Late last week, Rogers Cable announced the launch of an “Ultimate” tier broadband service for residents in greater Toronto, offering speeds of 50Mbps for $149.99 a month.  This morning, new details on a second tier of service, an adjustment to the usage allowances  for both tiers, and more.

New this morning:

• A second tier of service for greater Toronto residents has been announced.  “Extreme Plus” will offer 25Mbps/1Mbps service for $99 a month, with a 125GB monthly allowance.  A digital cable TV subscription is mandatory.
• Some corrected information about the “Ultimate” tier.  Despite what Rogers told one of our readers, this tier will offer 50Mbps/2Mbps service for $149.00 a month, with a 175GB monthly allowance (up from 150GB).
• The purchase of the Rogers Wireless N router for $200 is mandatory for all customers choosing the “Extreme Plus” or “Ultimate” tier.
• The overlimit penalty fee has not yet been established.  Rogers typically charges a maximum of $25 in penalties for exceeding usage allowances. As one reader put it: “What this means is that – IN REALITY – you are paying $124.00/month for an unlimited account at 25Mbps, or $199.00/month for an unlimited account at 50Mbps.”

Although many customers were excited by the initial news of higher speed service, the reality that the usage allowances are only incrementally higher, for a considerably higher priced level of service, reduced enthusiasm considerably.  Customers have also been underwhelmed by the upload speed, and by the news they will be required to purchase a router from Rogers for $200 just to obtain the service.

Rollout date for both services in sections of Toronto in August 17th, with other areas being added in mid-September.  We’ve obtained some preliminary specific dates for service based on Toronto metropolitan area postal codes:

August 17 is the date for implementation in the follow postal codes:

Toronto
M5X
M5J
M5W
M5C
M5G
M5B
M4Y
M5R
M4W (western section)
M4V
M4T
M4S
M5P
M4P
M4R
M4N
M5M
M2P
M2N
M2R
M2M

Markham
L3T

Vaughan
L4J

Richmond Hill
L4B
L4C
L4E

Newmarket
L3X
L3Y

Bradford / East & West Gwillimbury
L9N

September 18th is the targeted date for Phase Two of the rollout in these areas:

Aurora
L4G

All other areas surrounding Toronto (Pickering, Ajax, Brampton, Mississauga, etc.) upgrade is expected on September 18th + in these random postal codes:

L6E
L5W
L4T
L3Z
M5A
M4X
M1J
M1H

Thanks to Digital Home and a Rogers employee who remains anonymous for specific details.

Cable operators have been looking for a way to expand their broadband service to outside the home, and Comcast, Bright House, and Time Warner Cable have found their answer: WiMax technology from Clearwire.  They’ve joined Intel and Google as minority investors, collectively owning 25% of Clearwire, after investing more than $3 billion dollars in the wireless broadband service.  What do they get for the buy-in?  The chance to market Clearwire services to their cable broadband customers for “on-the-go” broadband.

Comcast High-Speed 2go Metro service launched Tuesday in Portland, Oregon providing consumers with portable speed up to 4Mbps in Clearwire’s own 4G network service area.  Comcast customers can sign up for a promotion for $49.95 a month for one year, which includes their wired cable modem service, a Wi-Fi router, and Clearwire wireless service (regular price after the promotion is $72.95 monthly).  Customers can access the service in any Clearwire 4G service area nationwide.  Where Clearwire doesn’t offer service, customers can “roam” on Sprint’s 3G data network nationwide for an additional $20 a month more.  There are no known usage limits at this time.  Existing Comcast broadband customers in Portland can add the Clearwire-based service starting at $30 a month.

The service will work for laptops, but not mobile data devices.  Comcast’s investment in Clearwire made such a venture possible, and is expected to compete with mobile phone broadband data plans, which typically offer 5GB of service for $50 a month.

Comcast will sell service in Atlanta, Chicago and Philadelphia by the end of 2009.

While the service will be useful for Comcast customers who travel or who want more reliable, fast wireless data access, Clearwire’s ability to serve as a true competitor to Comcast, Time Warner Cable, and Bright House may be compromised by those partnerships.

Could Clearwire effectively create promotions and plans that could lead to customers cutting the cord on their cable broadband provider?  Should cable companies increase their investments and ownership interest in Clearwire, would it ultimately matter to them where you obtained service?

The quest for fiber-based broadband service from consumers has reached the point where many have decided to accept or decline offers to purchase property in new housing developments based on whether they’ll have access to fiber or not.  Those were the findings in a study from the Fiber to the Home Council, which surveyed more than 600 existing fiber-to-the-home (FTTH) customers and 600 other broadband customers nationwide.

The results clearly show consumers love fiber optic broadband, far more than cable modems or DSL service from the phone company.

For example, 67% of FTTH users were very satisfied with their broadband speed compared to 58% of cable modem users and 46% of DSL users. A total of 70% of FTTH users were very satisfied with their Internet service up time compared to 64% of cable modem users and 55% of DSL users.

Consumers also reported that FTTH service was faster… much faster than competing technologies.  The median tested download speed from FTTH users was 10.4Mbps. FTTH tested download speed was 51% higher than cable modem service and 593% higher than DSL (DSL has abandoned the speed war, having lost that race to competing technologies, and now prevails only on price and where other alternatives are not available).

Upload speeds offered by FTTH users blew away the competition.  The average subscriber had 2.4Mbps of upload speed, which is 380% higher than cable modem users and 500% faster than DSL.

The survey also showed that robust competition, with at least one provider bringing true fiber to the home service to consumers, meant an average of six percent lower broadband bills.

Some cable and telephone industry executives downplay the lust for speed by consumers, claiming that most don’t understand the differences in speed, and don’t utilize services where speed matters most.  But the FTTH survey found entirely different results.  Not only are FTTH customers extremely loyal and happy with their service, they are reluctant to move to places that don’t offer it.

When asked to imagine purchasing a new home and given a list of five real estate development amenities, both current and non FTTH broadband users rated “Very high speed Internet from a direct fiber line” more important than other amenities such as green space/walking trails, 24 hour neighborhood patrol, a community pool, and a fitness center/club house. 69% of non FTTH users and 82% of current FTTH users said “Very high speed Internet” would be an important factor in buying a new home.

Even in this difficult economy, 49% of FTTH users said their broadband service would be the “last thing” they would give up.  Only 11% said it would be among the first things to go.

The demand is there, but the competition is not in many American communities.  Unless consumers reside in an area where an aggressive provider such as Verizon is willing to deploy fiber to the home, the chances of service arriving anytime in the near future is dismally low.  Few telephone companies are interested in deploying widespread fiber networks to consumers, and most cable operators believe their existing hybrid fiber/coaxial cable networks are “good enough” for consumers.  Only when a third player arrives in town, be it a private competitor or a municipally-owned fiber network, do telephone and cable providers get interested in performing their own fiber upgrades.

AT&T believes in its own copper-wire-based U-verse technology.  Smaller independent telephone companies are doing only limited experiments with fiber deployment, primarily to multiple dwelling units like apartment buildings and condos, and other uniform, expansive new housing developments.

Until prevailing attitudes among providers change, consumers hungering for fiber may simply have to pack up and relocate to the lucky communities that already have it, or will soon.

Sunflower Broadband Pricing - Note a $10/month surcharge applies for customers not subscribing to Sunflower's video package.

We’ve covered the story of Sunflower Broadband before here on Stop the Cap! This dubious provider has become well entrenched with its Internet Overcharging schemes in and around the Lawrence, Kansas region, charging top dollar pricing while imposing ridiculous limits on usage.  One Mac owner in the Lawrence area is fed up with Sunflower’s 3GB monthly usage limit for broadband users, charging a ludicrous $27.95 a month for standalone broadband service (that’s $9.32/GB!).  He’s calling on Apple Corporation to get involved in the opposition to price gouging and Internet Overcharging by providers like Sunflower.

Sunflower’s a big proponent of these pricing schemes.  Patrick Knorr, who works for Sunflower and is also ex-officio chair of American Cable Association, wants this kind of pricing for everyone.  No matter how much you consume, you are probably paying too little for your broadband account.  Sunflower’s pricing of its most deluxe Gold plan assumes you’ll never use more than 50GB per month, and for that charges customers $59.95 a month if all you want is broadband service.

Dave Greenbaum, writing for theAppleBlog, considers these kinds of limits to be abusive.

Apple is the leader in multimedia content creation; new Mac users are always pleasantly surprised by how easy it is to buy from the iTunes store, or create their own content. A common question we get in our local user group is “I’m not sure what I did wrong, but all of a sudden I have a substantial overage bill from my cable company.” Of course, the user did nothing wrong, other than subscribe to a few podcasts, and perhaps download a new Apple software update and buy some shows with iTunes! The Mac is also blessed with great online backup services like MobileMe, yet when our user group did a presentation on backup strategy, I had to warn novice users to be careful lest their backups end up costing them an arm and a leg in bandwidth overage fees!

Sunflower Broadband claims, with absolutely no independent verification, that nearly 50% of their customers consume less than ONE gigabyte per month and 98.9% of users had less than 40GB of bandwidth usage.  Of course, despite updates to its website, it curiously only provides statistics from April 2007, more than two years ago.

Greenbaum informs readers of Rep. Eric Massa’s proposed legislation, HR 2902, the Broadband Internet Fairness Act.

Ultimately, without an end to abusive broadband pricing, the implications for consumers go well beyond their own pocketbook:

Unfortunately, using the Internet normally with bandwidth metering is also unsustainable. When Mac owners are worried about downloading movies, doing backups or performing system updates, that hurts the Apple brand. Apple is continually innovating new ways to make the Mac OS the best Internet operating system, creating a whole ecosystem with iTunes, MobileMe and iLife. All of these great products rely on the ubiquity of the Internet. When Internet providers start making normal Internet use an expensive proposition, Mac users lose.

Apple should lead the way and come out against bandwidth caps. Given that many of the offerings on the iTunes store actually compete with cable TV, Apple should be vigilant that cable companies do not use bandwidth metering as a way to stifle alternative ways of viewing content.

Cable's Fear Factor: the Online Video Threat

[Updated 12:11pm EDT: Scott McNulty from Comcast notes in our comment section that the TV Everywhere concept will count against the 250GB usage allowance Comcast grants residential broadband customers, and suggests the concept is non-exclusive and voluntary.  We debate Scott on that point — see the Comments below the article to follow along and add your thoughts.]

The best kept secret in the broadband industry is now out.  Stop the Cap! reader Lou dropped us a note to say the New York Times has decided to let cable’s big secret out of the bag in an article published today entitled, “Cable TV’s Big Worry: Taming the Web.”  Lou writes, “finally, the mainstream media is pointing out that the real threat to Time Warner Cable and others is Hulu.”

In addition to the obsession to “monetize” content that is currently given away for free online, many in the cable industry believe the best way to tame the web is to control the content and method of distribution.  If you subscribe to a cable TV package, you’re approved.  If you don’t, no online video for you!  Once accessibility is limited to those “authenticated” to access the content, a handful of companies can determine exactly who can obtain their video programming, for how long, and at what price.  For everyone else not going along, discouraging ‘unauthorized’ viewing and disrupting underground distribution are powerful tools for providers to protect their video business model.

What is the best way to do that?  Internet Overcharging schemes of course.  By raising the alarm that online video growth will create a tsunami-like wave of Internet brownouts and traffic jams, and by trying to pit subscribers against one another based on perceptions of their usage, the message that will be part of any cable industry “education” campaign is that limits, tiers, fees, and penalties are the answer to all of these problems.  Watching Hulu every night?  Naughty. With this 20GB monthly limit, we’ll put a stop to that.  Netflix movie tonight?  Do you really want to risk going over your allowance and incurring “necessary” overlimit fees and penalties that represent more than 1,000% markup over our actual costs?  Wouldn’t it be fairer to your neighbors to watch HBO on your cable package instead?

Is it Fair for Big Trucks to Pay More On the Information Superhighway Because They’ll Wear It Out Faster?

In cities across the country, those interested in Internet Overcharging schemes are already engaged in focus group testing.  We know, because some of our readers have been stealth participants, informing us about all of their pretzel-like logic twisting games designed to convince the public that cable and telephone companies are not going to gouge you again with a higher bill.  Some want to use toll road analogies, others are using gas and electric comparisons, and one had the novel idea of putting a plate of food in the middle of the conference table and asking if it would be fair for just one person to eat 75% of it while the rest “go hungry.”

Unfortunately for them, by the end of the session, two of our readers attending two different panels derailed their efforts and had panels eating out of their hands in opposition to Internet Overcharging schemes, and collected a nice $75 (and uncapped lunch) for their efforts.

The Times piece only adds more evidence to help make the case that Internet Overcharging schemes aren’t about broadband fairness — they are part of a protection racket to protect fat profits earned from selling video packages to consumers.

Aware of how print, music and broadcast television have suffered severe business erosion, the chief executives of the major media conglomerates like Time Warner, Viacom and NBC Universal have made protecting cable TV from the ravages of the Internet perhaps their top priority.

“The majority of profits for the big entertainment companies is from cable programming,” said Stephen B. Burke, the president of Comcast, the nation’s largest cable company.

The major worry is that if cable networks do not protect the fees from paying subscribers, and offer most programming online at no cost — as newspapers have done — then customers may eventually cancel their cable subscriptions.

It’s My Cousin’s Fault

In other words, you and I are probably not the biggest threat the industry faces from the ultimate nightmare of eroding profits.  It’s really my cousin’s fault.  He, like many in their 20s, moved into his new home and didn’t do what many of us routinely did when we moved — start the newspaper service, connect the telephone line, and get the cable TV hooked up.

He did call Time Warner Cable — to only install Road Runner broadband Internet service.  He reads the news online, relies exclusively on a cell phone, and watches DVD’s and online video on his giant flat panel television.

The cable industry is horrified my cousin represents their future.

There is no sign of that happening anytime soon, but a recent poll by the Sanford C. Bernstein research group found that about 35 percent of people who watch videos online might cut their cable subscription within five years.

“We don’t think that it’s a problem now, but we do feel a sense of urgency,” Mr. Burke said.

An Urgency to Overcharge

Like most industries that have grown fat and happy on their traditional business models, the most common first response to a challenge to that model is to resist it.  The cable industry in particular has enjoyed a largesse of profits earned from years of de facto monopoly status in most communities, with the majority of its services being largely unregulated.  Cable rate increases have almost always exceeded the rate of inflation, and the public relations talking points for those rate increases has always been, “due to increased programming costs, which represent the increasing diversity and excellence of the cable channels we provide you….”

With prices for “basic/standard service” cable now approaching $60 a month, many younger customers just aren’t interested anymore.

Watching consumers abandon cable television packages for access through broadband gives executives and Wall Street analysts like Sanford C. Bernstein heartburn.  Until recently, many customers never contemplated the idea of getting rid of video packages and just keeping the broadband service they already have.  Not until Hulu.  That one website now represents a considerable amount of online video traffic from subscribers, and the cable industry isn’t in control of it, much less profiting from it.

Hulu represents a threat to be resisted.

You Use Too Much Internet, So We’ll Create Something That Will Make You Use More

To be fair to everyone, we have to get rid of the flat rate plan you’ve enjoyed for more than a decade and replace it with tiered pricing to be “fair” to subscribers because of enormous traffic growth. That what Time Warner Cable customers heard during a planned nonsensical trial of an Internet Overcharging scheme in four American cities, rapidly shelved when consumers rebelled and New York Congressman Eric Massa and Senator Charles Schumer got interested (Rochester, NY was a selected trial city).

It becomes all the more ludicrous as subscribers learn Time Warner Cable’s answer to the traffic jam is to add even more traffic… their traffic… onto their broadband lines.

Evidently online video is only a crisis requiring urgent action when it isn’t their online video.

One idea, advanced most vocally by Jeffrey L. Bewkes, the chairman of Time Warner, and embraced by many executives, would be to offer cable shows online for no extra charge, provided a viewer is first authenticated as a cable or satellite subscriber.

Mr. Bewkes has called the idea “TV Everywhere,” but others in the industry refer to it by other names: “authentication,” “entitlement,” and Comcast has called its coming service “OnDemand Online.”

“If you look at TV viewing, it’s up, even though the questions and stories are all about the role of video games and Internet usage and other uses of time,” Mr. Bewkes said.

The first test of the new system, which will authenticate cable subscribers online and make available programs on the Web for no additional charge, will be announced Wednesday, between Comcast and Time Warner. The trial will involve about 5,000 Comcast subscribers, and television shows from the Time Warner networks TNT and TBS.

It will be interesting to watch whether or not “no additional charge” means such content will be exempted from Comcast’s 250GB monthly usage limit, and whether Time Warner Cable will change their Subscriber Agreement to exempt their TV Everywhere service from the existing language in their agreement permitting Internet Overcharging schemes.  Time Warner Cable already exempts their “Digital Phone” product.

Ixnay on the Coin Chatter Already

The Times piece also raises eyebrows about the potential for collusion and antitrust violations in secretive meetings among industry executives, although they deny it.

The electronic media chiefs, including Mr. Bewkes, Jeff Zucker of NBC Universal and Philippe P. Dauman of Viacom, among others, have been more careful, so as to avoid being accused of collusion: much of the discussions have been on the telephone and in private, one-on-one chats during industry events. Pricing is rarely, if ever, discussed, according to executives involved in the discussions.

“We can’t get together and talk about business terms, but we can get together to work on setting open technology standards,” said Mr. Dauman, the chief executive at Viacom, which owns cable networks like MTV, VH1, Comedy Central and BET.

Although the representations from the industry seem benign, the potential for something far worse is always there.  Control the keys to unlock the door to online video (and the tools to lock out or limit the “other guy”), and you’ve got a plan to make sure people don’t dare drop their cable video package.  Where did the online video go from your favorite cable channel website?  It’s on TV Everywhere, and you don’t get in without an invitation.

One holdout among the major chief executives appears to be Robert A. Iger of the Walt Disney Company. At an industry conference this year he warned that gambits like TV Everywhere could be “anti-consumer and anti-technology” because such a plan would place cable programming behind a pay wall.

So much for “no extra charge.”

It’s Time to Investigate

Rep. Eric Massa (D-NY), is the House of Representatives’ watchdog on this issue.  He’s already connected the dots and realizes they lead in only one direction — to consumers’ pocketbooks.  Massa has introduced HR 2902, the Broadband Internet Fairness Act, specifically to prevent broadband providers from falling all over themselves to engage in anti-competitive, anti-consumer price gouging, all to cover their bottom lines.

This legislation, and Rep. Massa, needs your immediate support.  Call Congress and ask your representative to co-sponsor this vitally important bill.  The New York congressman is protecting consumers nationwide, and deserves your thanks and support.

Stop the Cap! also now calls on Congress and the appropriate regulatory bodies to begin an immediate investigation into the industry’s “cooperation” to launch TV Everywhere, and other similar projects. Specifically, we ask that an appropriate and thorough review be conducted to ensure that no collusion or antitrust violations have, are, or will take place as a result of this project.  We also call for a review of the “authentication” model proposed by the cable industry to ensure it does not exclude any consumer that subscribes to a competing video provider (satellite, telephone company, competing independent cable company, municipally owned provider, etc.), and that no “free pass” language be permitted that exempts their project from the terms and conditions that they seek to impose on others not affiliated with this project.

Senator Schumer’s long history of consumer protection would make him an excellent choice to lead such an investigation.

Once again, Net Neutrality must be the law of America’s online land.  Only with the assurance of a level playing field can we be certain no provider will attempt to exert influence or special favor over content they own, control, or distribute.