered rhetoric without substance and a whole lot of broken promises.  Genachowski has proven to be unable to stand up to the companies he is tasked with regulating.  With two Republican commissioners likely to favor the deal and Michael Copps almost certainly in opposition, it will be up to Julius Genachowski and Mignon Clyburn to vote this deal up or down.

But regulators are also responsive to Congressional pressure and dramatic backlash by consumers, such as what happened just a few years ago when big media companies lobbied to relax media ownership rules.  When consumers (and voters) revolt, regulators will change their tune… and fast.

What You Can Do

Consumers can make a difference in what comes next for T-Mobile and AT&T.  The first step is to make this an issue with your member of Congress and two senators.  Let them know you have profound concerns about another huge wireless merger.

There is simply no tangible benefit that can outweigh the loss of another important competitor in the American wireless marketplace.

AT&T’s bottom-rated service will not become any better acquiring the second-to-last rated service.  The company must invest in its network to compete, not simply pick off competitors to save money.  The loss of T-Mobile would mean only three national carriers, and it is highly unlikely Sprint would be able to withstand pressures on Wall Street to merge themselves away, probably to Verizon.

Tell your elected officials the AT&T/T-Mobile deal is a consumer nightmare and should not be approved under any circumstances.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Glenchur Says Regulatory Risk Substantial for ATT 3-21-11.mp4[/flv]

The always optimistic Bloomberg News says AT&T’s deal could still get past regulators, but there is a substantial risk as well.  Consumers can help make that risk unsustainable by telling the Obama Administration and Congress better broadband does not come from a duopoly, no matter how well-intentioned.  (4 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Arbogast Sees ATT Sweet-Talking for T-Mobile Approval 3-21-11.mp4[/flv]

Rebecca Arbogast, analyst with Stifel, Nicolaus and Co., discusses AT&T Inc.’s $39 billion purchase of Deutsche Telekom AG’s T-Mobile USA unit. As the acquisition may take a year to gain regulators’ approval, AT&T will need to “sweet-talk” regulators, consumers, and the Obama Administration with promises of rural coverage and broadband enhancements.  That means astroturf groups that claim to represent consumers but are funded by telecom companies will be a growth industry in 2011.  The question Bloomberg’s Betty Liu does not ask is whether competitive pressures against AT&T would force them to provide better service anyway, without wiping one of four national players off America’s wireless map.  (4 minutes)