AT&T warns DSL customers they can watch 10 High Definition movies per month... and use their Internet connection for absolutely nothing else, unless they want to incur an overlimit fee of $10.

AT&T has released a phoney baloney video for their customers purporting to “explain” broadband usage and the company’s completely arbitrary usage limits on DSL and U-verse customers: “A single high-traffic user can utilize the same amount of data capacity as 19 typical households. Lopsided usage patterns can cause congestion at certain points in the network, which can slow Internet speeds and interfere with other customers’ access to and use of the network.”

Too bad these claims are not verified with actual facts.

Meaningless statistics

AT&T’s claim that less than two percent of their customers use 20 percent of available bandwidth is frankly meaningless to the company’s DSL and U-verse hybrid fiber-copper networks.  For years, phone companies made a marketing point that unlike cable broadband’s shared network, their DSL service was never shared with anyone else in a neighborhood.  Therefore, running it at a trickle or full speed ahead should have no impact on any other customer.  The only exception to this rule comes from phone companies that under-invest in their middle mile and backbone networks.  For AT&T, that means trying to serve too many customers on inadequate equipment ranging from a poorly planned network of D-SLAMs, which connect individual customers with a fatter pipeline back to the central office, or an inadequate network between the central office and AT&T’s regional backbones.  Fiber, such as that used by AT&T’s more modern U-verse system, completely solves any capacity issues.  Broadband traffic is only a tiny percentage of the bandwidth consumed by AT&T’s IPTV video service — the one that delivers U-verse TV to your home.  AT&T imposes no viewing limits on customers, of course.

Any actual capacity crunch would only show up during peak usage periods — when AT&T customers of all kinds pile on their broadband connection at the same time. AT&T’s usage cap regime does next to nothing to mitigate that kind of congestion.  Here’s why:

Since AT&T and other broadband companies routinely claim the average use per customer is well under 20GB per month, and only 2 percent of customers are currently deemed “heavy users” by AT&T, that tiny percentage of customers cannot create sufficient drag on AT&T’s DSL network even if they opened up their connections to full speed traffic.  In reality, the 98 percent of “average” users piling on the network during prime time would be the only thing capable of the kind of critical mass needed to create visible congestion.  What uses more capacity?  Two customers using their 7Mbps DSL lines to stream online videos concurrently or 98 customers all using their 7Mbps DSL lines at the same time for virtually any online activity?

The math simply doesn’t add up.

The Congestion Myth

AT&T targets their broadband customers with an unwarranted, arbitrary Internet Overcharging scheme they cannot effectively explain to customers.

As two week’s of hearings this month have demonstrated, Bell Canada’s similar arguments for its usage caps simply come without any evidence of actual congestion.  In fact, company officials modified their position to talk more about peak usage congestion, a problem that cannot be controlled with a usage cap well in excess of the average consumer’s usage.  In fact, only a speed throttle could control network congestion at the times it actually occurred.  AT&T also ignores when its customers are using its network.  Is a heavy user downloading files at 3 in the morning creating a problem for other users?  No.  Are the majority of their average-usage customers all jumping online after school or work creating a problem?  Perhaps, if you believed AT&T even had a congestion problem.

Industry maven Dave Burstein does not, and Burstein talked to two chief technology officers at AT&T who told him wired broadband congestion is a “minimal” problem for the phone company.

Upgrades and Cord-Cutting, Delayed

Two things usage caps can do is help your company delay necessary upgrades to meet customers’ broadband needs, whether they are “heavy users” or not.  AT&T has shown itself historically to be slow to invest, and cheap when it does.  AT&T’s wireless network is bottom-rated by consumers thanks to inadequate network capacity.  The company elected to upgrade on-the-cheap to an IPTV platform that still relies on copper phone lines to deliver service that simply cannot compete in quality and capacity with Verizon’s FiOS fiber to the home network.  But investors love the fact the company counts every penny, even if it means inconveniencing and overcharging customers for their services, usually offered in duopoly or monopoly markets.

AT&T’s usage caps on U-verse are even less credible than those imposed on their DSL service.  U-verse is a fiber to the neighborhood network with near limitless capacity for broadband and video.  In fact, the only “congestion” comes from the copper phone lines that limit how much bandwidth can be supplied to your individual home.  But no matter how much you use, you will not affect your neighbors because your copper phone line is shared with nobody else.  In fact, the biggest chunk of U-verse’s bandwidth is reserved for their video services, which makes arguments about excessive Internet usage on that pipeline un-credible.

What AT&T’s usage cap does assure is that you will not drop that video package from your U-verse service anytime soon.  That lucrative revenue from expensive video packages cannot be forfeit without a fight, and a nice deterrent in the form of an arbitrary usage cap does wonders to keep that cord cutting to a minimum.

Meters That Don’t Measure

One of the worst ongoing problems with Internet Overcharging schemes like AT&T’s is the broken usage meter.  Stop the Cap! has received hundreds of e-mails from AT&T DSL and U-verse customers who report AT&T’s usage meter is either unavailable, broken, or is wildly inaccurate.  With absolutely no independent oversight, and no consistently accurate usage measurement, charging anyone overlimit fees with a broken meter doing the counting is unconscionable.  Yet AT&T may well try.  The company has already been sued by one law firm for what it alleges is an unfair usage meter on the company’s wireless service — a meter that consistently overcounts usage in AT&T’s favor.

AT&T admits they cannot even accurately measure their own customers' usage.

Once getting over the broken meter, customers are directed to a pointless usage-estimator — the ones that tell you about how many tens of thousands of e-mails you can send and receive under AT&T’s cap regime.  In fact, these statistics are irrelevant for the vast majority of customers who never think of sending 10,000 e-mails or exchanging 2,000 pictures or songs.  That’s because customers do not use the Internet to exclusively do those things.  Even with the guestimator, they are left checking a broken usage meter to ponder whether or not they can watch one more show or download another file without incurring a $10 overlimit penalty (or more).  That “generous” limit AT&T touts suddenly doesn’t look so ample when the company gets to the wildly popular activity of streamed video.  AT&T’s own video warns you can only watch 10HD movies a month over your broadband connection — and absolutely nothing else.  No web browsing, e-mail, or photos or music.  Ten movies a month.  Still thinking of dropping your U-verse video subscription now?

Yet AT&T has the nerve to claim, “Our goal is to provide you with the best Internet service possible.”  Really?

Thankfully, not every member of the investor class is thrilled with nickle-and-diming broadband consumers for usage that costs the providing company next to nothing.

The Economist excoriated AT&T for its unwarranted usage limits on its blog earlier this year:

The use of caps allows providers to dish out bandwidth with one hand and take it away with the other. The companies have vastly increased the capacity of various copper, coaxial and fibre lines, but artificially separate out a portion—at least half and often much more—for video which a set-top box or a broadband modem spits out as an apparently distinct service. Cable firms simultaneously push out hundreds of digital channels, while telecoms firms rely on multiple digital streams from live broadcast or cable TV or on-demand pay-per-view. It is as though the water main were divided as it entered the home and a steady, modest stream was made available for showers and at the tap, while most of it was always at the ready for a coin-operated washing machine.

Increasing speed on the internet portion, which would allow consumers to give up on TV subscriptions, is balanced by capping volume. If a consumer does not monitor usage, his internet access can be withdrawn or, in AT&T’s case, overage fees of $10 charged for every additional 50 GB of usage. […] [That] $10 charge applies whether the limit was breached by 1 MB or a smidgen under 50 GB.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT Usage.flv[/flv]

AT&T’s new video on broadband usage is based on facts not in evidence and only adds to consumer confusion about arbitrary Internet Overcharging schemes.  (4 minutes)

In the wake of a scandal that forced the resignation of the president and a board member of one of America’s largest gay civil rights organizations, The Gay and Lesbian Alliance Against Defamation (GLAAD) has withdrawn its prior support for the merger of AT&T and T-Mobile and reaffirmed its support of strong Net Neutrality policies.

In a letter filed with the Federal Communications Commission earlier today, GLAAD did an about-face on its earlier support for the merger, telling the federal agency it now has a “neutral position” with respect to the deal.

Mike Thompson, GLAAD acting president, used the communication to also express the group’s strong support of Net Neutrality, which guarantees a free and open Internet.

“A rigorous review process considered GLAAD’s unique mission and concluded that while AT&T has a strong record of support for the LGBT community, the explanation used to support this particular merger was not sufficiently consistent with GLAAD’s work to advocate for positive and culture-changing LGBT stories and images in the media,” Thompson said in a statement.

Thompson’s belief that AT&T has a strong record of support for gay and lesbian issues remains controversial in many segments of the gay community. John Aravosis of Americablog would take issue with Thompson, accusing AT&T of “screwing” the gay community in the state of Tennessee:

AT&T was one of the companies whose local representatives sits on the board of directors of the Tennessee chamber of commerce.  You remember them, the group that endorsed and actively lobbied for the measure repealing gay and trans rights ordinances in the state, mandating it so that no trans person can ever change their birth certificate gender in the future, and banning any future civil rights ordinances for anyone in the future.  That AT&T.  The AT&T that weighed in early with a statement, when we asked the 13 companies to disavow the legislation and call on the governor to veto, but then whose statement pretty much didn’t say anything.  The AT&T then that emailed me multiple additional statements AFTER the governor signed the hateful bill into law.

Aravosis

GLAAD has taken its first steps to move as far away from dollar-a-holler advocacy as possible as a result of the hostile reception GLAAD’s original position got from rank and file members of the civil rights group.  After AT&T’s financial contributions to the group were exposed, along with the interests of one of their board members with direct ties to the telecommunications company, GLAAD accepted the resignation of group president Jarrett Barrios and board member Troup Coronado.

Remaining board members want the controversy to be over and done with.

“I am confident that Mike made the right decision both in withdrawing GLAAD’s endorsement of the AT&T merger application and in affirming our support of general net neutrality principles,” said GLAAD board member Tony Varona.

Politico obtained a statement in response to these events from AT&T:

“As we’ve previously said, we recognize, and fully respect that these organizations, which do important work, will make up their own minds about whether to support the merger or remain neutral. And, though it should go without saying, the decisions made by these organizations will not in any way impact our desire to work with, partner with or support those organizations in the future.”

Cox alienates their customers.

Six of the 19 ‘Most Hated Companies in America’ are big cable, satellite and phone companies.  The list, published this month by The Atlantic magazine, call out the perpetrators of bad customer service, high prices, and in the case of Time Warner Cable (#3) — Internet Overcharging.

The American Customer Satisfaction Index rates companies based on thousands of surveys. In the latest index, the most-hated companies include large banks, airlines, power and telecom companies.  Especially called out this year was Time Warner Cable, celebrating a decade of public relations blunders ranging from gouging experiments on Internet service pricing, showing pornography on children’s channels, high rates, and downright lousy service in some areas.  And with CEO Glenn Britt entertaining a return to Internet rate gouging, the company’s 59/100 score still has plenty of room to fall.

#3 — Time Warner Cable (59/100) — All of the above, plus sexually harassing a North Carolina customer.

#4 — Comcast (59/100) –Dreadful customer service and poor communications left consumers with dozens of channels gone missing, outrageous rate hikes, their phone service implicated in a Florida woman’s death, and who could forget the technician that set a customer’s house on fire. This one actually lost two score points since last year.

#5 — Charter Communications (59/100) — The usual rate increases were bad enough, but Charter also told their customers they were on the hook for cable boxes lost in fires that were not their fault, was held accountable for faulty billing practices, went bankrupt, introduced its own Internet Overcharging scheme, and worst of all — their infamous PR disaster telling tornado victims in Alabama to go and find their lost cable boxes scattered somewhere in the neighborhood.  The representative on the line will wait.

#14 — AT&T (66/100) — Limited coverage and the introduction of usage pricing for data pl    …   oh sorry, AT&T dropped the call.  All reasons why AT&T wins the ‘you suck’ award among mobile providers this year.

#17 — Cox Cable (67/100) — The home of the $480 early termination fee, Cox alienates customers like few others.  They even use spacemen to harass their customers.  Bemusingly, Cox is considered a customer service success compared with our other bad boys.

#18 — Dish Network (67/100) — Trending downwards, Dish is still giving their customers a bath in bad billing and worse customer service.  They are lovers of big ad splashes with a terrifying excess of fine print which ruins the deal, if you read it.

The state of California is in receipt of a letter from AT&T objecting to a state workshop on the AT&T/T-Mobile merger that included 70 minutes for a panel of academic experts to share their views of one of the state’s largest wireless mergers in years.

J. David Tate, AT&T’s general attorney and associate general counsel, sent the letter in response to news California regulators would open the workshop to a presentation from academics about the impact the merger would have on California consumers, ranging from competition to roaming access to spectrum issues.

Tate called that inappropriate and asked the California Public Utilities Commission to ban their testimony:

“AT&T is raising objections to the panel because having a panel of ‘academic experts’ present at this workshop will pose significant risk of tainting the record with potentially uninformed and biased opinions. These opinions do not constitute the facts upon which the transaction should be reviewed.

“[…] Allowing academicians with unknown expertise in the wireless telecom industry the opportunity to place on the record their personal opinions regarding AT&T’s planned purchase of T-Mobile USA is procedurally improper, unfairly prejudicial to the parties, and contrary to due process principles.”

Instead of allowing those outside of the industry to present their views on the merger, AT&T suggested the best solution would be to allot the 70 minutes originally given to the academics to AT&T (and the three remaining panels AT&T does not object to) instead.

The impact of the last minute stampede by Verizon Wireless customers (new or otherwise) to lock in the company’s unlimited data plans before they were retired last week has reached Wall Street, but the ripples extend far beyond Verizon Wireless itself.

Macquarie USA analyst Kevin Smithen this morning downgraded AT&T stock to “neutral,” expressing concern about AT&T’s slowed growth in wireless revenues.

“We see increased headwinds to wireless revenue growth, limited improvement in enterprise and a lack of clarity on the status of the [pending acquisition of T-Mobile],” he writes. “We view projected organic revenue growth of 0.5% in 2012 as uninspiring. At current levels, we believe absolute and relative risk-reward to roughly balanced given these issues.”

Customers concerned about Internet Overcharging schemes being implemented by Verizon Wireless began fleeing other providers to “lock in” unlimited data service with Verizon before it was nigh.  One big victim of that was AT&T.

“We were waiting for the next iPhone to finally jump to Verizon, even if it meant paying a termination fee to AT&T, just to escape the dreadful service,” says Shai Lee, who was among several dozen readers contacting Stop the Cap! for assistance securing unlimited data plans with Big Red.  “When Verizon announced $30 for 2GB, there was no way we were going to be locked into paying that, so we jumped early.”

Many followed.

Smithen believes customers are also fleeing other carriers, especially T-Mobile, which he believes will lose two million customers before AT&T closes the deal or faces ultimate rejection for its merger by Washington regulators.

Some analysts believe T-Mobile customers are leaving over a combination of the company’s inherent weakness as a provider-now-in-limbo while others dread the reality of being ultimately stuck with AT&T.

“It’s like fleeing a country before the invading army reaches your town,” shares Samuel, a T-Mobile customer leaving for Verizon. “I won’t live under AT&T’s regime.”

Smithen sees even greater challenges for AT&T with the arrival of iPhone 5, which will either cost the company to subsidize or start another wave of AT&T emigration.

Verizon has already managed to secure 32 percent of the U.S. iPhone 4 market, according to a study by the mobile analytics company Localytics.  Since rumors about Verizon imminently ending unlimited data plans began in May of this year, Localytics has tracked a spike in Verizon iPhone purchases, one explained by existing customers upgrading to smartphones, and new customers arriving from other carriers.

For AT&T, customers on contract with smartphones are not adding additional services and those with data plans are trying to stay within plan limits, robbing AT&T of extra revenue.

Smithen says with this track record, average revenue per customer is “stalling.”