Their prices are sky high.

Back in May 2010, Stop the Cap! launched a debate with a few Wireless Internet Service Providers (WISPs) that provide largely rural America with wireless access to the Internet over long range Wi-Fi networks.  The debate got started when Matthew Larsen, who runs the Wireless Cowboys blog, announced the arrival of an Internet Overcharging scheme at his WISP — Vistabeam, which serves residents in rural Wyoming and Nebraska.

WISPs are being increasingly challenged by the changing tastes of Internet customers, who are gravitating towards broadband multimedia content, saturating limited capacity networks and forcing regular infrastructure upgrades to keep up with increasing usage demands.  Unlike larger providers, many WISPs are independent, family-run businesses that lack easy access to capital and resources to rapidly respond to demand, especially when most have a rural customer base that numbers in the hundreds or thousands.

That’s one of the reasons why Stop the Cap! has not been as harsh on these providers when they implement usage limit schemes on their customers.  Because WISPs provide service where cable and phone companies usually don’t bother to serve, these wireless providers are the only option beyond satellite Internet, which we regularly label “fraudband” for claims of broadband speeds that are rarely delivered.  Still, we were not impressed last year with some of Larsen’s language about what his usage caps were intended to do (underlining ours):

I feel that these caps are more than generous, and should have a minimal effect on the majority of our customers.   With our backbone consumption per customer increasing, implementing caps of some kind became a necessity.    I am not looking at the caps as a new “profit center” – they are a deterrent as much as anything.    It will provide an incentive for customers to upgrade to a faster plan with a higher cap, or take their download habits to a competitor and chew up someone else’s bandwidth.

Ouch.

It’s been over a year, and Larsen is back with an editorial patting himself on the back for an Internet Overcharging success story well-implemented:

We have never raised prices on our services.    We still have a customer note on the wall that reads “Your bill was the only one I got this month that DIDN’T go up.   Thank you!”     I would have a hard time raising prices on this person because of their neighbors that are downloading 20x as much.   Usage Based Billing is a much fairer way to go, especially when the provider faces so much reinvestment cost to accommodate the heavier users.   After the first year of implementation, I am very glad that we took the time to implement it and intend to use the revenue to build a better network for all of our customers.

Larsen is also upset with those who believe in the concept of unlimited Internet:

Operating a broadband network is not free, and it is not a low-maintenance business.   I have a group of dedicated employees and subcontractors that have spent a lot of late nights and early mornings away from their families to build and maintain our network.   Anyone who thinks that unlimited broadband is a God given right should be forced to spend a few days in my lead tech’s shoes, getting a good look at what a broadband provider has to do to build a network and keep it running.

Larsen, like other WISPs are confronting the reality that Internet usage is on the upswing, and while we sympathize with the challenges faced by Vistabeam and other WISPs, his statements do not apply to every broadband network around.  And frankly, an increasing number of customers simply aren’t interested in Larsen’s challenges, especially if another provider can deliver service more cheaply and efficiently.  Vistabeam better hope nobody does, because their prices are simply not competitive if just about any other provider manages to work their way into his territory.

Vistabeam prices start at $29.95 a month for 384kbps/128kbps service with a monthly usage limit of 10GB.  Exceed that and you will pay an additional $1 per gigabyte.  Customers who need more speed pay dearly for it.  A tier providing 4/2Mbps service will run you $99.95 a month with a 60GB monthly usage allowance.

As of late, Larsen has been railing against the U.S. Department of Agriculture over recent broadband stimulus awards designed to improve coverage of broadband Internet in the same rural regions of the country Vistabeam serves.  He’s upset the USDA has awarded a $10.2 million infrastructure loan to the Hemingford Cooperative Telephone Company, which provides service in western Nebraska under the name Mobius Communications.

Larsen speaks highly of the fact Vistabeam delivers service in the absence of government funding or stimulus. But average consumers are not likely to care when they compare prices and consider the fact Mobius doesn’t appear to limit customers’ usage.

Mobius DSL Prices:

• 500kbps – $35.00
• 1.5Mbps – $40.00
• 3Mbps – $50.00
• 5Mbps – $60.00 (Currently available in Alliance and Chadron.)

Mobius charges effectively half the price Vistabeam charges, and offers faster tiers of service in some areas, without fear of overlimit fees.  It’s also important to recognize the “award” was actually a “loan,” which must be repaid.  Larsen seems less upset with the fact there are broadband stimulus programs than with the reality industry lobbying has effectively cut out many Wireless ISPs from standing any chance of winning one.

I get especially frustrated by loan awards like this one because I have operated two ISPs that have had to compete directly with Mobius and did not have access to any federal grant or loan programs.   The USDA Broadband and Loan programs are essentially only available to [regional phone companies].   When I made inquiries into the programs several years ago, I found that they would only loan to a single recipient in a region so that they were not funding competing projects.

Phillip Dampier

For Stop the Cap!, our constituents are consumers interested in obtaining the best possible broadband service at the best price.  Larsen’s views, understandable from the perspective of a business owner, would leave a number of consumers paying effectively double the price for usage-limited broadband. That would, however, satisfy a business argument that self-funded private providers should not face competition from other providers that can extend faster, unlimited DSL, cable, or fiber service with low interest loans.

Wouldn’t a better solution be to form a coalition to force open the same beneficial loan programs to Wireless ISPs who can more readily and affordably build up their networks and ease the Internet Overcharging that too often comes along for the ride?  We’re not accusing Larsen of gouging his customers for fun and profit, but we would like to see WISPs like Vistabeam develop win-win strategies that deliver success for their innovative efforts and lower priced, faster service for their customers.

The alternative may be the eventual arrival of those rural phone companies, increasingly equipped to deliver faster and cheaper service to Vistabeam’s current customers, eventually spelling disaster to that company’s business plan.  It has happened before.  Anyone remember the “wireless cable” industry that delivered a few dozen cable channels over microwave signals?  That’s a service whose time came and went, largely replaced with satellite television and rural telephone cable TV, better equipped to provide the kind of service consumers actually wanted, but wireless cable was ill-equipped to provide.

Accidents can be forgiven, but when AT&T’s repair crews take nearly a week to fix them, they are rarely forgotten.

More than 350 residents of Burbank, Calif., learned that first hand when they lost their AT&T landlines for six days, after an unrelated construction crew accidentally cut a telephone cable.

For more than a few impacted residents, AT&T took their sweet time fixing the problem, costing area businesses thousands of dollars and leaving hundreds of customers mystified.

The accidental cable cut on Front Street Aug. 13 left consumers reaching for their cellphones and local businesses trying to convince their own customers they had not gone out of business.

The Glendale News-Press shared the misery:

Brian Schneider of Schneider & Associates Claim Services said he has been without phone service since Monday morning.

“It’s really destroying my business, I feel very helpless,” Schneider said. “I feel like I’m living in a Third World country with no telephone.”

He estimated a loss of $6,000 to $7,000 a day because customers cannot reach him.

“Customers are sending emails asking if we’re still in business,” Schneider said. “I have 25 employees who are going to be adversely affected by this.”

Compounding matters is the fact that he just rolled out a marketing campaign to attract new customers.

“It’s not easy to get new clients in this environment, and then they call and the phone just rings and we don’t pick it up — bye-bye new client.”

AT&T claims they had to dig down at least 12 feet to reach and repair the affected cable, and told the newspaper it would take up to a week to restore service, and it did.  But many customers were infuriated they were kept in the dark on the company’s progress, and others had trouble convincing AT&T to forward affected calls to unaffected cellphones and other working numbers.

AT&T said reimbursements for lost service, finally restored six days after the cable cut, were not automatic.  Customers seeking a refund have to call the company’s customer service line and request one.

Corpus Christi resident Sonny Tristan wants Time Warner Cable to fix the fence he claims they damaged more than a year ago when the company installed cable service at his Texas home.

Tristan says the cable company dug a trench to install the underground cable wire, but didn’t complete the job, leaving his backyard fence unstable and threatening to fall down.

Even a cable company technician agreed it was Time Warner’s responsibility to fix the problem, but for weeks all he got was talk and no action.

Like so many cable and telephone company problems Stop the Cap! covers for consumers, public exposure by local or online media is what usually draws enough attention to get a supervisor involved to fix the problem.  This time, Tristan went to KZTV’s Troubleshooters to try and cut through the red tape.

After the station called Time Warner, repair crews quickly arrived with word they were going to fix the fence without further delay, at no charge.

[flv]http://www.phillipdampier.com/video/KZTV Corpus Christi Troubleshooters Cable Company Damages Fence 8-17-11.flv[/flv]

Too often, media attention is the only effective way to cut through red tape that keeps cable and phone companies from fixing problems for customers.  KZTV in Corpus Christi reports it took their Troubleshooters team to get Time Warner out to fix a resident’s fence damaged by their installers.  (2 minutes)

Martha's Vineyard

President Barack Obama’s arrival on Martha’s Vineyard brings a gift any local resident can enjoy: improved cell phone reception on the island, located off the coast of Massachusetts.

The president’s advance team and entourage rely on Verizon Wireless cell phone service, so when the president travels to a vacation spot, Verizon Wireless usually follows with one or two temporary cell towers to guarantee adequate coverage.  This summer is no different, and customers that used to have to walk outside and face the mainland for adequate reception are suddenly enjoying four bars, thanks to two traveling cell towers strategically placed on the island at Chilmark and West Tisbury.

Martha’s Vineyard is notorious for lousy cell phone reception, and the island’s small population has not justified investment for improved service.  Even when carriers explore the idea, local residents usually object to the proposed cell towers, dismissed as unsightly.

But for much of August, the island’s cell phones have been ringing as Verizon customers accustomed to simply going without service while on the island are suddenly getting rock solid service.  That puts a temporary end to the usual practice of trading knowledge of “known reception spots” — specific floors in buildings, certain sidewalks with an especially clear view to the coastline, or where unknown forces converge to deliver enough signal to make a quick call or send a text message.

The cacophony of ringtones has received a mixed reception from the locals, some of whom are unimpressed with wealthy vacationers, bankers, and politicians who call Martha’s Vineyard home for two weeks during the summer.

Rachel Fox, an entertainment lawyer from Manhattan whose family has a home on the island told the New York Times, “A lot of the people who vote here, who live here year-round, couldn’t care less if the people who invade them in the summer get to talk to their Hollywood producers in the middle of the Chilmark [general] store.”

Cell Tower on Wheels

When the president leaves, Verizon’s two cell-on-wheels-trucks leave as well, leading some 15,000 locals to ponder who is paying Verizon to haul the two towers on and off of the island and the expense to run them.  The newspaper wondered the same and didn’t get a clear answer.

Laura Williams, a spokeswoman for the White House Communications Agency, said its job was to ensure “that the president has the best communications possible wherever he travels” so that he can “remain informed and connected.” But Ms. Williams would not answer specific questions about the enhanced service, including how much it costs and who pays for it, citing security concerns.

One thing is certain, the two or three week cell phone nirvana the island enjoys in the summer only benefits Verizon Wireless customers.  Those with AT&T, T-Mobile, and Sprint find themselves with no bars in virtually all places on the island.

That suits Linda Alley, whose home in West Tisbury is located right next door to one of Verizon’s temporary towers, just fine.

“I’m not attached to my cell phone like a lot of people are,” she told the Times. “I couldn’t care less.”

Sen. Schumer

Senator Chuck Schumer (D-New York) has proposed cell phone carriers permanently disable stolen cellphones, unless and until they are reactivated by the original owner.

Currently, only Verizon Wireless shuts down stolen phones, preventing their easy reactivation.  Other carriers only disable internal SIM cards, which are easily replaced by any thief in minutes, and for a fee AT&T and T-Mobile will reactivate any phone.  Sprint only disables access to stored contact lists and contents of memory cards that often accompanying modern smartphones.  But anyone can reactivate a stolen Sprint or Nextel phone just by claiming to have acquired it legitimately from the former owner and replacing the removable SIM card.

The result of easy reactivation is a thriving black market for stolen phones, particularly in New York.

“Forty-one percent of all property crimes in New York City in the first half of this year were related to cellphones,” Schumer said, noting phones often sell for hundreds of dollars and are back in operation sometimes hours after being stolen.

SIM Card

Schumer says if carriers permanently disabled stolen phones until the rightful owners declare them retrieved, phones would become worthless to would-be thieves.

The senator notes that European carriers use each phone’s unique identification code to monitor the status of the phone.  Once reported stolen, overseas carriers will not reactivate a disabled phone without a signed statement from the original owner authorizing the transfer of ownership.

Schumer notes cell phone theft is rising dramatically in New York as more people start carrying increasingly sophisticated smartphones.

In 2009, 10,650 phones were stolen in the city.  In 2010 — 10,746.  So far this year, more than 11,320 phones have been taken by thieves.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WNYW New York Deactivate Cellphones 8-21-11.flv[/flv]

WNYW-TV in New York has raw video of Sen. Schumer’s press conference on cell phone theft.  (10 minutes)