[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/UBB is Nonsense.flv[/flv]

François Caron produced this video succinctly smashing the myth that “usage-based billing” and “usage caps” are about fairness or fight congestion.  In this case, Caron refers to Canadian providers, but the story is much the same south of the border.  These Internet Overcharging schemes are nothing more than an effort to control what you can do with your broadband connection.  AT&T wants a 150-250GB usage cap on broadband, but has limitless capacity for television and telephone service.  They also have $39 billion to buy T-Mobile, but need to overcharge you for broadband service.  Bell in Canada wants -every- broadband user in Canada to pay this ripoff pricing.  Share with anyone who thinks paying for usage is anything like paying for water, gas, or electricity.  It’s not!  (6 minutes)

Genachowski

Federal Communications Commission Chairman Julius Genachowski spent this morning in Orlando delivering a keynote address opening the wireless industry’s annual trade show.

Stop the Cap! spent part of the morning following the event over a live stream that most wireless customers would never dare to watch — fearing they’d blow past their monthly usage limits.  Genachowski steered well clear of commenting on yesterday’s merger announcement between AT&T and T-Mobile.  But then AT&T must have hacked their way into the tablet the FCC chairman was reading from, because he suddenly launched into a series of talking points that could have come right off of AT&T’s government affairs website.

“Mobile broadband is being adopted faster than any technology in history, but there’s a catch,” Genachowski said. The chairman said the demand for wireless broadband is overwhelming the country’s wireless infrastructure. “The coming spectrum crunch threatens America’s leadership in mobile,” Genachowski said.

It appears Julius has been listening to AT&T executives who have made the spectrum crunch and “America’s leadership in wireless broadband” bullet points a hallmark of their argument for a merger with T-Mobile.

In fact, although T-Mobile delivers AT&T additional mobile broadband capacity in selected major cities, the company is likely to find many of T-Mobile’s cell sites redundant, and some of T-Mobile’s spectrum is incompatible with AT&T’s network unless customers are handed new devices.

America’s “leadership in mobile broadband” can be judged in many different ways.  For example, we feel many in Washington are helping AT&T lead the way to a mobile duopoly.  We are also leading with some of the most expensive mobile broadband service in the world, a fact of life that will never change in America’s shrinking competitive landscape.

Spectrum issues are solvable by the FCC without destroying competition with yet another colossal merger.  The chairman’s telegraphing of AT&T’s talking points can only be seen as an encouraging road map by which the huge telecom company can sell its deal to regulators by selling out consumers.

Dismissing the implications of an antitrust regulatory review not seen in the United States for years, AT&T this morning officially unveiled its intention to acquire T-Mobile in a $39 billion deal that will give AT&T nearly 40 percent of the American wireless market.

With a combination of the two companies, the new super-sized AT&T would become America’s largest wireless operator, and deliver nearly three out of every four wireless customers to just two companies — AT&T and Verizon.

Wall Street is delighted.

“Phenomenal deal if it happens,” said Jonathan Chaplin, an analyst with Credit Suisse Group AG. “Huge upside for AT&T — [T-Mobile owner] Deutsche Telekom getting a great price; however, we believe regulatory risk is enormous.”

That may prove an understatement, if public interest groups have their way.

“The combination of the second-largest wireless carrier, AT&T, with the fourth-largest, T-Mobile is, as former FCC Chairman Reed Hundt once said, ‘unthinkable,'” said Public Knowledge President Gigi Sohn. “We urge policymakers to think similarly today. The wireless market, now dominated by four big companies, would have only three at the top. We know the results of arrangements like this – higher prices, fewer choices, less innovation.”

“It’s difficult to come up with any justification or benefits from letting AT&T swallow up one of its few major competitors,” said Parul P. Desai, policy counsel for Consumers Union. “AT&T is already a giant in the wireless marketplace, where customers routinely complain about hidden charges and other anti-consumer practices.”

...Ourselves with AT&T

“I think it could reach some level of controversy,” said an antitrust expert, who worked for the Justice Department’s antitrust division. “There’s going to be spectrum issues. This is going to be a complex deal and I don’t think it’s a foregone conclusion that it will be approved.”

Despite the concerns, AT&T is confident that regulators have been sufficiently cowed by the company’s lobbyists to approve just about anything they bring to the table.

AT&T CEO Randall Stephenson told reporters on a conference call that the company spent plenty of time doing “homework” on how to get the deal to pass regulator scrutiny.

The American carrier even bet its winning outcome with a $3 billion cancellation fee, payable to Deutsche Telekom if the deal cannot be consummated.

In AT&T’s presentation this morning, the company promised they would improve America’s worst-rated cell phone company by merging with America’s second worst-rated cell phone company.  Specifically, AT&T says the deal will bring T-Mobile’s wireless spectrum allocations to the larger carrier, which can alleviate spectrum shortages.  The company also promised, in return for deal approval, expand service in more rural locations and quicker upgrades to the next generation of speedy wireless data — LTE.

Ralph de la Vega

Ralph de la Vega, AT&T’s president and CEO of Mobility and Consumer Markets, showed slides promising T-Mobile customers would benefit from new choices in cell phones and would enjoy AT&T’s far larger nationwide network, delivering improved service.  But he also hinted it would cost value-oriented T-Mobile customers, promoting the deal’s potential of winning new revenue from customers soon forced to pay AT&T’s significantly higher prices.

AT&T claimed the company still would face robust competition from Verizon, Sprint, and a number of much-smaller regional carriers like MetroPCS and Leap Wireless’ Cricket — themselves under pressure to merge.  But consumer groups are skeptical.

“Don’t believe the hype: There is nothing about having less competition that will benefit wireless consumers,” said Free Press Research Director Derek Turner. “And if regulators approve this deal, they will further cement duopoly control over the wireless market by AT&T and Verizon.”

“The FCC’s National Broadband Plan, issued last year, warned about the absence of sufficient competition in the wireless market. The possibility that three players would control nearly three-quarters of that market will surely trigger intense scrutiny by the agencies,” said Andrew Schwartzman of Media Access Project.

The deal has been under negotiation for several months between the German carrier and AT&T.  Many Wall Street analysts see the deal as a major win for T-Mobile, which has struggled mightily against the AT&T and Verizon juggernauts.  The German company wins a seat on AT&T’s board, a part interest in the carrier, and a high valuation on its network.  AT&T gets the country’s only other major carrier using the same technology it does — GSM — and picks up the potential of more robust coverage in the urban and suburban areas T-Mobile focuses on.  AT&T will also follow the time honored tradition of buying something they cannot afford outright — they will finance it with a generous credit line arranged by J.P. Morgan Chase.

[flv]http://www.phillipdampier.com/video/CNBC Mergers and Acquisitions ATT and T-Mobile Merger to Create Industry Giant 3-21-11.flv[/flv]

CNBC managed to achieve an exclusive interview with the CEOs of AT&T and T-Mobile about their merger.  As with most business media, don’t expect a lot of challenging questions in response to the claims made by the company executives about the merger or its impact on consumers.  (20 minutes)

Verizon delivers fiber-to-the-home service over its FiOS network.

Verizon Communications says it will not run an Internet Overcharging scheme on its wired broadband customers.

The company that knows about investment and upgrading their networks like few others — bringing true, fiber-to-the-home FiOS service to customers across several states — says it has no need to impose usage caps or metered billing on its wired broadband customers.

“This is something we have looked at in the past, and we’ll continue to evaluate what’s best to ensure our customers get the best broadband service for the best value,” Verizon spokesman Bill Kula told Broadband Reports. “We have no plans to implement usage-based pricing for our fixed broadband customers,” Kula says.

Verizon’s announcement provides additional ammunition against AT&T’s unjustified 150-250GB usage caps over claims it faces congestion issues.

The company doesn’t share AT&T’s “congestion problem,” probably for two reasons:

1. Because it does not exist.
2. Verizon has upgraded their network to keep up with demand, winning new customers with their top-rated FiOS fiber to the home network.

Karl Bode sees right through AT&T’s arguments:

If you believe AT&T’s claim that the new pricing is about congestion and not about protecting U-Verse revenues from a Internet video — and many don’t — Verizon’s decision to spend $24 billion on upgrading more than half of their network to fiber to the home would make a Verizon decision to follow suit a very tough sell. AT&T has previously stated their last-mile customers see little to no congestion, and Verizon’s seeing even less.

Kula notes Verizon doesn’t oppose the use of usage caps, but their TOS allows them to handle any users they deem particularly gluttonous, and even then — Verizon makes it clear to us they’ve never disconnected one of these users. “Verizon terms of service were written in a way to allow us to terminate users if they violate our acceptable use policy, and excessive use ‘could’ constitute a violation,” says Kula. “However, we’ve not disconnected any consumer, small business or mass market customers to date.”

Stop the Cap! has never objected to terms and conditions which provide an escape clause for a provider that encounters a customer creating significant problems on its network, such as e-mail spamming, illegal activity, or causing serious problems for other users.  These terms and conditions are a part of every Acceptable Use Policy, and responsible providers don’t activate those provisions on a whim.

It’s too bad some AT&T customers can’t choose an alternative to a company who promised great things with U-verse, and then put unjustified limits on customer enjoyment.