While some American broadband providers continue to dream of Internet Overcharging schemes for American customers, one of the world’s most usage-capped countries continues its march forward to abolish them.  Australia’s Optus, a major broadband provider, today announced it was dramatically increasing usage allowances on customers, effective immediately.

The Fusion 99 plan, which bundles telephone and broadband service, sees its data allowance increased from just 15GB of usage per month to 500GB (twice that of American cable giant Comcast).  Ditto for the Fusion 109 plan, which originally doubled the 15GB limit to 30.  Now it offers a 500GB allowance of usage.

If 500GB isn’t enough, Optus has announced its Fusion 129 plan includes 1000GB — a terabyte — of usage per month, which includes unlimited long distance calling and calls to Australia’s mobile phone customers (most countries outside of North America require the calling party to pay mobile rates when calling a mobile customer).  Even customers on Optus’ budget-minded standard and “naked” (standalone) broadband plans will benefit from new 500GB allowances.  Those who manage to exceed their allowance will find broadband speeds reduced to 250kbps until the end of the billing cycle.

Some Australian ISP’s take all limits off during off-peak usage hours.  The country has traditionally suffered from usage caps because of international undersea cable capacity problems which restrict how much traffic can be sent and received between the South Pacific and North America and Europe.  Increased undersea fiber capacity is tempering those traffic restrictions, and momentum towards unlimited use plans (or those with ridiculously high allowances) is the result.

Lifehacker produced a broadband plan breakdown showing the dramatically increasing usage allowances for Australian broadband customers. Traffic shaping continues to be an issue, however. Such speed control measures traditionally target peer-to-peer traffic. Total cost is the total price of the service over the length of the term contract. This chart represents high end plans, typically offering the highest speed tiers. All dollar amounts are in Australian dollars.

[flv]http://www.phillipdampier.com/video/ABC The Gruen Transfer Telco Ads 11-2010.flv[/flv]

The Australian Broadcasting Corporation’s ‘The Gruen Transfer’ takes a humorous look at how phone companies Down Under advertise their services, including a reference about how “capped” services represent revenue gold to service providers.  (15 minutes)

Phillip "Of course you know this means war" Dampier

Sizing up the big winners from FCC Chairman Julius Genachowski’s latest Net Neutrality proposals is as simple as putting those praising Genachowski in column “A” and those outraged by downsized consumer protections into column “B.”  It comes as no surprise Big Telecom, the employees whose jobs depend on those companies, their trade associations and lobbyists are all living it up on the “A” side while consumers and public interest groups sit in the dark in column “B.”

Among the high-five club is Kyle McSlarrow, the outgoing head of the National Cable and Telecommunications Association, the cable industry’s top lobbying enterprise.

On the NCTA’s blog, an indication of your broadband future has been placed front and center — a meter.  Perhaps putting a coin slot on your cable modem or a credit card reader on the side of your monitor would be a bit too brazen, even for this industry.

McSlarrow, among others, heaped bountiful praise on the FCC chairman for his ‘enlightened’ views on Net Neutrality.  That hardly a surprise considering Genachowski has opened his phone line, and apparently his heart, to industry propaganda and arguments.

Genachowski’s remarks about usage-based pricing, in particular, were a breath of fresh air to Wall Street and providers clamoring to dispense with unlimited broadband service for consumers to increase profits:

Our work has also demonstrated the importance of business innovation to promote network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing.

“This approach reflects a responsible and considered view of a fast-moving and highly dynamic marketplace but it doesn’t assume that there is any one ‘correct’ answer,” McSlarrow wrote.

It’s also a view consumers strongly disagree with, but those opinions are off the FCC’s radar.  Consumers don’t have the chairman’s direct phone number.  If they did, they could argue the fact “matching price to cost” would mean a dramatic reduction in pricing for today’s unlimited broadband account.  Instead, we have a lobbying effort to end “unlimited” entirely, backed by manufactured studies funded by providers expecting pre-determined conclusions.  Too bad the FCC doesn’t read provider financial reports.

Writes McSlarrow:

Some consumers don’t see the need to go online.  Others are constrained by cost.  Still others want to use the service they have in cutting-edge ways.  And the ability to pigeonhole companies and their business plans as being one thing or another is breaking down, particularly in an environment where Internet applications, content, and services change the way we behave as consumers, provide new opportunities for providers and consumers and alter how we all interact with both traditional and new devices and features.

The key point is that that we need to focus on what best serves consumers.  With all this change, it is necessary to have the flexibility to test new business models – and perhaps new pricing plans – in order to see if they make sense.

A usage-based pricing model, for instance, might help spur adoption by price-sensitive consumers at the lower end of the socioeconomic ladder.  As Sanford Bernstein analyst Craig Moffett noted in a report issued yesterday, “{u}sage-based pricing for broadband would have profound implications.  At the low end, it would allow cable operators to introduce lower priced tiers that could boost penetration and help in efforts to serve lower income consumers.”

McSlarrow

Evidently, to chase the small percentage of Americans who either don’t have an interest in going online, or think it costs too much, the NCTA wants those already online to face Internet Overcharging schemes ranging from usage caps to metered billing.  Is it flexible for consumers who face the end of broadband pricing as they’ve lived with for more than a decade or is it flexible for providers who can run to the bank with the higher profits rationed broadband delivers?

McSlarrow quotes Moffett’s quest for higher profits for his clients — Wall Street investment banks, but ignores the implications Moffett himself admits — consumer rebellions, self-rationing of usage, a stifling of online innovation from independent companies not connected with providers, and higher prices.

American providers look north for an example of Big Telecom’s pot ‘o gold — Canadian ISPs that have managed to wreak havoc on the country’s broadband rankings, forcing consumers to live with higher prices and, in some cases, declining usage allowances.  Canada’s broadband innovation graveyard is an object lesson for Americans: usage-based pricing doesn’t deliver savings to anyone except the most casual users living under constrained speeds and paltry allowances as low a 1GB per month.  For everyone else, broadband prices are higher, speeds are slower, and usage allowances deliver stinging penalties for those who dare to exceed them.  What do Canadian providers do with all of the money they earn?  A good sum of it goes towards acquiring their competitors, further reducing an already-poor competitive marketplace.

As one Ontario reader of Broadband Reports noted, “our largest cable company has the money to buy three professional sports teams but not enough to roll out DOCSIS 3 [to all of its customers.]  Our largest phone company, Bell, has the money to buy half the news stations in Canada, but cannot seem to get users off of 3Mbps DSL service.  The whole system is a scam.”

While the rest of the world is decidedly moving away from limited-use broadband, American providers have sold Genachowski that rationing the Internet is “innovation.”

Of course, you and I know real innovation means investing some of the enormous profits providers earn back into their networks to keep up with growing demand.  Providers can innovate all they like to attract price sensitive customers, so long as current unlimited plans remain available and affordable.  But as AT&T illustrated earlier this year, the first thing off the menu is “unlimited,” replaced with overpriced and inadequate wireless data plans that only further alienate their customers.

AT&T should take a lesson… from AT&T.  While it gouges its customers on the wireless side, the company has managed to solve the affordability question all by itself, without resorting to wallet-biting.  It dramatically reduced prices on its DSL services — now just $14.95 a month for its customers, which includes a free gateway and modem.  That sure sounds like a solution for budget-conscious customers and delivered all without antagonizing those who want to keep their current unlimited service plans.

AT&T seems to have managed to solve the affordability question without overcharging their customers.

Cable companies deliver their own budget broadband plans, but it comes as no surprise they barely market them, fearing their premium-paying customers could downgrade their service.

In short, Internet Overcharging is a solution chasing a problem that simply does not exist in a responsible broadband marketplace.

McSlarrow says he’s not arguing for or against any particular model.  All he is really confident about is that the marketplace is changing and that “companies will have to adapt to that change.”

But as is too often the case, McSlarrow, his industry friends and colleagues, and Chairman Genachowski have forgotten it’s ultimately consumers who have to adapt to change, and we promise it means all-out war if providers tamper with unlimited broadband service.

Ontario residents enjoy less than half a serving of broadband their neighbors in Quebec enjoy from Bell, for less money

Residents of Quebec enjoy more than double the broadband usage allowance Bell provides its Ontario customers, showing once again h0w arbitrary Internet Overcharging schemes are for consumers in North America.

Broadband Reports reader Ironsight200 ponders why customers in Quebec enjoy substantially less abuse from the skimpy usage allowances Bell imposes on its customers.

The prices charged differ as well, with Quebec residents also getting an out-the-door lower monthly price because Bell does not impose charges on the modem Ontario customers rent for $3.95/month — $6.95 a month with the Fibe 25 service.

Let’s take a look (and don’t worry Ontario readers, Bell promises you can still look at least 624,999 additional web pages this month without incurring overlimit fees):

Quebec users get more than double the usage allowance of...

...their neighbors in Ontario.

Pricing for Bell broadband service at the bundled price:

*- includes $3.95 modem rental fee. ^- includes $6.95 modem rental fee.

GCI, an Alaskan Internet Service Provider, is getting pummeled by angry customers as they continue to learn the company has launched an Internet Overcharging scheme that limits their broadband use.  Some customer claim the company is actively trying to trick those previously enrolled in unlimited plans into limited service tiers with tantalizing “free speed upgrades.”

Stop the Cap! reader Thomas was one of more than a dozen readers who complained to the Anchorage Daily News about the broadband ripoff.

He is outraged by the bait and switch tactics employed by GCI that sold customers on expensive bundled service packages that promised “unlimited Internet” service the company is now trying to take away.

Thomas first learned GCI had slapped limits on his broadband account… from Stop the Cap! GCI never bothered to inform him, or many other customers, about the new usage limits.  After he read our earlier story, he called GCI and learned he was a victim of Internet Overcharging.

GCI’s limits range from 40-100GB on plans ranging in price from $45-105 per month.

GCI, like most Internet Overchargers, tries to blame its customers for the imposed limits.

GCI estimates that 5 percent of its Internet customers are consuming 70 percent of the company’s available bandwidth. These users share a portion of their Internet cable with other GCI customers, and they have been slowing down the other households’ Internet speed, GCI spokesman David Morris told the Anchorage newspaper.

In an effort to prove their contention that usage limits improve service, GCI handed out free speed upgrades along with usage allowances and attempted to conflate the two.

In reality, most broadband slowdowns come from overselling access and being unwilling to invest in appropriate capacity upgrades to meet the growing needs of customers.  For companies like GCI, imposing usage limits to scare users away from high bandwidth services is cheaper and more profitable than meeting customer demand.

“Most of the under-30 crowd that I know use Netflix and Hulu streaming services so we can watch what we want, when we want. Cable TV does not give us the flexibility we want,” Sean Hogan, an Anchorage accountant, told the newspaper.

“I’m getting charged $180 per month and I don’t even want the phone or cable,” said Mike White, an Anchorage customer who upgraded his data-usage plan recently because he was worried about violating GCI’s limits.

GCI claims its new limits allow customers to do many things they had no interest in doing under their old unlimited plans, like sending millions of e-mail messages or browsing tens of thousands of web pages.  To make the limits sound generous, they made a chart:

Of course, these limits ignore the reality customers do most or all of these things, and if they use their high speed connection to download files or watch the increasing amount of video content delivered in High Definition, they’ll blow through some of GCI’s limits with little effort.

Despite GCI’s claims of generosity, its customers think otherwise, and many are moving to curb their usage to avoid potential penalty fees or service termination the company could impose with enforcement of their caps:

Morris said that most of GCI’s customers will discover that their Internet usage is far below the new limits. Depending on the plan, the limits range between 50 and 125 gigabytes per month.

Chris Bruns, an Anchorage father and college student, isn’t so sure. “I’m in the high-30 (gigabyte) range every month,” he said.

GCI’s cheapest substitute for an unlimited plan is 40 gigabytes — the equivalent of downloading and watching 60 movies per month on your computer.

Bruns found out recently — after calling GCI to ask some questions about his family’s Internet speed and usage — that his previously unlimited plan, called Ultimate Xtreme, now had a 40 gigabyte ceiling.

“I was pretty miffed. It came as a surprise,” he said.

“When we signed up, we specifically got the unlimited plan because we knew we used it a lot,” he said.

He said he has since curbed the family’s Internet usage to be on the safe side. He said he and his wife regularly download movies for themselves and cartoons for their two children on Netflix to watch on their computer. Using Netflix is a way to keep the kids from seeing “garbage” on TV, Bruns said.

Ed Sniffen, a consumer-protection attorney in the Alaska Department of Law, may a victim of GCI’s bait and switch broadband himself.

Sniffen said he has had an unlimited-data plan with GCI and didn’t know on Tuesday afternoon whether he received a notice about the new policy. He said anyone who has a concern should contact the Law Department’s consumer-protection office.

The story in the newspaper prompted an enormous response — some 265 comments and counting.  A sampler:

GCI provides terrible service compared to companies in the lower 48 at exorbitant prices. They are a monopoly that needs to be tweaked.

GCI’s Network costs are FIXED. They are raping and pillaging us.

“GCI said it hasn’t yet charged anyone fees for exceeding the data limits…” — GCI lies. Just a few months ago I was charged nearly $100 for exceeding the bandwidth limit. Since then, I’ve upgraded my package to a ridiculous amount of bandwidth (at a ridiculous price) just so I can avoid that problem.

This is crazy. You go anywhere in the lower 48 and almost every Internet provider out there has some sort of unlimited plan, and it doesn’t involve payment with an arm, a leg, a kidney, or a first-born child. GCI needs to get this crap sorted out.

I got an offer to double my Internet speed and usage for a few bucks extra, and free cable (the good package, not the basic cable). Two months later, I still haven’t seen anyone show up to do anything, and I’m still getting charged out the tail end for overage charges. I keep requesting to up my Internet (I have a college student who takes some Internet classes) but they never do it. The only reasons I switched from ACS were because when it rained we had no phone OR internet (they said the problem was with our lines – our landlord at the time needed to fix it, but the contractor said it was ACS’s line problem – THEY needed to fix it.)  If there was another alternative to phone/Internet, I would so be there.

I was out and out LIED to by a GCI Rep. I was told if I changed my plan I would receive higher speeds with NO OTHER CHANGE for the same price. I questioned the GCI rep about this in detail several times before agreeing. The next day I no longer had unlimited downloads. I was LIED to and RIPPED OFF by GCI.

GCI’s statement that they have not charged overlimit charges is incorrect as over ten individuals that I know including myself have been hit with bills ranging from $300 to $2000 for one month of service.

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.