Nevermind. We'll resell Sprint instead.

Back in January 2010, Cox Cable announced it was getting into the cell phone business with an ambitious plan to construct its own competing wireless network.  Cox used their little spacemen to market their forthcoming alternative as delivering “unbelievably fair” pricing and terms for cell phone service.  The bigger players were selling bait and switch plans with high extra charges and bill shock at the end of the month, or so Cox’s ads suggested.

Now, the cable company has announced it is pulling the plug on its partially constructed 3G network, and will rely exclusively on reselling Sprint service.

“We believe this approach is good for our customers, allowing us to take the necessary steps to fulfill our promise to deliver a Cox experience that customers expect from us,” read a statement from Cox.

What happens to Cox’s existing infrastructure, and the frequencies it won at auction in 2008, is unknown.

Although the reasons for the change of heart are not officially known, there is speculation in the investment community Cox’s expensive launch of 3G technology would be outdated just as larger providers were unveiling newer 4G networks.  Additionally, the dynamics of the market are increasingly trending towards a duopoly, especially after AT&T announced its intentions to acquire T-Mobile.

Two major carriers will provide service to the vast majority of Americans if the merger is approved.  That would leave Cox in a difficult position attracting investment to build its own network and interest from consumers looking for the latest and greatest smartphones Cox couldn’t sell.

Sprint’s wholesale division has allowed several providers to resell Sprint’s network, no capital investments required.  Cox had already been relying on Sprint for providing cell phone service in several markets.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Cox Wireless Advertising Campaign.flv[/flv]

Cox Wireless’ marketing campaign promised “unbelievably fair” pricing on its own wireless network.  Now it will resell Sprint’s network instead. (2 minutes)

Bill Shock

Time Warner Cable’s fastest broadband speeds come to those willing to pay a stiff installation fee — $67.98, covering a required in-home installation.

Stop the Cap! readers have been sharing their experiences calling Time Warner to set up installation appointments for the DOCSIS 3 cable modem swap required to obtain the cable company’s top broadband speeds — 30/5 and 50/5Mbps.

Although one reader was quoted $29.99, the majority are sharing their surprise at a stiff $68 fee just to install the faster Internet experience they crave.

“I’d rather just swing by one of their stores and pick up the modem and install it myself,” writes Jon from Perinton, N.Y.  “All they are going to do is check the line — something they can do remotely — and hand me a new modem, and charge me half of my normal month’s bill for the effort.”

But it could be worse.  One downstate customer shared his experience with an even higher install fee when DOCSIS 3 was introduced in metropolitan New York: $40.95 for the truck trip and a $50.00 wireless activation fee (the new modem was part of a wireless router) – take it or leave it.

Stop the Cap! called Time Warner Cable this morning and learned there is a way to a lower price – be a new Time Warner Cable customer.  Those just signing up for cable, telephone, and DOCSIS 3 broadband service pay just $29.99 for installation of all three services, and we talked them down to $19.99 — the price charged to transfer a phone number to Time Warner’s “digital phone” service.

But they won’t budge on the $67 fee just to upgrade their existing Internet customers.

If you are still paying regular Time Warner prices, perhaps now is the time to cancel service and then return as a “new customer” under a price promotion, also scoring a dramatically lower installation fee in the process.

Bill Shock

Time Warner Cable has redefined bill shock for two of their customers this week as an Ohio man found the cable company trying to bill his credit card $16 million dollars and the Madison County, Ky., Board of Education found their broadband rate going up as much as 1,568 percent.

One of these was a mistake, the other represents a potential nightmare.

Lt. Daniel DeVirgilio received notification from Time Warner Cable his credit card didn’t have a big enough credit limit to sustain the $16,409,107 in charges the cable company tried to get authorized.  The Beavercreek, Ohio resident was taking the billing foul-up in stride, joking with the Dayton Daily News that he probably should have gotten Showtime thrown in at those prices.

Time Warner Cable Southwest Ohio officials on Thursday attributed the $16.4 million figure to human error, according to the newspaper. An employee typed in the wrong number for the amount owed, which caused the company’s automated system to generate the letter.

Unfortunately for DeVirgilio, Time Warner left him on hold for nearly 40 minutes trying to straighten out the billing mess.  No harm was ultimately done to his credit card, but the 26 year old remains concerned Time Warner could have reported the “delinquent” charge to credit reporting agencies.

Madison County, Ky.

The relatively painless resolution DeVirgilio got in Ohio is unlikely to repeated for school officials in Kentucky, reeling from news Time Warner Cable is demanding an enormous rate increase for Madison County Schools’ fiber optic-based broadband network.

The Richmond Register reports local officials were stunned when the cable operator refused to renew their existing contract, which provides service at a cost of $32,000 a year to county residents.  The cable operator instead announced it wanted the school system to pay at least 500 percent more to continue the same level of service in 2011 and beyond: $168,000 a year for county taxpayers with a five year term commitment.

School officials discovered Time Warner Cable was the only provider in the region capable of delivering the type of service the school system requires, and that has given the cable company a safe position to raise prices — dramatically.

Even worse, the Kentucky Department of Education informed the district it could not agree to a five year term even if it wanted to.  Year-by-year service was the only way forward, according to county officials.

In response, Time Warner jacked up the price again — this time by 1,568 percent, potentially costing Madison County taxpayers a whopping $504,000 annually.  Telephone ratepayers will also deliver a piece of their monthly phone bill to the cable operator from Universal Service Funds that will be diverted to cover at least another $750,000 in fees sought for an annual contract.

“It’s been a very frustrating situation from the beginning,” Superintendent Tommy Floyd told the newspaper. “This makes it very difficult for us to continue our ongoing commitment to serve children. I’m going to continue on behalf of Madison County Schools to find the lowest cost provider of services.”

Time Warner also knows time is running out for the school district.  The county must sign a new contract by June 30th or lose its fiber network.  That could be a disaster for the school district.

“We use [the network] all day long in each of our buildings,” Floyd said.

State officials wrote a letter to Time Warner Cable demanding an explanation for the rate increase and stating it was unacceptable.

The state and school officials are still waiting for a response from the cable company, which so far has yet to respond.

[Updated 11:30am ET:  Stop the Cap! received a response yesterday afternoon from Cynthia Godby, Communications Manager for Time Warner Cable in Cincinnati.  In the cause of fairness, and with her permission, we are including her response in full, below:]

Although more than 30 million Americans have experienced getting bill shocked with a cell phone bill loaded with overlimit fees and penalties, a wireless industry group says 19 out of 20 of these customers are economically better off getting those high bills, and any plan to notify customers in advance when their usage limits are reached would “harm innovation, limit consumer choice, and impair the potential for competitive differentiation.”

These incredible conclusions come in a filing from the Wireless Communications Association International, an industry group funded by AT&T, Sprint, Clearwire, and Time Warner Cable.

The WCAI just released a new white paper claiming Americans facing Internet Overcharging from usage-capped wireless data plans are actually saving money when carriers impose overlimit fees.  Their reasoning for this new math?  You might overpay for a usage plan that delivers a higher usage allowance than you need.

"And to think they actually believed us when we said Internet Overcharging saved people money!"

The wireless industry is heavily lobbying the Federal Communications Commission to stop the agency from imposing new rules to deal with the bill shock problem.  The FCC favors an advance warning system, which would force providers to notify customers by e-mail or text message when they near their usage allowance.  Letting customers know when they are about to pay enormous penalty usage rates before they are reflected on a future bill could save Americans millions annually.

The WCAI-funded study says consumers don’t need the agency’s help, going as far as to claim the majority of Americans are already well aware they are exceeding their plan limits, and are better off paying short-term penalties.

“The FCC is weighing new regulations that it says will eliminate so-called ‘bill shock,’ but this analysis makes plain that consumers don’t need regulators’ help,” WCAI President Fred Campbell said. “If you give them the right information, they know how to pick the best deal.”

But critics charge providers fighting this provision want to hide the most basic information of all — when consumers are on the verge of running up huge bills.

“The FCC’s effort on bill shock is long overdue in a wireless environment where today’s heavy user is tomorrow’s average user, and where the wireless Web is more and more important to commerce and to society,” Free Press Policy Counsel M. Chris Riley said. “It is vital that consumers are empowered with the information and the tools needed to make decisions about their own wireless usage so they can avoid outrageous charges.”

The WCAI white paper suggests that if providers are forced to issue advance warnings, companies may have to raise rates to compensate.  The paper’s author suggests consumers would find that worse than just paying the bills with overlimit fees:

The Nielsen Study indicates that many consumers incurring overages do so willfully and repeatedly. Their behavior suggests it is unlikely that usage notifications or usage controls would change their behavior because they are either indifferent to the overage charges or have determined that the occasional overage charge is more economical for them than choosing a more expensive plan. Notwithstanding that these overage-incurring consumers may not want or need additional notifications or controls, the adoption of the FCC‘s regulatory proposals would impose on all consumers the financial burden of ―protecting this one small group.

The WCAI dismisses the huge number of complaints that arrive at the FCC each year over this issue as simply “opinions” from consumers, not nearly as credible as their own analysis of actual customer bills.

The paper even argues with the definition of ” bill shock,” suggesting that the nearly 7 percent of wireless customers who blow past their voice allowances only face an average penalty of around $18.  That is “surprising or inconvenient; but it is unlikely to be shocking.”

Bill Shock

The WCAI study admits the dollar amounts for data-usage bill shock can be considerably higher, sometimes $100 or more.  The charges occur more frequently, too — impacting nearly 18 percent of customers.  But the group dismisses it as a rare occurrence anyway and that carriers will issue credits for astronomical surprise bills.  Besides, the paper concludes, when it was written most consumers were enrolled in increasingly-rare “unlimited use” plans.  Since the raw data was collected largely before AT&T abandoned its flat rate data pricing in 2010, statistics regarding bill shock for AT&T’s new limited use plans were not available.  The white paper inaccurately dismisses that major rate change, claiming it “had no impact on the data analyzed.”  That leaves readers believing the rate changes made no difference.

But the group’s logic completely derails when it concludes there are “consumer benefits to overages.”  Namely, providers “simplified” rate plans to reduce choice which was causing “customer confusion.”  The paper concludes “there is substantial evidence that consumers make deliberate choices to incur overages rather than upgrading to a more expensive monthly rate plan, and that they overwhelmingly benefit from such choices.”

The white paper ignores several important factors:

1. The diminishing number of unlimited access plans which give consumers a way to avoid overlimit fees, especially for data;
2. Carriers themselves arbitrarily set the arbitrary rules for the playing field – calling plan allowances, data allowances, limits, overlimit fees and penalties, and roaming rates;
3. The study ignores the record number of consumers complaining about surprising bills and the true economic impact providing simple text message or e-mailed notifications would have, and doesn’t give any reason why a consumer can’t simply shut off services once limits are reached, to prevent excess charges.

The white paper notes that 736,000 Americans annually are getting surprisingly high bills.  Assuming they are an average of $20 higher than anticipated, that represents nearly $15 million dollars in extra revenue for carriers — ample reason to hire dollar-a-holler groups to produce nonsensical reports that conclude a system to notify consumers they are about to be one of those 736,000 customers is actually bad for them and their wallets.

The FCC’s Consumer Task Force recommends these strategies to avoid bill shock:

•    Understand your calling pattern for making voice calls, and ask your carrier for a plan that would be best for your kind of use.
•    If you are an infrequent phone user, consider a pre-paid plan. Because you “pre-pay” for all your minutes, these plans make it impossible to go over your set limit.
•    Understand what your roaming charges are and where you will incur them.
•    Understand your options for data and text plans.
•    If you are going to use your mobile phone outside the U.S. for voice, email, and other services, make certain to find out beforehand what charges may apply. (Visit Wireless World Travel for more information about using a wireless phone in other countries.)
•    Ask how your carrier can help you avoid bill shock – with phone or text alerts, by letting you monitor your account online, or by giving you other information.
•    If you have tried to resolve a billing issue with your carrier and can not reach an acceptable resolution, complain to the FCC. You can call our Consumer Center, toll-free, at 1-888-CALL FCC (1-888-225-5322), or file a complaint here.

To learn more, read the FCC’s White Paper on Bill Shock.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/FCC Bill Shock.flv[/flv]

The Federal Communications Commission discusses the problem of “bill shock.”  (1 minute)

Prime Minister Harper's government is facing an open revolt by Canadian consumers over Internet Overcharging.

A full-scale revolt among consumers across Canada has brought the issue of Internet Overcharging to the highest levels of government.

A spokesman for Prime Minister Stephen Harper said the government is very concerned about a decision from the Canadian Radio-television and Telecommunications Commission that has effectively forced the end of unlimited use broadband plans across the country.

Both the Liberal and NDP parties have made a point of protesting the CRTC decision, which happened under the Conservative Party’s watch.  Harper’s Industry Minister Tony Clement stepped up his remarks this morning which hint the government is prepared to quash last week’s decision by the CRTC, which has already forced price increases for broadband service across the country.

“The decision on its face has some pretty severe impacts,” Clement told reporters in Ottawa after NDP and Liberal critics in the House of Commons repeatedly pounded the government on the issue of so-called “usage-based billing.”

“I indicated the impacts on consumers, on small business operators, on creators, on innovators. So that’s why I have to work through a process, cross my T’s, doc my I’s. When you’re dealing with a legal process, that’s what you have to do. But I will be doing that very, very quickly, and getting back to the prime minister and my colleagues very, very quickly,” said Clement.

As of this morning, more than 286,000 Canadians have signed a petition protesting the Internet Overcharging schemes.

The protest movement has now been joined by small and medium-sized business groups who fear the impact new Internet pricing will have on their businesses.

Richard Truscott, with the Canadian Federation of Independent Business, normally a group that prefers less government action, said his members are demanding a stop to the pricing schemes before they get started.

“The vast majority of small businesses rely on reasonably-priced Internet service to conduct their operations,” he said. “Generally this is the sort of thing that hits the most innovative sector with higher costs.”

Most cable and phone companies are lobbying Ottawa politicians to keep the new usage-based billing schemes, and several are pretending the protest movement doesn’t exist.

AgenceQMI, a cable-company owned wire service, is also coming under fire for misrepresenting Clement’s positions on the pricing schemes in a news report issued yesterday.  The wire service claimed Clement supported the CRTC’s position, something Clement adamantly denied this morning.

The National Post, a self-described conservative newspaper, this morning published an editorial supporting usage-based pricing, claiming a handful of users were creating a problem that light users should not pay to solve.  But many readers leaving comments on the article strongly disagreed, claiming the newspaper is out of touch.

Although the regime of usage caps, speed throttles, and overlimit fees have been in place with most major providers for at least two years, the culmination of several events in the last six months have brought the issue to the boiling point:

1. The arrival of Netflix video streaming, which provides unlimited access for a flat monthly fee;
2. The ongoing limbo dance among several providers who are reducing usage allowances when competitive threats arrive;
3. The increase in providers now enforcing usage limits by billing consumers overlimit fees that spike broadband bills;
4. Recent examples of bill shock, which have left some consumers with thousands of dollars in Internet charges.

Bill Shock

Kevin Brennan, a graphic designer who works from home and downloads large files from clients, was first hit with extra charges in November, which cost him $34 above his usual Shaw bill.

“I’d never been contacted about going over before,” he told the Calgary Herald, adding he was also over in December. “Thirty-four dollars doesn’t seem like much, but over the course of a year it adds up.

“What concerns me, outside my own business, is the lack of innovation people will be able to do. And it makes Shaw a monopoly. . . . if you watch TV or the Internet, you pay more to them.”

Shaw reduced its usage allowance for customers like Brennan late last year from 75 to 60GB on its most popular broadband plan.  It also now enforces a $2/GB overlimit fee.

John Lawford, counsel for the Public Interest Advocacy Centre, told the Herald the concern isn’t just that smaller companies can no longer offer unlimited plans, which reduces competition.

“The phone and Internet and cable companies of the world are playing it both ways. They’re saying, ‘Well, there’s these big data hogs that are using too much, we’ve got to punish them to keep the price down.’ On the other hand they’re buying media companies so they have stuff to shove down the wires, which doesn’t count toward your cap,” Lawford said. “That’s anti-competitive.”

Most Canadian media companies are now tightly integrated with large telecommunications companies.  CTV, Canada’s largest commercial network, is now owned by Bell, the country’s biggest phone company.  Rogers, Shaw, and Videotron — the largest cable companies in Canada own cable and broadcast stations, newspapers, and magazines.  They also control cellphone companies, Wi-Fi networks, and have interests in satellite providers as well.

When a competitor like Netflix arrives to challenge the companies’ pay television interests, turning down consumers’ broadband usage allowances discourages cord-cutting.

The CRTC’s decision to allow Bell to charge usage-based pricing for wholesale accounts was the final death blow to unlimited Internet according to several independent service providers, because virtually all of them rely on Bell — a company that received taxpayer subsidies to build its broadband network — for access to the Internet.

Canadian Parliament

TekSavvy, a company that used to offer unlimited use plans, can do so no more.  In a statement to customers, TekSavvy laid blame on regulators for being forced to increase prices.

“From March 1 on, users of the up to 5Mbps packages in Ontario can expect a usage cap of 25Gb (60Gb in Quebec), substantially down from the 200Gb or unlimited deals TekSavvy was able to offer before the CRTC’s decision to impose usage based billing,” read a statement sent to customers.

TekSavvy spokeswoman Katie do Forno said the CRTC decision is a disaster for Canadian broadband in the new digital economy.

“This will result in unjustifiably high prices and a reduction in innovation,” said do Forno. “I think it’s going to change behavior about how people use the Internet.”

The company underlines the point by including “before and after” pricing schedules on its website, an unprecedented move.  Shaw, western Canada’s largest cable company, was heavily criticized for trying to hide their reduction in usage allowances.

Ottawa residents are planning direct action to protest the decision this Saturday.  Shawn Pepin is organizing the protest rally.

“What they’re doing right now looks like a cash-grab scheme, and people aren’t going to take it,” he said.

[flv width=”640″ height=”388″]http://www.phillipdampier.com/video/CBC News Pay As You Go Tony Clement 2-1-11.flv[/flv]

Minister of Industry Tony Clement was pressed by CBC Television about the Harper Government’s stand on Internet Overcharging.  The CBC asks why Canadians are paying some of the world’s highest prices for broadband and why Clement is finally getting involved.  Watch as he mysteriously avoids stating the obvious: Canadians are in open revolt and politicians from competing parties are taking their side.  (9 minutes)