Suddenlink will introduce an Internet Overcharging scheme beginning with their customers in Amarillo, Tex. Oct. 3rd, according to a company document obtained by Stop the Cap!  But the new usage cap and overlimit fee scheme will not be limited to Texas.  The company’s internal memo notes the new limits will eventually be imposed on customers nationwide, and incredibly, the cable operator claims it will make their Internet service better:

Early next month, October 2011, Suddenlink will notify residential (non-business) Internet customers in Amarillo, Texas, of a new usage allowance plan (AP) that is designed to further enhance their Internet experience.

This allowance plan will be introduced to other residential Internet customers, in other Suddenlink communities, in the following weeks and months.

An introductory letter will be mailed to Suddenlink residential Internet customers, when our allowance plan goes into effect in their community. The introductory letter to Amarillo customers will be mailed on or about October 3, 2011.

In addition to the introductory letter noted above, we will launch a new Web page on or about October 3, 2011, at suddenlink.com/allowanceplan.

This new page will provide additional information about the allowance plan in the form of frequently asked questions (FAQs).

Suddenlink's national service area

On the first instance of exceeding the limit, the customer’s Internet service will be suspended until the customer reads and agrees to a web notification message that includes an understanding that on the fourth instance of going over their usage cap, customers will be billed $10 for every 50GB increment that exceeds their allowance, whether it is by 1MB or 40GB.  That pricing is identical to AT&T’s usage cap overlimit fee.

Amarillo residents already pay $55 a month for 15Mbps standalone broadband service from Suddenlink.

Stop the Cap! reached out twice today to Suddenlink officials to get their reasons for implementing the usage allowance program, what the specific allowances might be, and when the usage caps will reach markets beyond Amarillo.  We have still not heard back from them as we “go to press” but will update the piece if and when we do receive their comments.

Suddenlink’s employees are being trained on how to handle the inevitable complaints when customers discover their bills have suddenly increased.  Their employee FAQ:

Q. I only went over my allowance by 1 gigabyte, but I was still charged $10. I thought I would not be charged $10 until I was 50 gigabytes over my allowance. What happened?

Of the very few customers who go over their monthly allowance, we have found that most go over by a significant amount. Accordingly, to make this process as fair and simple as possible on all customers, we do not start charging until the third time someone goes over the allowance – and, once that happens, we automatically assign additional allowances to the account, in standard 50-gigabyte installments, at a standard price of $10 for each installment.

Customers can use all or some of that additional allowance, depending on their individual situations. What’s more, if they exceed the additional allowance of 50 gigabytes, another 50-gig allowance is automatically applied, again at the standard price of $10.

To help customers manage their Internet accounts, we have provided a way for them to monitor their monthly usage at Suddenlink.net.
• If you’re already registered at Suddenlink.net, log on, go to “My Account,” and then click the link for “My Internet Usage Summary.”
• If you’re not already registered at Suddenlink.net, visit that site, look toward the upper right corner for the log-in box and the link that reads “Don’t have an account? Sign up now!” Follow that link to a set of instructions on how to register your account, and then, when you’re finished, click the link for “My Internet Usage Summary.”

Kent: The days of system upgrades are over.

Finally, we offer some tips at suddenlink.com/allowanceplan, about ways to keep usage within the monthly allowances we’ve established.

Q. Can I have fewer than 50 gigabytes or less than $10.00 applied to my account the next time I go over?

Not at this time. The 50-gigabyte installments and $10 per installment charges have been standardized in all areas where we’ve rolled out this allowance plan, to make the process as fair and simple as possible on all customers.

Q. I don’t recall being notified that this was starting in my area. When did that happen?

We mailed letters announcing this change to all customers in your area several weeks before the allowance plan was put into place. I’m sorry if you missed that letter, but rest assured, very few customers – less than 1 out of every 100 – go over their allowance. And for the very few customers who do go over their allowances, charges are waived the first couple of times.

Q. What gives Suddenlink the right to do this?

We occasionally make changes to our Internet services, consistent with our Residential Services Agreement, which is published on our website. This allowance plan is one of those changes.

If asked: To view our Residential Services Agreement, go to Suddenlink.com, and look for a link near the bottom of the page titled, “Terms & Policies.” Click on that link and then look for another link titled, “Residential Services Agreement.” Click on that link and then scroll down the page until you see the sections related to Internet service, such as Section 46.

Suddenlink’s new Internet Overcharging website is not yet active, so we are unsure exactly what plan limits will be, but Suddenlink has been no stranger to usage caps.  The company introduced a usage meter in several markets in the summer of 2009, and used to claim usage limits were partly to handle traffic loads on a limited number of cable systems that were in the process of upgrading.  Once the upgrades were complete, the caps were supposed to be relaxed or retired.

Then, Suddenlink president and CEO Jerry Kent appeared on CNBC last September to announce that people don’t realize the days of system upgrades are over and it was time to rake in the profits:

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

Suddenlink’s journey to usage caps includes all the hallmarks we foretold in an article published on Stop the Cap! in 2009:

1. Establish a foundation for usage caps.  In their 2009 FAQ, Suddenlink conflated broadband usage with electricity: “What is “Internet usage”?  Much like electric usage is measured in kilowatts, and water usage is measured in gallons, Internet usage is measured in gigabytes (GB).”
2. Establish a ‘pulled from the air’ number of gigabytes (which often conveniently later becomes your usage allowance) and then tell subscribers what they can do with that.  In Humboldt County, Calif., in March 2011, Suddenlink began telling “heavy users” what other customers were doing with what the company deemed a more appropriate, average amount of Internet service.  Suddenlink also told customers the Internet service they were providing was for “entertainment only.”
3. Tell customers such tools are actually for their benefit.  See above.
   
4. Lie to customers when a usage meter suddenly shows up or terms and conditions are quietly changed to support an Internet Overcharging scheme.  In 2009, Suddenlink introduced a usage meter but tried to reassure customers, telling them: “Does Suddenlink plan to set a maximum usage allowance for its Internet customers, like other companies are doing? Do you plan to charge extra if a customer’s usage is too high?  Those steps are not part of our current plan. Our only goal at this time is to help the few customers whose usage is well above (two to three times higher than) the typical range to identify the reasons for that high usage and take steps to protect and secure their computers and accounts.”

You used too much. Look what you can do with an "average" amount of usage instead.

Now usage caps will protect and enhance Suddenlink’s profits on Internet service.  Remarkably, Suddenlink put itself in the “predicament” of facing increased customer demand of the Internet through its own marketing.  The company’s website heavily promotes its bandwidth-heavy Suddenlink2GO™ service to “watch TV online anytime, anywhere in the U.S. on any computer for FREE when you subscribe!”

But “free” becomes $10 for every 50GB if you watch too much.

How to Get Unlimited Back: If you are a Suddenlink residential customer who does not want to face restricted-use Internet, you can avoid the limits by switching to Business Class service, which will not have caps.  Unfortunately, pricing information was not immediately available to us.  One customer in Lubbock noted he paid $69 a month for 6Mbps Business Class service and $107 a month for 107Mbps residential service, so expect to pay comparatively more for lower speed service.

1.5Mbps "broadband" is not the cure-all Comcast claims it to be.

When multi-billion dollar Comcast Corporation decided it was the right time to acquire multi-billion dollar NBC-Universal, one of the concessions Comcast made to win federal approval of the deal was to deliver budget-priced Internet service to those too poor to pay the company’s current asking price of $40-60 a month.

Comcast Internet Essentials was the result, and as Comcast rolls its publicity train from city to city, promoting the new package, politicians and cable executives have teamed up to take credit, suggesting the company’s limited-access $9.95 1.5Mbps service will somehow erase the high-tech job deficit, eliminate the digital divide, and will even somehow help America’s broadband speed gap with the rest of the world.

But it will do none of those things for the vast number of income-challenged families who won’t actually qualify for the three year program, either because they already scrape up enough for Comcast service, don’t have children, or manage to miss a payment due date.  In fact, 1.5Mbps budget-priced Internet is a service providers should have been willing to offer all along, to anyone who wants the service.  But it took a colossal-sized merger concession to get Comcast to sort of do the right thing.

I say “sort of” because the terms and conditions that accompany the service resemble the gotcha fine print the banking industry so loves:

The program is only available to households that (i) are located where Comcast offers Internet service; (ii) have at least one child who receives free school lunches through the National School Lunch Program (the “NSLP”) and as confirmed annually while enrolled in the program; (iii) do not have an overdue Comcast bill or unreturned equipment; and (iv) have not subscribed to any Comcast Internet service within the last ninety (90) days (sections 1(i)-(iv) collectively are defined as “Eligibility Criteria”). This program is not available to households that have children who receive reduced price lunches under the NSLP. The program will accept new customers for three (3) full school years, unless extended at the sole election of Comcast. Comcast reserves the right to establish enrollment periods at the beginning of each academic year in which it accepts new customers that may limit the period of time each year in which you have to enroll in the program.

2. In order to confirm your eligibility for the program, Comcast will need to verify that your children receive free school lunches through the NSLP in the initial enrollment year and each subsequent year you are enrolled in the program. In order to confirm eligibility, participants in the program will be required to provide copies of official documents establishing that a child in the household is currently receive free school lunches through the NSLP. Each year you will be required to reconfirm your household’s current eligibility by providing Comcast or its authorized agent with up-to-date documentation. If you fail to provide documentation proving your eligibility in the program, you will be deemed no longer eligible to participate in the program.

3. You will no longer be eligible to participate in the program if (i) you no longer have at least one child living in your household who receives free school lunches under the NSLP; (ii) you fail to maintain your Comcast account in good standing; (iii) Comcast ceases to provide the Covered Service to your location; or (iv) your account opened under the program is closed. A change in address may result in your account being closed, even if you continue to receive Comcast services at a different address. Program participation also may be terminated if the Covered Service is upgraded, altered or changed by you for any reason. If you are no longer eligible for the program, but continue to receive the Covered Service from Comcast, regular rates, and any other applicable terms and conditions will apply to the Covered Service.

No kids in your home?  No discount Internet access for you!  Refuse on principle to accept a government handout to pay for school lunches?  Sorry, you need to buy the full-priced Internet Comcast will happily sell you.  Missed a cable bill payment because you needed to buy medicine this month?  It will cost you your inexpensive access.  Comcast even reserves the right to cancel your discounted service if you choose (or are forced) to move.

Most would-be customers who assume they are eligible because they, like so many others, are income-challenged these days, are thrilled to read and watch news accounts about the discount Internet program for their kids.  But like Santa reneging on Christmas, the excitement turns to disappointment when they discover they are ineligible for one reason or another.

In Baltimore, WBAL-TV got nearly breathless with excitement telling their audience, “Things are looking up for Maryland families — way up. A new effort is under way to help connect 250 families to cyberspace at an affordable price.”

Baltimore is a city of 620,000 people.  Before the Great Recession, 15.4% of families and 19.3% of Baltimore’s residents fell below the poverty line, excellent candidates for inexpensive Internet access.  That’s more than 32,000 people, but Comcast is apparently making room for just 250.

Despite those figures, Comcast’s David Cohen thinks his company’s discount Internet will make all the difference.

“We believe we have a shot to be able to make a real impact on the digital divide with this program,” he told the Baltimore TV station.

He might be right… for 250 families anyway.  Everyone else… pay up or go without.

Terms and conditions apply

WBAL Investigative reporter Jayne Miller got slightly carried away on behalf of Comcast, equating their program with a solution for high-tech jobs and increased Internet speed:

Internet access and speeds have become national issues. The U.S. lags behind other countries in broadband availability, hurting what some believe to be the nation’s ability to compete, said Miller.

In comparison, “China recently graduated over 440,000 engineers, and we in the U.S. graduated 65,000,” said U.S. Rep. “Dutch” Ruppersberger.

I’m sorry to bring people back to reality, but 250 families getting the right to buy up to three years of Internet access at speeds that are half of what the FCC National Broadband Plan defines as actual broadband is not an answer to anything beyond Comcast’s poor public relations in the customer service department.  It’s not going to help America’s broadband speed rating (it will actually hurt it at 1.5Mbps).

WBAL is hardly the only station overdoing their celebrations of Comcast (a prolific advertiser by the way).  I’ve watched reports that suggest Comcast is doing this out of the goodness of their heart, not because they agreed to as a condition of their mega-merger with NBC.  Considering the lawyer-like limitations that are certain to keep many people out of the program and others from downgrading their existing service to something more affordable, charity is hardly a word I would extend to the nation’s largest cable operator who found cause to limit access to even the lowest broadband speeds to protect its bottom line, which it hopes will get much fatter with the acquisition of NBC-Universal.  When the three year program ends, let’s just see how charitable Comcast is about extending it.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KASA Santa Fe Internet Accessibility with Internet Essentials 8-26-11.mp4[/flv]

KASA-TV in Santa Fe talks with their “very good friend at Comcast” about Internet Essentials and the company’s general Internet expansion plans in New Mexico.  The interview resembles an infomercial for Comcast products and services.  (5 minutes)

Mediacom, America’s eighth largest cable company, lost 20,000 video subscribers in the second quarter of 2011, joining a growing parade of cable companies reporting increased cord-cutting by customers who either cannot afford, or don’t need increasingly-costly cable TV service.

The cable operator, which largely serves small cities and suburban areas, has suffered from notoriously poor consumer ratings for several years, and some customers have apparently had enough.  Mediacom, which went private earlier this year, provided fewer details about its performance in its first quarter as a private company, but the information it did provide showed attempts to make up the losses with rate increases on remaining customers and increased revenue from phone and broadband sales, and Mediacom’s advertising business.

The company’s customers in its strongholds in the southeastern and midwestern United States have been impacted hard by declining property values and high unemployment.  Impacted consumers are paring back expenses, and while they are keeping phone and broadband service, cable TV is increasingly being dropped.

Earlier conference calls with Mediacom company officials note an increasing number of customers are only being rescued when the company discounts the cost of the service as a customer retention tool.  The company has been hard selling its “VIP Pak” — a triple play package of cable TV, phone, and Internet for $90 a month, but it comes with lots of fine print: mandating a 24-month contract, a required subscription to HBO, and gradually increased rates after the first year.  Mediacom’s bundled offers lock in customers with two year contracts, but don’t protect them from periodic rate increases, which are automatically applied as implemented.

Customers looking for standalone broadband or a “double-play” will also find high prices, two-year contracts and early termination fees in their future:

• Cable TV & Broadband: $79.90 for the first year, $99.90 for the second, with a $240 early termination fee
• Cable TV: $49.95 for the first year, $64.95 for the second, with a $240 early termination fee
• Broadband Only (12/1Mbps): $49.95 for the first year, $54.95 for the second, with a $240 early termination fee

Resort communities like Wildwood, N.J. become near ghost-towns when the lucrative summer season comes to an end.  But Comcast expects motel owners to keep paying for cable service even after they lock their doors and shut down during the winter.

Now more than three dozen area independent hotel owners have told Comcast to take a hike — they are switching to satellite.

For owners, Comcast has added insult to financial injury with higher rates and new requirements for year-round service that nobody watches from October-April.

It wasn’t always this way.  Comcast formerly grandfathered seasonal service into contracts for area resorts.  No converter boxes were required either, making it easy to install in hotel rooms.

But no more.

The cable company claims it needed “rate consistency” in the region and raised prices.  Plus, Comcast has notified hotel owners they’ll need to accommodate digital set top boxes — one to a television, something owners considered the final straw.

James “Jimmy” Johnson, owner of the 48-room Imperial 500 told the Philadelphia Inquirer he invested almost $60,000 for flat panel televisions in his rooms that Comcast now wants to slap cable boxes on.  Johnson is not happy about that, because guests could walk off with them and their accompanying remote controls.

“I go through remotes like you go through underwear,” Johnson told the newspaper.  Comcast charges substantial fees for lost or stolen cable equipment.

Comcast also sought pricing changes that would charge motel owners for service per-television, instead of per-room.  Several motels have multiple televisions in each room, substantially raising prices.

As a result of the rate increases and what many owners have called the cable operator’s intransigence, they are kicking Comcast out, installing satellite television from DirecTV instead.

After an initial investment of $6,400 for the satellite equipment, many owners expect significant savings from DirecTV’s seasonal service contracts, although some guests may find regional sporting events exclusive to Comcast unavailable in their satellite-TV equipped rooms.

But for Johnson, the savings are worth it.

“I’m renting rooms; I’m not running a sports bar. . . . With computers now, you can get a lot of games on your computer, or your phone,” Johnson told the Inquirer.

In an upstate New York match-up, the Rochester/Finger Lakes region scored dead last in broadband speed and value, according to data from Broadband.com.

Why are broadband speeds so much lower in the Flower City?  Blame Frontier Communications, which continues to pitch its decade-old DSL product, delivering an average speed of 4.45Mbps, while other upstate cities enjoy access and competition from Verizon’s fiber to the home network FiOS.  Frontier DSL actually often costs more, after taxes and fees, than Time Warner Cable’s much-faster cable broadband product, Road Runner, which rates an average download speed of 12.77Mbps in Rochester.  Frontier does manage to pull one win — higher upload speed DSL providers can often achieve in cities where cable operators keep upstream speeds as low as possible.

Time Warner Cable has dragged its feet upgrading broadband service in the area to its DOCSIS 3 platform other upstate cities have had since last year.  DOCSIS 3 should arrive within the next 4-8 weeks, which should boost broadband speeds, but may not deliver lower broadband prices because of Frontier’s uncompetitiveness in the area.

(Source: Broadband.com)

The top city in upstate New York for download speed is the state capital, Albany.  But Buffalo wins the contest for upload speed thanks to aggressive competition for Time Warner from Verizon in the Queen City.  Buffalo also pays the least for service — nearly $5 less per month than residents in Rochester pay on average.  Syracuse scores in the middle — but closer in terms of speed and value to other Verizon-served cities.

Slow and expensive broadband service can hamper economic development and costs consumers more.  Unfortunately, there are no signs Frontier Communications has plans to do anything differently in its largest service area — a classic driver of the accelerating number of customers calling to pull the plug on their landline service.

Time Warner Cable's Road Runner vs. Frontier Communications' DSL (Speeds are downstream/upstream; Source: Broadband.com)