Genachowski

On Tuesday, Federal Communications Commission Chairman Julius Genachowski said that he generally supports data caps and tiered broadband pricing plans. The chairman’s comments came during an interview at the Cable Show with former FCC Chairman Michael Powell, now the top lobbyist with the National Cable and Telecommunications Association.

Genachowski has remained consistent in his cautious support for “industry innovation” that includes usage-based pricing, with a caveat providers should not exploit that at the expense of consumers.  But consumer groups like Free Press already believe usage caps, particularly on wired broadband services, are already bad for consumers, exploit a marketplace duopoly, and are worthy of investigation by the agency.

“All the evidence shows that caps on wired broadband platforms like cable make no sense. They don’t affect network congestion, even in the rare instances where congestion actually exists on these systems,” says Free Press policy director Matt Wood. “Cable companies use them to penalize their subscribers and discourage them from using innovative services that compete with cable TV.”

Free Press reminded Genachowski of Comcast’s recent actions which exempted its own video content from usage caps, while leaving them in place for competitors.

“Comcast’s recent actions show both the harms of these caps and the lack of any legitimate reason for them,” noted Wood. “[Now] Comcast changed course and suspended caps temporarily in all but a few markets — but promised to start overcharging any users there who exceeded these arbitrary limits.”

“The FCC has turned a blind eye to this competition problem. If it wants to see experimentation in pricing that actually benefits consumers, we need a competition policy that creates more experimenters.”

The Russian Federation has now passed the United States in fiber broadband deployment, with more than 8% of Russians now able to subscribe to fiber Internet service delivered directly to their home or building.  The United States is effectively stalled at 8%, with most Americans getting fiber broadband from Verizon Communications, community-owned providers, or a rural phone company co-op. Those are the findings of DSL Prime.

The most aggressive fiber broadband network upgrades are in South Korea and Japan, where between 40-60 percent of homes subscribe to the service, which often delivers speeds of 100Mbps or greater to residential users. But eastern Europe and Russia are also becoming increasingly important targets for fiber broadband manufacturers and vendors, who are selling the glass-fiber cables and network equipment to private telecommunications companies that used to be state enterprises.

The Baltic state of Lithuania has achieved a leadership role in Europe, with almost 30 percent of homes wired for fiber and growing.

Much of the initial fiber broadband buildout in eastern Europe and Russia is ironically the product of former socialist state planning that existed during the Communist era.  A large number of urban residents in the region live in government-constructed multi-dwelling units, part of larger complexes. That infrastructure reduces the costs of wiring large numbers of potential customers, and some providers deploy fiber to the building and use existing copper phone wiring within to reach individual units.  The short distance of copper has little impact, with speeds commonly ranging from 50-100Mbps.

Much like in the United States, urban areas are much more likely to be targeted for fiber than rural ones, and Russia in particular also depends on robust wireless service in some cities with decrepit wired telecommunications infrastructure.

DSL Prime‘s Dave Burstein argues that fiber upgrades are a good idea in the long run, but appreciates technology improvements in both DSL and cable broadband are helping bring higher speeds to consumers as well, so long as providers continue to invest in upgrading their networks.

As uploading becomes more important, no other current technology delivers as much upstream performance as fiber broadband, which can often equal downstream speeds.

Comcast today announced it was incrementally increasing its 250GB usage cap by 50 additional gigabytes per month as part of a new trial, the first allowance increase since the company started the cap in 2008.

But before so-called “heavy users” celebrate, the company is also announcing it will test overlimit fees for customers who exceed the new 300GB cap.

Cathy Avgiris, Executive Vice President and General Manager, Communications and Data Services, Comcast Cable:

We’ve decided to change our approach and replace our static 250 GB usage threshold with more flexible data usage management approaches that benefit consumers and support innovation and that will continue to ensure that all of our customers enjoy the best possible Internet experience over our high-speed data service. In the next few months, therefore, we are going to trial improved data usage management approaches comparable to plans that others in the market are using that will provide customers with more choice and flexibility than our current policy. We’ll be piloting at least two approaches in different markets, and we’ll provide additional details on these trials as they launch. But we can give everyone an overview today.

The first new approach will offer multi-tier usage allowances that incrementally increase usage allotments for each tier of high-speed data service from the current threshold. Thus, we’d start with a 300 GB usage allotment for our Internet Essentials, Economy, and Performance Tiers, and then we would have increasing data allotments for each successive tier of high speed data service (e.g., Blast and Extreme). The very few customers who use more data at each tier can buy additional gigabytes in increments/blocks (e.g., $10 for 50 GB).

The second new approach will increase our data usage thresholds for all tiers to 300 GB per month and also offer additional gigabytes in increments/blocks (e.g., $10 per 50 GB).

In both approaches, we’ll be increasing the initial data usage threshold for our customers from today’s 250 GB per month to at least 300 GB per month.

In markets where we are not trialing a new data usage management approach, we will suspend enforcement of our current usage cap as we transition to a new data usage management approach, although we will continue to contact the very small number of excessive users about their usage.

Tell Comcast to drop the padlock on your broadband connection altogether.

The change comes at the same time Comcast is under fire for allegedly giving preferential, cap-free treatment to its own video content through an Xbox video game console app.

Comcast has followed AT&T’s pricing, testing a new overlimit fee of $10 for each 50GB increment customers exceed their allowance.  While not outrageous on a per gigabyte basis, the minimum charge of $10 is steep, especially considering Comcast pays only pennies per gigabyte to move traffic.

Stop the Cap! urges Comcast customers to use the occasion to demand the company suspend its unnecessary and arbitrary usage cap altogether.

The best approach for consumers is the one Comcast plans for markets not subject to a trial of their latest Internet Overcharging schemes. Namely, leaving the overwhelming majority of Comcast customers alone while informally reaching out to the tiny minority of customers the company feels are consuming data at levels that create significant problems for other customers on their network. With Comcast’s near-universal adoption of DOCSIS 3 technology, those problems are rarer than ever.

Waiting for FiOS

For those who admire the apparent pervasiveness of competition between Time Warner Cable and Cablevision Industries vs. Verizon Communications’ FiOS, the idea the Big Apple has a broadband problem seems a bit ridiculous, particularly if you can’t get your local cable company to pick up their phone and AT&T will only hand you a 1.5Mbps DSL line, if you can get it.

But according to the Village Voice, New York City broadband “sucks,” and it will continue to suck for at least the next eight years.

“Though entrepreneurs in most parts of the city can access a fast broadband connection today, many of those we interviewed said that New York’s telecom infrastructure is well behind where it should be for a city vying to be one of the nation’s two leading technology hubs,” the study notes.

What it comes down to is that New York — despite being the world’s media capital — does not have adequate access or bandwidth to support tech companies’ needs.

For example, some companies might be able to get either FiOS or Time Warner Cable, but not both, which means they can’t have broadband backup.

“It’s like the elephant in the room is that bandwidth here sucks,” one entrepreneur told the researchers. “You should be able to walk into any building and have at least 150 megabit connection available to you. There has to be ways for the city to construct much better bandwidth availability for start-ups.”

Many cited told the researchers that their internet routinely goes down. And startups who want to set up shop in cheaper, industrial districts often can’t, because the cable companies would rather provide service to more lucrative residential areas. Sometimes, telecom concerns are willing to dig up streets and lay cable, but at a hefty price — around $80,000.

That $80,000 bill is handed to a prospective customer and does not come from cable operators’ capital expense fund.

Researchers gave New York a broadband grade of B to B-, which isn’t too bad considering what broadband is like in the mid-south, the midwest, and the rural west. But it doesn’t cut it for helping New York become a bigger tech city.

Waiting for "Business Class"

While Time Warner Cable and Cablevision have wired multi-dwelling units and homes across New York City, cable operators have only recently started to turn their serious attention to corporate business customers.  Time Warner Cable agreed, as part of its franchise renewal deal with the city, to invest $1.2 million per year for fiber connections to commercial buildings yet to be wired for cable. Cablevision, which can be found in boroughs like Brooklyn and out on Long Island, agreed to spend a more modest $600,000 a year for the same purpose.

Time Warner Cable has already warned investors its capital spending on wiring commercial office buildings across the country is increasing as the company sees lucrative new revenue opportunities competing with their usual nemesis — the phone company.

Verizon treats FiOS deployment in New York City as a long, long-term project. There are neighborhoods in Manhattan that can’t wait much longer for the fiber optic network as Verizon increasingly lets its old copper wiring go to pot, leaving some New Yorkers without phone service for weeks.  The city of New York has given Verizon until 2014 to wire the city, and the company appears likely to need those two additional years at their current pace, and that agreement only covers residential properties, not commercial ones.

Robust broadband is essential for many high technology startups and the multi-million dollar data centers that support them. New York mayor Michael Bloomberg considers it a top priority to reduce the city’s economic dependence on Wall Street, which generates considerable tax revenue for both the city and state. High tech enterprises fit that bill. But the city’s broadband grades do not.

“For a city that’s trying to be a tech powerhouse, we need to have an A,” said Jonathan Bowles, the author of the study, “New Tech City.”

Rogers Communications has following up its “Next is Now” corporate video from 2010 with a sequel: “Next is Now… More Than Ever,” which highlights how Canadians are increasingly relying on mobile communications for news, entertainment, social life, work, and education.

While Rogers wanted the video to promote how the company would be a part of that telecommunications transformation, many of their customers can’t help but reflect on the fact the revolution is well-tempered with Internet Overcharging schemes like usage caps.

Stop the Cap! reader Alex is among them, noting the video says nothing about the company’s restrictive usage limits on home broadband and the even harsher caps on its mobile services.

Rogers, like most telecommunications companies, repeatedly tells investors there is real money to be made attaching meters to monetize megabytes.  Charging for broadband usage is a growth industry, and with the company’s own projections for data growth, they are well-positioned to be in the money for years.

With broadband dependency being as pervasive, if not more so, in Canada as in the United States, the barely regulated services on offer in both countries often come at a steep (and increasing) price — all for something even Rogers hints is becoming a utility — one as important as electricity, gas, and clean water.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Rogers Next is Now More than Ever 5-12.flv[/flv]

Rogers Communications’ “Next is Now… More Than Ever” has broader implications than the company realizes. (3 minutes)