Phillip Dampier

The Wall Street Journal today published an article reviewing the landscape of flat rate broadband service and how some Internet providers want to change it.

The article quotes me on the issue of Internet Overcharging becoming a political football in the Net Neutrality debate.

“This could come down to carriers saying, ‘If you don’t allow us to manage our networks the way we see fit, then we will just have to cap everything,’ ” says Phillip Dampier, a consumer advocate focusing on technology issues in Rochester, N.Y. “They’ll make it an either/or thing: give them more control over their network or expect metered broadband.”

Mr. Dampier was among those who forced Time Warner Cable to shelve a metered Internet pilot program in several cities last year. The company, which had argued the plan would be a fairer way to charge for access, acknowledged it was a “debacle.” It won’t say if it plans to revive the trials.

Unfortunately, the article never bothers to mention Stop the Cap!, the website dedicated to fighting these overcharging schemes.

AT&T weighs in on their experiment to overcharge consumers in Beaumont, Texas and Reno, Nevada, and analysts think Net Neutrality arguments may give providers an excuse to expand those experiments, launch price increases and blame it on Net Neutrality policies:

“Some type of usage-based model, for those customers who have abnormally high usage patterns, seems inevitable,” an AT&T spokesman says. AT&T declined to provide more details on its trials.

“Unquestionably, the carriers erred in their initial selling of broadband with a flat rate,” says Elroy Jopling, research director of Gartner Inc. “They assumed no one would use it as much as they do now, but then along came high-definition movies. They’re now trying to get around that mistake.”

Network neutrality deals primarily with ensuring that Internet providers don’t favor any online traffic over any other. Still, Mr. Jopling and other analysts argue, the net neutrality debate might provide the carriers with an opening to argue for changing that pricing.

“With network neutrality enforced, the only other option for carriers is to charge by the byte or to raise the flat-rate pricing,” says Johna Till Johnson, president of Nemertes Research. “Right now they’re just deciding which one to do. Just be prepared to pay more.”

It's "Rep. Eric Massa," Not 'Joe Messa'

The article has several flaws.

• It mis-identifies Rep. Eric Massa (D-New York) as “Rep. Joe Messa.”  Rep. Massa introduced legislation to ban Internet Overcharging when companies cannot produce actual evidence to justify it, particularly in the limited competitive marketplace for broadband in the United States.
• The article fails to mention the usage limits proposed by smaller broadband providers, including Frontier’s infamous 5GB usage definition in their Acceptable Use Policy.  This is a very important fact to consider when the article quotes Professor Andrew Odlyzko, an independent authority on broadband usage, as stating the average broadband consumer uses triple that amount (15 gigabytes per month).
• The quotation about the number of e-mails or web page views available under plan allowances that routinely appear in such articles ignores the increasing use of higher bandwidth applications like online video.  Telling a consumer they can send 75 million e-mails is irrelevant information because no consumer would ever need to worry about usage limits if they only used their account for web page browsing and e-mail usage.  They very much do have to be concerned if they use their service to watch online video from Hulu or Netflix, or use one of the online backup services.
• The article makes no mention of publicly available financial reports from broadband providers like Time Warner Cable that prove that at the same time their profits on broadband service are increasing, the company’s costs to provide the service continue to decline, along with the dollar amounts they spend to maintain and expand that network to meet demand.  Providing readers with insight into the true financial picture of a broadband provider, instead of simply quoting the public relations line of the day would seem particularly appropriate for The Wall Street Journal.
• The article doesn’t make mention that the same providers arguing increased Internet traffic is creating a problem for them are also working to launch an online video distribution platform that will rival Hulu in size and scope.  TV Everywhere will consume an enormous amount of the broadband network they claim can’t handle today’s traffic without Internet Overcharging schemes being thrown on customers.  Of course, such usage limits are very convenient for companies like Comcast, Time Warner Cable and AT&T, which are now in the business of selling pay television programming to consumers.  Should a consumer choose to watch all of their television online instead of paying for a cable package, a usage allowance will help put a stop to that very quickly, as will planned restrictions that only provide online video to “authenticated” existing pay television subscribers.

One thing remains certain – providers are still itching to overcharge you for your broadband service.  Consumers and the public interest groups that want to represent them must stand unified in opposition to Internet Overcharging schemes and for Net Neutrality protection, and never accept sacrificing one for the other.

The reported deal between Comcast, the nation’s largest cable operator and NBC-Universal, part owner of Hulu, could have serious consequences for the Internet’s most popular destination for online television shows and movies.

In just a year, Hulu has enjoyed a quadrupling of visits well into the millions, streaming dozens of network television series, specials, and movies, all supported by commercial advertising.  Devised to help combat online video piracy and earn additional advertising revenue from web watchers, Hulu partners NBC, Fox and Walt Disney Co., have been successful at drawing scores of Americans to the video website.  Program distributors have also been pleased, earning money from shows like Lou Grant that haven’t been on network television in decades.  But after the economic crash of 2008, the venture has proven costly for the partnership, challenged by an advertising marketplace on life support and outright hostility by broadband providers, cable operators, and Wall Street investors, upset that the service is giving it all away for free.

Among the loudest to complain is Comcast, which is now angling to acquire NBC, and its 30% ownership stake in Hulu.

Comcast CEO Brian Roberts has repeatedly complained about the implications of giving away online video, which for some have begun to replace cable television subscriptions.

“If I am any one of these programmers, not just ESPN but the Food Network and I have a business in that 50 percent, 60 percent, 70 percent of my business comes from subscriptions, I want to think long and hard before I just put that content out there for free and not think through what it is going to mean to my business,” Roberts said at an investors conference in May.

Roberts view was shared by the CEO of the nation’s second largest cable operator, Glenn Britt of Time Warner Cable.

“If you give it away for free, you’re going to forego that subscription revenue,” Britt said. “And if you actually think the ad revenue can make up for that, then God bless you and go on your way. But I don’t think that’s the case, and (networks) don’t really think that’s the case either.”

The difference between Comcast and Time Warner Cable is that the former could gain part ownership in the largest service now giving it all away for free, and that has major implications for Hulu’s future.

“Would Comcast put an end to the Hulu model of using the Web to distribute free TV content?” asked Michael Nathanson, senior media analyst at Sanford C. Bernstein & Co. “Will Comcast continue to support Hulu?”

The Los Angeles Times reports there is already a precedent for Hulu limiting content for online viewers in response to complaints:

Hulu already has limited users’ access to certain cable programs, including FX’s “It’s Always Sunny in Philadelphia,” in response to an outcry from the TV producers and cable companies that object to paying TV programmers hundreds of millions of dollars each year for shows that are offered free online.

“Arguably, their ability to shape online content distribution, and to recast windows for video on demand, would be an important attribute of any deal,” wrote Craig Moffett, a cable industry analyst at Sanford C. Bernstein.

Comcast’s interest in NBC Universal would dramatically expand its entertainment portfolio with such attractive cable channels as USA Network, MSNBC and CNBC as well as the Universal Pictures movie studio. The proposed Comcast-NBC Universal venture also would give the cable operator a greater role in deciding how and when TV shows and movies are distributed online and at what price to consumers.

Comcast’s influence would primarily be felt in cable network programming streamed online, as Comcast has a vested interest from the millions it currently pays those programmers to carry their networks on Comcast cable systems nationwide.  Comcast could advocate Hulu become a partner in the TV Everywhere cartel, providing video content only to “authenticated” pay television subscribers, or it could limit the number of episodes available for free, or when those episodes appear on the service.

Soleil Securities media analyst Laura Martin thinks an even more likely possibility would be charging a fee for some of its more popular content.  Martin points to Hulu’s own financial problems, a consequence of the crash in the advertising market.  Soleil estimates that the three partners subsidize $33 million of the losses at Hulu even after earning $123 million this year from advertising.  Even worse, Martin says, is the cannibalizing of the networks’ own advertising earnings from broadcast runs of those shows now available online.  She told the Times that for every viewer who migrates to the Internet, the companies forfeit $920 a year in ad revenue.

But not everyone believes the Comcast-NBC deal is such a great idea.

Time Warner CEO Jeff Bewkes today told an industry conference in Manhattan that large media mergers have had a lousy track record.  Still, he said the merger would probably benefit the cable industry as a whole, because broadcast networks content with giving away content for free online will now be a part of the very industry hurt by that formula and will be more friendly towards arguments to stop it.

“We love to see our competitors taking risks,” Bewkes said.

[flv width=”400″ height=”300″]http://www.phillipdampier.com/video/CNBC Hulu 9-7-09.flv[/flv]

CNBC’s Julia Boorstin talked with Hulu CEO Jason Kilar in September about the desire for the company to partner with the cable industry’s TV Everywhere project.

PSP Go

The arrival of Sony’s update to the PlayStation Portable, the PSP Go, gives potential buyers more to ponder than its $250 price tag and the fact it excludes a UMD drive, which means many consumers will now download their games from the PlayStation Store.

In areas where broadband service is loaded down with Internet Overcharging schemes like usage allowances and overlimit fees, the first question for potential PSP Go owners is, “how big are these games?”

They are right to be concerned… and confused.  There has been considerable debate over the size of the average PSP Go game.  Some retailers have been talking about Go games running 50-100 megabytes.

But Al De Leon, PR Manager for Sony Computer Entertainment America, has stated the average size of a PSP Go downloadable game will be between 600-800 megabytes and no upper limit has yet been announced.  A few consumers who purchased the device discovered “no upper limit” is the operative phrase.  They found some examples among PSP titles on offer:

• Gran Turismo is 937 megabytes
• God of War: Chains of Olympus is 1.29 gigabytes
• Resistance: Retribution is 1.4 gigabytes

Of course, some games will be much smaller, especially those designed for playing on the Go. Enjoy competitive odds on kabaddi games with https://4rabetsite.com/sports/kabaddi-138.

Sony’s experiments with online game distribution could foretell a future where game titles are increasingly distributed online to consumers, which reduces manufacturing costs and speeds delivery to eager buyers.  But that future may be hampered if broadband providers implement usage allowances, particularly at the lower limits some companies have experimented with.  Frontier’s infamous 5 gigabyte, unenforced limit in their Acceptable Use Policy is a good example.

Cable ONE, owned by the Net Neutrality-bashing Washington Post, has turned the art of broadband service into a science of confusion for its customers.

In addition to introducing a forthcoming new, faster tier of service, offering speeds at 12Mbps downstream and 1.5Mbps upstream, Cable ONE has been tinkering with their convoluted usage capping system, which combines a daily usage allowance with throttled speeds and exempt periods during traditionally lower usage hours.

See if you can understand their new usage limit chart, and even if you can, ask yourself if your parents will pick up what they are putting down:

(Click to enlarge)

Karl Bode at Broadband Reports thinks “Standard Speed” refers to Cable ONE’s throttle — reducing effective speeds by half, assuming you exceed your “threshold.”  The limits shown are reset daily.  Exceeding that limit many times during a month can technically get your service suspended, but we’ve not heard of anyone who either hasn’t been able to talk their way out of it with company officials or who haven’t been bothered by local system managers who are probably just as confounded by this crazy cap scheme as we are.

Cable ONE customers like the new speed offering, if and when it arrives in their respective communities, but hate the silly usage allowances and speed throttles that accompany them.  As Stop the Cap! has always said, consumers are beating the doors down waiting to throw more dollars at broadband providers who offer them the higher speed service they desire.

Instead, some providers would rather create Internet Overcharging schemes to reduce demand and expenses, and profit the proceeds.  If given a competitive choice, consumers will leave a cap-happy provider for someone else who actually listens to customers.  Unfortunately, for too many Americans, the key words are “if given a competitive choice.”

A customer in Boise notes, “I can’t even watch a full movie from Netflix without getting my speed cut in half.  I started the movie at 12pm and by 1pm my speed was cut in half.  When I called Cable ONE and asked about my bandwidth, they wouldn’t even tell me if I crossed the threshold limit.  They kept dancing around my question with ‘it may have been reduced.’  Wake up Cable ONE!”

Many Cable ONE customers are located in smaller cities and communities that currently have just one other option – DSL service from the local phone company.  For many residents, that tops out at 1.5Mbps or 3Mbps downstream.  But for some, it’s better than being usage capped by cable.

Perhaps Cable ONE would do good to watch their own advertisements, which promise: “It’s the way we always listen, to every word you say; loud and clear is how we hear, there’s just no other way.”

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Stop the Cap! calls on Cable ONE to discard confusing, impenetrable usage allowances that few customers can find on their website and even fewer actually understand.  Investing in your network with the proceeds of higher speed premium service tiers and making upgrades to DOCSIS 3 can provide additional bandwidth and profit opportunities while customers can sit back, “enjoy the fun with Cable ONE,” and relax with the broadband service they pay good money to receive.  Cable ONE already provides customers with a way to self-regulate their usage, by selecting a speed tier that is comfortable for them and their anticipated Internet needs.

From the Department of Duh:

The plight of mobile providers to strike profit riches in mobile broadband has been stymied by the fact customers actually want to use the service they pay for each month.

Even worse, customers are using dongles to give their laptops and netbooks wireless connectivity, which hurts an industry accustomed to charging top dollar for data plans used sparingly on cumbersome mobile phones.

“Dongles really are reaching a critical mass,” a Vodafone spokesperson told BBC News.

French operator SFR claims laptops equipped with a dongle use 450 times more bandwidth than a classic mobile phone.

So-called “smartphones,” which often include a built-in or on-screen keyboards, are using lots of data, too.

The result has been near-universal adoption of usage caps in European mobile broadband, which UK operator O2 admitted earlier this year were “used as a deterrent and to make sure that others using the network had a good experience.”

Many providers have customers too afraid to exceed those caps, often set at 1-5GB per month.  The punitive overlimit fee can easily add tens of Euros to mobile broadband bills.  Many customers stay well clear of the cap to avoid the prospect of receiving a shocking bill.

Providers fear their mobile networks may soon be at capacity.  That would logically lead many to presume fast and furious investments in their networks to upgrade capacity, but that is exactly the opposite view some providers have.

“You can easily lose money on mobile broadband if you do it in the wrong way,” warns Bjorn Amundsen, director of mobile network coverage at Telenor in Norway.

“We have had to be careful not to invest too much, because the only thing that would happen if we did would be to increase data traffic without an increase in our profits,” said Amundsen.

Phil Sayer, principal analyst at Forrester Research told the BBC, “the user community as a whole is tired of hearing special pleading from the mobile operators.”

“Remember, these guys have been making money hand over fist from data roaming charges,” Sayer said.