One of the principal components of Internet Overcharging is the so-called “usage meter,” a measurement tool designed to help customers keep track of their usage so they don’t exceed arbitrary usage allowances and face overlimit penalties or speed throttles.

But with no government agency or independent watchdog monitoring the accuracy of the meter, providers can claim any amount of usage they wish, and stick customers with the bill.

Telecom New Zealand is the latest ISP forced to admit its usage meter was wildly inaccurate, with nearly 100,000 accounts impacted by faulty meter measurements between November 2010 and June 2011.  At least 47,000 faced punitive measures including substantial overlimit fees or throttled speeds for exceeding usage limits, even though they actually didn’t.  Now Telecom has admitted the meter was wrong, it violated the Fair Trading Act in the process, and is refunding $2.7NZ million dollars in overcharges. It was either that or face substantial fines from the Commerce Commission.

Telecom called the error that forced some customers into more expensive plans to avoid additional overlimit fees “an incorrect perception about […] data usage.”

“We’re pleased to have reached a settlement with Telecom and that they have made prompt refunds directly back to the customers who have lost out,” said Stuart Wallace, Commerce Commission Competition Manager. “Telecom brought this issue to our attention as soon as they were made aware by their customers and have co-operated fully with the Commission. Due to Telecom’s immediate admission of a breach of the Fair Trading Act, followed by appropriate compensation to customers, the settlement is the best possible outcome for those customers and avoids potentially lengthy and costly court hearings paid for by taxpayers.”

It’s the second usage measurement failure announced by the company this month.  In a separate move, Telecom agreed to pay $31.6 million to five of its competitors overcharged for wholesale broadband service.

When technically-savvy customers realize they are being billed for non-existent usage and the media takes an interest, providers eventually disclose their mistaken measurement tools.

“Customers are expected to keep these ISP’s honest,” says Stuart Littlejohn, a Stop the Cap! reader in Wellington. “ISP’s never suggest their meters are anything except accurate until they are caught with their fingers on the scale, and always in their favor.”

Littlejohn has already received a refund from Telecom for illegitimate overcharges he incurred earlier this year.

“It was an absolute nightmare,” he shares. “We thought someone hacked our wireless network or someone in the home was lying about their usage, all theories encouraged by Telecom employees who pointed the finger at everyone but themselves.”

Littlejohn says after Telecom granted one credit as a “goodwill gesture,” subsequent overcharges that went unexplained were his problem, not theirs.

“After the first credit, everything else is your fault,” he says.

Littlejohn caught the company red-handed when storm damage disrupted his service for nearly a week, and Telecom’s usage meter recorded 22GB of usage on his down-and-out service anyway.

“They ultimately couldn’t argue with themselves, but they tried at first,” he says. “Then I told them to call the department responsible for repairing my service and they quickly learned the line they said used 22GB was out of service at the time the usage was supposed to occur.”

“Without that, they would have probably insisted I still owed them for that ‘usage.'”

Littlejohn wasn’t alone.  Other overbilled customers appealed their case to the New Zealand Herald last June, and two weeks later, Telecom admitted their usage measurement tool was faulty.  But by then, customers were already paying for the erroneous charges:

The Herald has received detailed internet usage logs from two Telecom customers – one in Dunedin and the other in New Plymouth – which show over-counting broadband downloads, in one period by as much as 139 per cent. Both have raised the matter repeatedly with Telecom, but have yet to get an explanation.

“We showed Telecom five days of data as early as February 14,” says director Mark Peisker of Dunedin’s CueClub. “There was massive variance between our data and that reported by the Telecom usage meter. I said to them: ‘Your counting has very little to do with what comes down my line to me’.”

CueClub’s data taken from its two internet routers shows an average of 62 per cent over-counting during a three month period – the worst month being May when Telecom counted an extra 118.24 gigabytes (GB) of usage amounting to $203.97 in overcharging.

“They’re crooks, plain and simple, and only when they were caught did they admit their mistakes, and the only ‘penalty’ they are paying is refunding their ill-gotten gains,” Littlejohn says. “Where is the substantial fine to send a message stealing from your customers is wrong?  A strong fine would tell Telecom they made a costly mistake not worth repeating.”

Time Warner Cable experienced another challenging quarter, continuing to lose cable TV customers who either drop or pare back their television service, often in favor of broadband.

The company reported losses of an additional 128,000 video subscribers during the third quarter, but is partly winning that revenue back with new broadband customers — 89,000 of them in the last three months.

“Broadband is a powerful service for which there appears to be unquestionable consumer thirst,” Time Warner Cable CEO Glenn Britt said on the investor call. “Over time, we will contribute more of our plant’s capacity to broadband.”

The company is also poised to expand its marketing to win new broadband customers away from their primary competition — telephone company DSL service.  Company officials remain confounded by customers who subscribe to Time Warner’s cable TV service and take broadband from “inferior” phone company-delivered DSL.  Time Warner will continue to target these customers with win-over promotions offering a year of Road Runner Standard Service at the $29.95 promotional price point.

For the company as a whole, this is the tenth consecutive quarter of year-over-year residential broadband revenue improvement, coming from a combination of higher-priced, faster speed tiers, price increases, and subscriber additions.  The company’s DOCSIS 3 upgrade has proven itself a winner for customers and the company, with 18 percent of Time Warner subscribers now choosing 30 or 50Mbps broadband services.

Wall Street expressed some concern about statements from CEO Glenn Britt that the company was going to expand capital spending on broadband to handle increasing demand, especially from online video.  That concern comes despite the fact the company’s “capital intensity” (spending) from January-September was the lowest in the history of the company.  The full year’s capital spending is on track to reach up to $3 billion, which is consistent with what the company spent last year.

Glenn Britt

So despite the plans to spend more on broadband, that spending is actually in line with previous years.

In response to an opening question from Deutsche Bank’s Doug Mitchelson, Britt delivered an extended explanation downplaying the company’s spending plans:

In a way, there’s nothing really new here. I think you’ve seen this trend for a while. Our broadband product is very strong.

As most people know, the usage of broadband is skyrocketing, as it has been for some time. And that means that we will need to spend more money on it. We have been already, both in capital and operating expenses.

The great thing about the Internet is lots of third parties dream up lots of new applications that require more speed and more bandwidth. And we anticipate that we’re going to have to devote more capacity to that over time. We will do that by gradually removing our analog signals from our — analog TV signals from our plan. We’ve been doing that over the last several years by migrating to digital using Switched Digital technology. And over the next several years, we’ll be going all digital in the TV space.

I don’t see this driving a dramatic change in our cap spending, I think, to the core of your questions. The spending has been going on for a while, and I think you’re seeing a change in mix. The video spending is going down over time. The business services is going to go up, although it didn’t this quarter. And you’re going to see the spending on broadband going up. But I don’t think the overall trajectory is mutually different.

This quarter, the company’s conference call seemed to embrace greater broadband usage, and pondering Internet Overcharging schemes like usage caps or usage-based billing never came up.  But Richard Greenfield from BTIG alluded to usage in his questions to Rob Marcus, president and chief operating officer at Time Warner Cable.

“I think we’re somewhere in the 7GB a month [range] of downstream bandwidth on a median basis,” Marcus said. “The average is much higher given the disproportionate usage by our high-end users.”

There were plenty of other facts to be gleaned from this morning’s conference call:

TV

• Whole Home DVR service has been introduced nationwide.  In the coming year, Time Warner will begin deploying “home gateways,” which reduce equipment costs;
• Time Warner is testing improved cloud-based set top boxes with home networking capabilities in parts of Syracuse, Los Angeles and Dallas.  These boxes will expand across the country in 2012.  They offer better search capability and deliver an improved user experience;
• 60% of customers reject “triple-play” offers from Time Warner and choose either “single” or “double-play” service instead;
• Much of Time Warner’s revenue growth is coming from rate increases on programming, services, and equipment;
• TV Essentials, the smaller, less expensive video package, is now available in New York City and Northeast Ohio, as well as upstate New York. It will launch nationwide by year end.  Unsurprisingly, company officials admit the less-than-attractive channel lineup has resulted in the vast majority of customers calling about the offering taking the traditional video package instead;
• Customers continue to drop ancillary services to cut their cable bill.  The increasingly expensive DVR box is a new target for cutting, and premium movie channels, adult pay-per-view, and mini-pay services all continue to suffer significant declines in business;
• The Google-Motorola deal will likely have little impact on Time Warner’s set top boxes, which primarily come from Cisco and Samsung.

Broadband

• By the end of the year, Time Warner plans to offer an Android-based TV Everywhere application similar to the existing iPad application, which will also continue to be upgraded to include on-demand offerings;
• Time Warner will make their TV Everywhere service available on game consoles, smart TVs and PCs in the near future;
• New York City customers will soon be able to select from a range of local broadcast stations on the company’s iPad app.  Other markets will start to see local channels added to this app in 2012;
• Major parts of Time Warner’s capital investments this year are: building data centers in Charlotte and Denver, conversion to all-digital in Maine to make room for enhanced broadband, and the continued rollout of DOCSIS 3.0. The company is also continuing to spend significantly on wiring commercial buildings to sell services to business customers;
• TV Essentials customers will soon be offered a “lite user” slower speed discount broadband plan to accompany their video package;
• In Los Angeles, Wideband 50Mbps customers also get 2 gigabytes of 4G/3G mobile broadband for no additional monthly charge on the company-branded Clearwire service. For Turbo Plus and Wideband 30Mbps customers, they can get the same 4G/3G capability for an additional $10 a month. Standard and Turbo customers can get it for an extra $20.  The company’s mobile broadband add-on product has not enjoyed much success with paying customers, however.  Time Warner hopes the value-added bundling of mobile broadband will attract more interest.

Phone

• Cord-cutting is now impacting Time Warner “digital phone” service, too.  Customers are increasingly reluctant to purchase phone service from any landline provider.  Now Time Warner’s regular pricing is starting to cost them business.  Executives revealed Time Warner’s “digital phone” service costs the company $9.06 to provide.  They charge consumers $30.  With that kind of profit margin, the company admits it will have to get more aggressive in pricing to attract new customers (and potentially keep existing ones);
• Time Warner lost 8,000 residential voice line customers last quarter, cushioned by net additions of 13,000 business line customers;
• The company continues to show little interest in selling cell phone products or services, either owned by themselves or others.  Mobile data remains an exception.

A unknown number of Verizon Wireless customers were treated to some welcome news just days before the latest iPhone arrived for sale: early upgrades worth up to $300 in return for a two-year contract extension.  The offer arrived in an e-mail message the company sent to customers like Leslie Harsh of Omaha, Neb.

“Congratulations,” it read. “You’ve earned a new phone.”

Wireless carriers often waive two year waiting periods for good customers who are itching to get their hands on a new phone, and the Harsh family jumped in the car and headed on down to several local Verizon Wireless stores in search of a new iPhone 4S.

But high demand and the pesky fine print got in the way.

The offer turned out to only be valid on phones already in-stock in local stores, and with the unprecedented demand for the latest iPhone, Harsh was initially disappointed as the Omaha World-Herald reports:

Verizon representatives at the store told Harsh that the offer worked only with phones that the store had in stock. And since Apple and its cellular partners — AT&T, Verizon and Sprint — sold more than 4 million iPhone 4S handsets combined over the weekend, it was no surprise that the store didn’t have any of her chosen phone in stock.

Harsh then asked if she could preorder the phone. No dice, Verizon representatives said. The company’s computer system wouldn’t allow it because of an agreement with Apple.

So Harsh left without a new phone, hoping to use the offer next time one of Verizon’s Omaha-area stores had an iPhone 4S in stock.

That disappointment turned to frustration when Verizon sent out another e-mail days later rescinding the offer:

“Our sincere apologies. We got a bit ahead of ourselves,” began the message, which then withdrew the offer and threw in a consolation price — 30 percent off in-store accessories some customers think are overpriced to begin with.  To add salt to the wound, Apple and Bose products were excluded from the discount.

Verizon’s apology and coupon didn’t satisfy Harsh, who spend time and gas money scouring Omaha for the newest Apple phone.  She wants Verizon to uphold the original deal, but so far, the company hasn’t agreed.

Stop the Cap! recommends customers who find themselves in such situations escalate the matter to the executive customer service level and move beyond in-store and front line employees, who are unlikely to be empowered to grant special requests.  Harsh’s upgrade request is not uncommon, and carriers often grant them to good customers.  Harsh spends over $100 a month on her Verizon plan, which puts her in good favor with the phone company.

Filing a complaint with the Better Business Bureau will automatically escalate her plight to executive level customer service at Verizon.  If she indicates this situation is serious enough to end her relationship with Verizon if they do not make amends, it’s likely the company will bend if Harsh signs a two-year contract extension, especially because they gave her the idea in the first place.

A Federal Communications Commission proposal to require Internet Service Providers to report service outages may meet with legal challenges, despite the agency’s insistence the program is designed to help monitor network reliability and potential cybersecurity threats.

The FCC has been seeking service outage reports since May, when it first asked providers for information to track 911 outages over broadband Voice Over IP networks and determine if further regulations were needed to increase service reliability.

The agency is also reported to be concerned about botnet attacks — coordinated denial-of-service attacks on individual websites done for political, personal, or profit-motivated reasons.

Providers object to turning over the data, accusing the agency of exceeding its authority.  Some are signalling they might challenge the requirements in court if the Commission doesn’t curtail the program.

Providers may be objecting because the data collected could become public, allowing anyone to chart the reliability of each respective broadband service provider.  Competitors could potentially use that information to their advantage.  Additionally, data that shows ongoing problems could be used to justify additional oversight or regulatory measures to improve performance. Beyond NIS2, the DORA Readiness Check helps organizations prepare for the Digital Operational Resilience Act. By pinpointing gaps in your current setup, you’ll gain clear insights into necessary enhancements.

Jeffery Goldthorp, the FCC’s associate bureau chief for cybersecurity and homeland security admits the agency might not have a clear mandate to pursue its monitoring program, telling CNET there was ambiguity in the agency’s authority.

Republican FCC Commissioner Robert McDowell goes further, saying “in my view, we do not have Congress’s authority to act as suggested.”

The phone company gives its WeatherLine the boot.

Verizon and other phone companies are finding it increasingly profitable to get out of the information business, and the days of calling numbers for the current time of day or hiring someone to deliver local weather, sports scores or lotto numbers are increasingly behind us.

For decades local phone companies have run recorded announcement services, first as a free public service and then as a profit center.  The venerable “Time of Day” service, which in some areas was broadened to include the current temperature and an abbreviated weather forecast, was initially envisioned as a labor saver.  That’s because your grandparents used to call and bug the operator for the current time to synchronize their clocks, which tied up switchboards and potentially delayed emergency calls long before there was a “911” to call instead.

In the 1970s, phone companies began to realize they were giving away a lot of information for free, and with some numbers getting tens of thousands of calls a day, that meant leaving money on the table.  And so began “recorded information message charges,” typically around 8.3-25 cents cents a call (phone companies always round up no matter what) charged when customers dialed numbers with prefixes of 974 or 976.  Later still, the 900 area code would open the door to even more expensive pay-per-minute services.

Some phone companies charged for the local time and weather, others gave away the local forecast for free.

For Washington, D.C. residents, Verizon’s local weather line died a quiet death last week.  Callers to (202) 936-1212 now hear a message telling them the number has been disconnected.  And so ends an era.

It’s not to be completely unexpected.  Smartphone owners can get the time or weather just by looking at their phones.  The Weather Channel and NOAA Weather Radio provides much the same service 24-hours a day.  Some cities have competing weather lines each delivering the weather to interested callers.

But Verizon’s 936 number has become so ingrained in local residents’ heads, it’s now a valuable commodity one company wants to purchase.

Telecompute, which runs recorded information lines across the country, wants to pick up where Verizon left off.  They are attempting to negotiate with the phone company to acquire that magic 936 number for their own weather line, already running at (202) 589-1212.  But that’s no 936 number.

If you believe the Internet age has made the concept of recorded information lines obsolete, and Verizon certainly thinks that’s true, you might be surprised to learn Telecompute’s lesser-known, existing weather line receives over 2,000 calls a day.  That’s welcome news for Howard Phoebus, the veteran forecaster who will keep his job providing customers in the District, Virginia, and Maryland their daily forecast.

[flv]http://www.phillipdampier.com/video/976-8881 Commercial.mp4[/flv]

A commercial for a California 976 dial-a-date number.  Warning: 80’s feathered hair and fashions may cause allergic reactions in some viewers.  (1 minute)