Phillip "Darn, they didn't pick my essay" Dampier

Time Warner Cable paid $20,000 for a report that concludes, “policymakers not only need to focus on the oft-stated long-term goal of encouraging Fiber-To-The-Home but also on the more immediate need to bring fiber significantly closer to the customer.”

That declaration was included in one of five essays released this week by Time Warner Cable’s Research Program.  When we first wrote about this program in February, we were convinced that the resulting essays would parrot the cable company’s public policy agenda.  We were largely right, especially in those that delved into public policy matters.  They stayed safely inside the company’s policy boundaries.  Even those who focused on technical matters avoided directly challenging the company writing the check.

The cable company earlier announced it would pay $20,000 stipends to essayists that wrote research reports on these questions:

• How are broadband operators coping with the explosive growth in Internet traffic? Will proposed limits on network management practices impede innovation and threaten to undermine consumers’ enjoyment of the Internet?
• How can policymakers harmonize the objectives of preventing anticompetitive tactics and preserving flexibility to engage in beneficial forms of network management?
• Regarding these issues, describe a vision for the architecture of cable broadband networks that promotes and advances innovation for the future of digital communications.
• How might Internet regulations have an impact on underserved or disadvantaged populations?

The winners:

• Dale N. Hatfield, executive director, Silicon Flatirons Center for Law, Technology and Entrepeneurship, University of Colorado, “The Challenge of Increasing Broadband Capacity.”
• John G. Palfrey, Jr., Henry N., Ess III professor of Law, Harvard Law School, “The Challenge of Developing Effective Public Policy on the Use of Social Media by Youth.”
• Nicole Turner-Lee, vice president and director, Media and Technology Institute, Joint Center for Political and Economic Studies, “The Challenge of Increasing Civic Engagement in the Digital Age.”
• Scott J. Wallsten, vice president for Research and Senior Fellow, Technology Policy Institute, “The Future of Digital Communications Research and Policy.”
• Christopher S. Yoo, professor of Law & Communciations, University of Pennsylvania Law School, “The Challenge of New Patterns in Internet Usage.”

Among the reports were a few that echoed the cable industry’s public policy agenda, particularly Scott Wallsten’s policy essay, “The Future of Digital Communications Research and Policy.” Wallsten is an industry favorite.  He works for the Technology Policy Institute, an industry front group funded by AT&T, Comcast, the National Cable & Telecommunications Association, Qwest, Time Warner Cable, T-Mobile, and Verizon.

Scott Wallsten's essay parrots the cable industry's agenda

Wallsten argues worrying about residential broadband service is far less important than delivering broadband improvements to businesses to spur economic growth.  Part of the money to do that might come from raising residential broadband prices.  Wallsten points out consumers are willing to pay far more than they do today for their broadband accounts — up to $80 a month for today’s typical access speeds.  That’s music to an Internet Overcharger’s ears.

Wallsten’s essay hints that broadband expansion to the unserved, and Washington’s focus on broadband competition, might be misplaced if they are looking for the biggest economic bang for the buck.  His overall conclusion?  Worry about business broadband, not home residential use.

This is hardly new territory for Mr. Wallsten, who in 2007 wrote a piece warning of the perils of flat rate, unlimited use broadband pricing for the Progress & Freedom Foundation and the Heartland Institute, both great friends of large industry players. Only this time, he got a nice chuck of change from Time Warner Cable ratepayers.

More remarkable was Dale Hatfield’s essay, “The Challenge of Increasing Broadband Capacity.” Unlike Mr. Wallsten’s cable industry public policy echo chamber, Hatfield tries to keep things technical, but also safely made sure he didn’t stray too far off Time Warner’s broadband plantation.

Hatfield discusses the challenges of different broadband technologies ranging from twisted-pair copper wiring that delivers DSL to cable’s hybrid coaxial-fiber networks and the latest generation wireless and fiber optic technologies.  Hatfield largely calls them as he sees them, noting DSL’s inherent distance limitations and maximum supportable speeds, cable’s potential for last-mile/neighborhood congestion, wireless spectrum inadequacy, and the promises fiber optics can bring to the broadband revolution if costs can be reduced.

Hatfield avoids embarrassing his benefactor too much by spending the least amount of time and space on the benefits fiber brings to the broadband expansion question:

The fourth technology, fiber optic cable, is generally regarded as the “gold standard” in terms of increasing broadband digital access capacity because of its enormous analog bandwidth and its immunity to natural and man-made forms of electrical noise and interference. The actual digital transmission rate delivered to or from a customer depends upon the details of the architecture employed, but the ultimate capacity is limited more by economic factors rather than by the inherent technical constraints on the underlying technology imposed by Shannon’s Law. In this regard, fiber optic cable is often referred to as being “future-proof” because the maximum digital transmission rates are governed more by the electronic equipment attached to the cable rather than by the actual fiber itself. It is future-proof in the sense that the capacity can be increased by upgrading the associated electronic equipment rather than by taking the more expensive step of replacing the fiber itself.

Hatfield

While Time Warner Cable does market itself as having an “Advanced Fiber Network,” it is, in reality using the same technology the cable industry has used for a decade — fiber distribution into individual towns and large neighborhoods, coaxial cable the rest of the way.  Hatfield believes that simply isn’t good enough:

[…]Both DSL and cable modem technology benefit from the shorter distances that are associated with a more dense deployment of their access nodes. This suggests the growing need to extend fiber optic cable capacity closer to the customer—either fixed or mobile—to minimize the distance between the customer and the access nodes.

Hatfield’s subtle conclusion is that broadband expansion is ultimately best served by delivering fiber-optic connections straight to the home, something Time Warner Cable has argued against and refused to provide for years, but has now paid $20,000 to put on their website:

[…]Policymakers not only need to focus on the oft-stated long-term goal of encouraging FTTH but also on the more immediate need to bring fiber significantly closer to the customer to support a vastly increased number of access nodes. This is particularly important in the wireless case, where the capacity added through frequency reuse is critical to facilitating wireless competition with the two major suppliers of fixed broadband capacity—the incumbent telephone and cable television companies.

University of Texas students living in a Richardson on-campus apartment complex are stuck paying a mandatory $15 monthly “technology fee” for AT&T-provided Wi-Fi service that works so poorly, many residents are signing up with other providers and paying twice for Internet access.

Residents of Waterview Park have complained about Wi-Fi access inside the complex for some time, but they were never forced to pay for it until May, when the complex’s governing board notified residents that the mandatory fee would be imposed once AT&T took over the service.

Although AT&T doesn’t bill for, or collect the fee, they do provide the service, and students have complained loudly about its weak signals and poor performance.

The Mercury, the university newspaper, ran a story this weak outlining the complaints:

A sample lease agreement obtained from Waterview shows the mandatory technology fee of $15/month.

Computer science junior Kenny Rodriguez said the problems stem from the use of hotspot Wi-Fi as residential internet for students. Hotspot Wi-Fi generally broadcasts an internet signal from a fixed location that becomes weaker the further you move away from it.

“When I was living in building 29, my roommates and I could only pick up a signal by standing in one corner of the living room,” junior Michael Stettler said.

Stettler and his roommates moved to building 31 and are now able to pick up a signal in two of their bedrooms, albeit a slow one.

Rodriguez, who lives in building 8, can only pick up a signal in his living room and sometimes can’t even log on to use it.

“Frequently, the access points are broadcasting but aren’t routing traffic anywhere,” Rodriguez said.

Once a student finds a place in his apartments where a signal can be received, the speed of the connection becomes a problem because the more students who share the available bandwidth the slower the speed becomes.

“It was decently fast at the beginning of this school year, then when everyone came back for fall it crawled to like a tenth or a fifth of a MB per second,” Stettler said.

Waterview’s management has been forced to issue refunds of up to $30 to affected students for poor or non-existent service, but the complex won’t waive the ongoing monthly fee, despite the fact the service can’t deliver much more than 1Mbps on a good day.

Several residents opted to sign up with other providers instead, paying $30 a month or more for service they can actually use.  Stettler and his three roommates decided it was worth it and signed up with Time Warner Cable for 15Mbps service.

The student newspaper took note of another bulletin issued by Waterview management issued August 31 that claimed every resident would have reliable internet within the next 7-14 days or else a non-specific contingency plan would be implemented.

“Nobody has actually stated what will happen if AT&’T doesn’t make their service reliable,” Rodriguez told the paper.” They’ve just vaguely implied that something will happen.”

Twenty-two days later, students report no verifiable improvements have been made in the reliability of the network or the service.

John Linton, CEO Exetel

Australia’s planned National Broadband Network (NBN) delivering the country access to broadband speeds up to 1Gbps face many of the same criticisms American municipal providers hear when incumbent commercial providers face imminent competition from fiber broadband.

But nobody can top the venomous spray of Exetel’s CEO John Linton, who called the entire concept of public broadband for the public good “a load of crap” and those behind it a mix of ‘thugs,’ ‘pretenders,’ and generally incompetent and stupid.

Linton’s Internet Service Provider delivers broadband to most of its customers over Telstra landlines, using DSL.  But the company has grudgingly agreed to participate in the NBN project, even while still despising it to the core.

Exetel’s pricing on NBN’s fiber network charges for speed and usage.  Much like cable broadband, Exetel delivers much faster downstream speeds (up t0 100Mbps), with upload speeds maxing out at 8Mbps. The higher the speed, the higher the monthly access fee.  Users receive no usage allowance, paying fees per gigabyte for all of their usage.  Exetel still reserves the right to throttle customer speeds for certain online applications, and “traffic shape” users based on their usage.

In Tasmania, Exetel has introduced a 25/2Mbps broadband plan with no usage allowance — but no monthly access fee either — charging a flat $2 per gigabyte of usage.

Exetel Fiber Pricing In Tasmania

Linton spews most of his angry commentary on his personal blog, which he closed to non-Exetel customers unless they made a $20AUS contribution to the company’s endangered wildlife protection programs.  But he rarely pulls punches in public either.

Is this Australia's broadband future?

A sampler:

With wireless broadband waiting in the wings, those excited by NBN’s 1Gbps speeds are “unthinking and just plain stupid, pretty much along the same lines as the stone age cargo cult dwellers in the jungles of New Guinea are excited about the next ‘goods drop’ from the strange colored bird.”

Australia’s aging population, “who don’t play computer games or get a surrogate sex life from pornography” have zero interest in getting terabyte broadband speeds, making the whole endeavor a giant waste of money.

“The number of people who want 100Mbps are almost none today and aren’t going to be very many in five years time.   Probably 40-50% of people today will never want to use a piece of fiber […] and they’re certainly not gamers playing, or those other things.  They’re the other half of Australia that has a life rather than a half life.”

On the results of the recent election and the decision to move forward with the NBN: “God help us all.”

On Communications Minister Stephen Conroy (Australia’s version of FCC Chairman Julius Genachowski): “He was his usual mixture of bewilderment, ignorance and barely concealed thuggery, but I was amused at his reference to Exetel (not by name).” Linton wrote on his blog. “While I’m grateful for the ‘free plug’ I thought it was an obvious example of “straw clutching” if it wasn’t based on appallingly bad briefing, which I would doubt, because for him to have been aware of any actual pricing would have required some sort of briefing,” added Linton.

On NBN co-chief Mike Quigley, who will help manage NBN service: “Is [Mike Quigley] god? Can he reverse 100 years of telecommunications going one way and say, ‘Oh, I’m Mike Quigley, and I haven’t worked here in 30 years, I know nothing about running major networks, but someone has paid me $2 million a year so I can pretend I can’.  The only one who can do it is Telstra. It would do it cheaper than a bloody government.”

Linton blames all of the talk about a publicly-owned broadband network for the decrepit state of Australia’s commercial broadband market, claiming it dried up private investment in new ADSL products: “The situation as I see it is that the suppliers — Telstra, Optus, AAPT — are not really investing in anything new, especially when you’re referring to ADSL type broadband products. The current suppliers are holding on to the margins they have at the moment, and if anything they will seek to increase them rather than reduce them,” says Linton.

Since nearly every broadband user in Australia knows Linton hates fiber broadband, what technology does he believe represents Australia’s future?

Or this?

3G wireless.

“Most people that I know, including me, put a much higher priority on mobility than they do on speed,” he told ZDNet. “The average person needs a 100Mbps internet connection about as much as they need to have their arms amputated.”

While mobility is important, his critics charge, there is no way 3G wireless can deliver Australia its broadband future.  Service is not ubiquitous across the country, speeds are far below even what DSL offers, streaming multimedia is challenging at best, and the usage fees and limits that accompany wireless service plans in the south Pacific would create an even greater divide between those who can afford wireless broadband, and those who cannot.

A report released yesterday by the Bureau of Statistics shows Australians are downloading more data than ever before, increasing more than 50 percent in the second quarter compared to the same period last year. The amount of data downloaded every three months is now 11 times higher than March 2005 and 126 times higher than March 2002.

Australia’s National Broadband Network is open to all Internet Service providers that wish to participate, reselling their broadband plans using NBN’s infrastructure.

AT&T wireless broadband customers who thought they could survive a smartphone data plan with only a 200MB usage allowance are discovering $15 overlimit fees applied to their bill because of mystery data usage consumed while they were asleep.

Stop the Cap! reader Pat dropped us a note to say she accumulated a whopping $45 in overlimit fees on her August bill for her family’s three iPhones because they exceeded their 200MB usage allowances while the family was unconscious:

At around 2AM most mornings, our phones regularly show usage of around 5-10MB each even though they are being charged and are not used by anyone in the family.  At first my husband thought an application on the phone was automatically exchanging data so we tried switching off 3G access and relied exclusively on Wi-Fi access, to no avail.  Sure enough, for the next seven days in a row, the phones all used between 5-10MB of usage.  We tried disabling and removing various applications and told others only to communicate manually.  That didn’t work either.  The mystery usage remained.

We contacted AT&T multiple times about this issue, because this usage easily put us over the limit, at which point AT&T bills a $15 penalty to buy you another 200MB of usage.  We got a lot of excuses, one month’s credit, but no answers.  One representative used the opportunity to try and upsell us on the 2GB plan to “avoid this from happening.”  It sounds like a nice scam.

Pat, it turns out this has been a significant issue for many AT&T customers dating back to the June introduction of the usage-limited smartphone data plans from AT&T.  We found threads on both AT&T and Apple’s websites running well into the dozens of pages, with nobody getting a definitive, consistent answer as to why this keeps happening.

In late July, the folks at Gizmodo got a statement from AT&T about the problem:

This is a routine update of your daily data activity on your device to ensure the accuracy of your data billing. Customers are not charged for data usage, given that no data session is generated. It’s not uncommon for devices that are ‘always on’, like iPhone, to process data event records for billing purposes after a certain amount of inactivity or after long periods of time. It’s also separate from how our system lets you monitor your data consumption.

Unfortunately, it’s also apparently inaccurate because subsequent comments indicate customers were, in fact, billed for that usage.

Customers have been told a variety of things to justify AT&T’s usage billing:

1. It’s an application on your phone polling for data and/or updates;
2. Your phone is sending and receiving e-mail;
3. If your phone goes “to sleep” it switches away from Wi-Fi and back to AT&T’s 3G usage, incurring data usage fees;
4. In the early morning, AT&T communicates with phones to exchange updates and data;
5. The usage reports represent cumulative usage made during the day but only later reported to AT&T;
6. It’s iTunes diagnostic information you agreed to share with Apple being sent to them every night;
7. It’s Apple’s fault.

The biggest problem? AT&T’s stingy usage allowances.  Many customers do not understand what a megabyte represents, but 200 of them sounds like a lot… until you browse to a page with multimedia content or utilize an application that exchanges a lot of data during the day.  AT&T has really not addressed the problem, other than to throw $10 credits to customers who complain the loudest.  Many just upgrade to the higher priced 2GB plan and hope the problem goes away.

AT&T’s Internet Overcharging scheme for wireless has trained customers to use less of a service they pay good money to receive:

• Customers think twice before installing and using data applications that could consume too much of their allowance;
• Customers train themselves to jump off of AT&T’s 3G network and switch to Wi-Fi wherever possible, despite paying for AT&T’s wireless data network;
• Customers quickly learn paying more for a more “generous allowance” is a “better value,” saving them the time and hassle of worrying about overlimit fees;
• Customers can complain all they like, but in the end they’ll grumble and pay the bill, facing exorbitant early termination fees if they want out of AT&T’s fee maze.

Unfortunately, without a team of lawyers or regulatory agencies breathing down AT&T’s neck to deliver a credible response to these overcharges, they are very likely to continue.  Although AT&T claims the 200MB usage plan was designed to save customers money and attract new users to smartphones, it’s no mistake the cheapest plan delivers a minuscule allowance.

The company knows very well that smartphone data usage increases as the phones and the software that runs on them become more sophisticated.  Customers delivered a tasty sample of 3G usage are likely to enjoy it and find themselves upgrading to a more profitable data plan with a comparatively larger allowance.  If they don’t, AT&T wins again because customers face paying at least $30 for 400MB of usage, even though a 2GB plan would have only set them back $25.

For now, the best we can recommend is completely powering off the phone overnight and seeing if it still incurs any phantom charges.  You should also complain, regularly and loudly, to AT&T each time it happens.  Contact your state Attorney General and file a complaint if AT&T’s answers are unsatisfactory and urge their office to begin an investigation.

As Stop the Cap! has said from day one, Internet Overcharging schemes force customers to spend time and energy doublechecking usage gauges that may or may not be accurate and make you think twice about everything you do online, wondering what it will ultimately do to your bill at the end of the month.  It’s all a win for service providers, who get the benefit of conservative usage from the “think-twice” mindset and revenue enhancing overlimit fees from those who never worry.  You lose either way.

A British financial analyst has issued a new report telling phone companies they should forget about fiber optic upgrades — copper-based DSL service is adequate for consumers and doesn’t bring shareholders fits over capital expenditures.

Analysys Mason’s Rupert Wood believes companies are at risk of overspending on fiber networks that deliver speeds he claims few consumers want.

“The vague promise of future services may appeal to some early FTTH adopters, but will become increasingly ineffective as a selling point unless the rate of innovation in devices and services that are uniquely suitable for FTTH gets some new impetus from vendors and service providers,” writes Wood. “The future cannot be simply plotted against increasing fixed-line bandwidth.”

Wood believes wireless 3G and 4G broadband is where innovation and demand is greatest.  It also just happens to be where the biggest money can be made.  Providers can charge premium prices for wireless services while limiting access.

Wood

For at-home Internet, Wood believes copper-based DSL is fine for most consumers.  Wood points to American providers offering super-high-speed broadband tiers that attracts few buyers as proof there is little interest in ultra-fast connections.  DSL is cheap to provide, he argues.  Fiber is just ‘too risky’ and Wood suggests it’s not as “future-proof” as wireless.

So what should providers do with their fiber networks?  Short of abandoning them altogether, Wood recommends operators pull back on fiber roll-outs and deploy them only for experimental purposes.

“Conditions vary between markets, but in general the business case to move much beyond trials just isn’t there and we are already beginning to see some scale-back,” explains Wood.

“Bandwidth demand for fixed broadband is converging with the bandwidth required to stream TV, and its rate of growth will slow down,” he adds. “DSL [technology] might not be able to meet these demands at some point in the future, but we believe that this point is still a long way off.”

If you want to read more, it will cost you €5500 to purchase a copy of “FTTx roll-out and capex in developed economies: forecasts 2010–2015.”

Our analysis comes for free.

Wood ignores the most important reason why Americans are not signing up for ultra-fast premium speed tiers in droves — the current “early adopter” price tag.  Few consumers are going to justify spending $99 a month or more for the highest speed connections.  When price cuts deliver faster service at incrementally higher pricing, perhaps $10-20 for each step up, there will be greater demand.  If America was not interested in higher speed networks, Google’s proposal to build a 1Gbps fiber to the home system would have passed by without notice.  Instead, more than 1,100 communities applied to be chosen for the project, including just about every American city.

Wood’s report primarily speaks to a European market, where the majority of broadband connections come through telephone company DSL or wireless.  In the United States, the cable industry heavily competes with phone companies for broadband customers.  That is much rarer in Europe.  Wood’s claim that consumers care little about speed is belied by marketing campaigns that put cable broadband’s speed advantage front and center, and they have the market share to justify it.

In North America, although Wood’s report may be music to phone companies’ ears, refusing to upgrade copper phone networks comes at their peril.  Americans and Canadians are disconnecting their landlines at an increasing rate, abandoning those that abandoned innovation long ago. Cable operators report many of their new broadband customers come from those disconnecting slower speed DSL service from copper-loving phone companies.

The future is clear — sticking with standard DSL over copper phone lines in competitive markets is a losing proposition unless phone companies begin slashing prices to become a value leader for those who want more savings than speed.

Verizon determined the best way to “future proof” its network was to deploy fiber straight to the home in many areas.  Verizon’s vision carries a price tag analysts like Wood and those on Wall Street don’t like because it challenges short term profits.  But with Americans increasingly saying goodbye to their landline providers, not upgrading networks to give customers a reason to stay is penny wise and pound foolish.