After an outpouring of complaints from UK mobile data customers, T-Mobile’s UK division has announced it is backing off implementing ‘new and improved’ usage caps of 500MB per month, down from the 1-3GB customers used to enjoy.  But the change of heart will only apply to existing customers.  New customers will find themselves second class citizens of the T-Mobile family — stuck with a 500MB allowance other customers won’t have to cope with.

The company claims it changed its mind after hearing from customers, but we suspect the real reason for the sudden change was word the British regulator OFCOM was considering an investigation, suggesting T-Mobile could have violated its own contract with customers by not providing 30 days of advance notice.

There were also reports angered customers seeking an early end to their contract were meeting resistance from T-Mobile’s customer relations department.  Customers who quit early face steep early cancellation penalties, despite the fact they should be waived if a mobile provider materially changes the service consumers thought they were getting when they signed up.

Another object lesson learned: Internet Overcharging schemes often start with “generous” allowances that some providers will lower if it means reducing demand on their networks, without ever bothering to lower prices for customers.

The Canadian Radio-television and Telecommunications Commission

Thanks to quick work from the Canadian Radio-television and Telecommunications Commission (CRTC), Canadian broadband providers have wasted no time announcing new usage limits and penalties for those who exceed them.

The principal culprit for the Internet Overcharging: Bell (Canada), the nation’s largest telecommunications company.

Bell’s newly won right to charge wholesale customers usage-based billing rates has caused a collective groan from independent providers from Vancouver to Charlottetown. Primus, the second-largest alternative communications company in Canada, threw up its hands and announced it was going to pass Bell’s costs along to their customers.  Some other providers have already raised rates, shocking customers who received December bills with $100 in overlimit penalties.

“It’s an economic disincentive for Internet use,” said Matt Stein, vice-president of network services for Primus. “It’s not meant to recover costs. In fact these charges that Bell has levied are many, many, many times what it costs to actually deliver it.”

That is a hallmark example of what happens under Internet Overcharging schemes like “usage-based pricing,” usage caps, or other limited use plans.  Customers don’t pay for their actual broadband use — they overpay, especially when stiff penalties are imposed when they exceed their usage allowance.

“Canada’s broadband market is a racket, period,” says our reader Andy, who lives near Petawawa, in northern Ontario.  “If you are in a major city in the south, you can choose Bell or one of their lackeys or the cable company, which almost always means Shaw or Rogers in English-speaking Canada.”

Andy doesn’t have access to cable, so his broadband comes courtesy of DSL from the phone company.  He counts himself lucky he has that, even though it only delivers around 512kbps and is down at least once a week, especially when the weather is bad.  Other communities have no broadband at all, and some areas are so desperate for access, they have provided financial incentives to attract a provider to town.  It rarely succeeds.  Zeropaid reports a handful on unscrupulous would-be providers have taken the incentives and left town with no broadband service to show for it.

“These guys only want the easy customers and they’ve got them in Toronto or Ottawa,” Andy says. “The rest of us can live with dial-up.”

The Canadian government occasionally launches highly publicized demonstration projects to deliver rural broadband in northern Canada, often over wireless, something Andy scoffs at.

“When the TV cameras are shut off and [Prime Minister] Stephen Harper’s political bandwagon goes home, the networks last for about a month until something goes wrong and the whole thing shuts down, sometimes for weeks before someone repairs it,” Andy says.

There oughta be a law.

Katz

In fact Canada, a country with a reputation for keeping a regulatory eye on essential services, has an agency that is supposed to protect consumers and monitor telecommunications services. Unfortunately for Canadians, it was that agency that gave Bell the go-ahead to kill unlimited, flat rate broadband — the service that has kept most independent service providers in business.

Critics charge the Commission has been acting more like a Big Telecom industry trade group than an independent oversight body, and many independent providers openly wonder how long they’ll survive with Bell’s predatory pricing.

Reviewing who serves on the Commission may provide some answers about why they seem to be closely aligned with Canada’s largest telecom companies.  Many of the commissioners used to work for the very companies they are now asked to regulate, and some are likely to return to them after their stint at the CRTC.  The agency’s supposedly independent commissioners know if they want future employment in the telecommunications industry, it’s best not to antagonize your next boss.

Take Commissioner Leonard Katz.  He joined the CRTC in 2005 and was appointed vice chairman of telecommunications in 2007.  For 30 years before joining the Commission, Katz was employed by Canada’s largest telecom firm, moving up through Bell’s management ranks from 1974-1985.  His last big job at Bell was as the assistant director of Bell’s regulatory lobbying department, where he spent his energy and time dealing with federal politicians and the CRTC.  Katz also loves Canada’s wireless industry, dominated by Rogers Communications.  He was founder and chairman of the Cellular Telecommunications Industry Association Clearinghouse for wireless carriers.

Arpin

Or there was Michel Arpin, a consummate former insider at some of Canada’s largest corporately-owned broadcast station groups like Astral Broadcasting, Mutual Broadcasting, and Radiomutuel.  He also had a side relationship with Telus, a western Canadian telecom company that also belongs to the Canadian Association of Broadcasters (CAB).  Arpin served CAB as vice-chair and chair. Arpin, the corporate media man, also served as the vice-chairman of the CRTC’s broadcast division until late last year.

Other examples:

• Rita Cugini — A regional commissioner for the province of Ontario, her professional background has been working for some of the province’s biggest media interests, including Alliance Atlantis, Telelatino, and CFMT/OMNI.  She also is integrally involved with the Canadian Association of Broadcasters, which bends the ears of regulators regularly on a variety of matters;
• Tim Denton — About as close to the broadband industry as you can get, Denton’s role as a commissioner began in 2008, but his money was made working for the broadband industry, including the Canadian Association of Internet Providers, which lobbies for big broadband provider interests.
• Candice Molnar — Serves today as regional commissioner for Manitoba and Saskatchewan, but she knows most of the prairie provinces’ movers and shakers by name, having spent more than 20 years at SaskTel, Saskatchewan’s biggest phone company.  She helped guide SaskTel from provincial to federal regulation when she worked there and her voting record shows her heart is still with her former employer.

Cugini

With a Commission stacked against ordinary Canadian consumers, it’s no wonder Internet Overcharging schemes and stifled broadband competition rule the day in Canada.

“Rural Canada always pays the biggest price,” says Andy.  “If it didn’t happen in Toronto or Ottawa, it didn’t happen at all.”

Andy complains Canadian broadband will never improve with Internet Overcharging schemes in place.

“They complain about your usage and say if they can restrict it, they can improve service to more people; well, where is my better service?” Andy asks.

“At least I don’t have to worry about their usage allowances… yet,” Andy says. “Even if I left my connection running continuously, at these speeds I doubt I could do much damage.”

Commissioners of the National Telecommunications Commission (NTC), led by its chair Gamaliel Cordoba (middle, in blue shirt) preside in a public hearing Tuesday on the proposed circular requiring broadband data limit for consumers and minimum broadband speed for service providers. The event, which was held at the NTC main office in Quezon City, was attended by various industry stakeholders, including telcos, bloggers, and consumer advocacy groups. Photo by Melvin Calimag; Courtesy: GMANews.tv

Philippine consumers won a major victory this morning, successfully stripping language permitting Internet usage limits from a broadband reform measure before the country’s telecommunications regulator.

In a newly revised draft, this language written by and for some of the nation’s largest telecom providers was removed after a major consumer push-back:

“WHEREAS, it has been observed that few subscribers/users connect to the internet for unreasonably long period [sic] of time depriving other users from connecting to the internet; NOW, THEREFORE… Service providers may set the maximum volume of data allowed per subscriber/user per day.”

Consumer rights group TXTPower was instrumental in exposing the provider-written language and generating a groundswell of opposition to broadband usage limits.  The group’s leader Tonyo Cruz said Internet Overcharging schemes like usage caps deliver all of the benefits to providers while limiting consumer access and increasing bills.

“The adoption of [usage caps] will destroy social media in the Philippines and affect businesses,” Cruz told commissioners at a National Telecommunications Commission public meeting attended by consumers.

Cruz compared broadband in the Philippines with a turtle race.

“Imposing caps would be like putting speed limits on slow-moving turtles,” he said.  “It is one thing for telcos to say that a small percentage of consumers abuse their networks, but is another and more important thing to know whether they actually deliver the promised services and whether they have at the moment or in the future the capacity to deliver them.”

Cruz says his group doesn’t oppose providers dealing individually with consumers who use their accounts to the point of creating problems for other users on the network, but a blanket usage limit punishing every Filipino was unacceptable.

The issue rapidly became a political hot potato when ordinary Filipinos contacted their elected representatives to protest the measure.

Kabataan Partylist representative Mong Palatino put the Commission on notice: “NTC’s draft memo [including usage caps] is clearly anti-consumer and regressive. It tramples on the rights of the consumers to get what they pay for in terms of a reliable Internet service,” Palatino wrote in a widely distributed statement. “By allowing telcos and Internet Service Providers (ISPs) to limit Internet speed and connection, NTC seemingly wants the whole nation to regress to an Internet era that is much slower and highly unstable,” Palatino explained.

For Cruz, the entire argument for usage caps and the complaints about consumers using too much Internet service “ring weird.”

“The telcos who complain about over-use are the same companies actively encouraging consumers to use the Internet and become avid Internet users, to watch and upload videos and photos,” Cruz noted.

Cruz and other consumer activists want the Commission to hold additional public hearings, and stream them live over the Internet.

Life's for sharing... just not on our wireless network.

British T-Mobile wireless broadband users got — how shall we put it — an “abrupt” and uncharacteristically rude notice about a change in the company’s “Fair Use” policy that takes effect in February (underlining ours):

Browsing means looking at websites and checking email, but not watching videos, downloading files or playing games. We’ve got a fair use policy but ours means that you’ll always be able to browse the internet, it’s only when you go over the fair use amount that you won’t be able to download, stream and watch video clips.

So what’s changing? – From 1st February 2011 we will be aligning our fair use policies so our mobile internet service will have fair use of 500MB.

What does this mean? – We’ll always let you email and browse the internet and you’ll never pay more than you agree to. We do have a fair use policy but ours is there to make sure we deliver the best service possible to all our customers.  This means that you’ll always be able to browse the internet.

So remember our Mobile Broadband and internet on your phone service is best used for browsing which means looking at your favorite websites like Facebook, Twitter, Gmail, BBC News and more, checking your email and looking for information, but not watching videos or downloading files.

If you want to download, stream and watch video clips, save that stuff for your home broadband.

T-Mobile's warning to customers to avoid watching videos on their network flies in the face of their own smartphone promotions.

As our regular reader “Jr” observes, broadband carriers want customers to use their broadband connections to browse web pages and read e-mail — and little else.  Rarely has a carrier come right out and said it, though.

Not only has T-Mobile “aligned” their fair use policies to deliver you less service (down from 1-3GB per month), but they’ve kept the same high price.  T-Mobile is the same company that routinely markets smartphones and other multimedia-equipped handsets specifically for the services they don’t want you to use on their network.

T-Mobile illustrates once again how Internet Overcharging schemes really work:

1. They implement a usage cap and suggest it is “generous” and that the majority of customers will never come close to hitting it;
2. They gradually reduce the usage allowance when revenue needs eclipse the needs of customers;
3. They still claim the new, lower limit is still “generous.”
4. They suggest almost nobody is likely going to hit the limit, no matter what it is.

Of course, had T-Mobile customers really come nowhere near the old limits, what problem was resolved lowering it?  T-Mobile claims the vast majority of customers don’t exceed 200MB of usage per month, an exceptionally low amount in comparison to other carriers.

The telecoms regulator Ofcom told ZDNet UK on Monday that, “if consumers are being notified of a change likely to cause them material detriment, the provider must give the customer one month’s notice of the change, and at the same time they must also inform the customer of their right to terminate their contract without penalty if the proposed change is not acceptable to the customer”.

As the changes take effect from 1 February, T-Mobile has given less than one month’s notice.

“We encourage unhappy consumers to speak with their provider about their concerns,” Ofcom’s spokesperson said. “If the problem relates to a particular term or condition that you feel is unfair, then you can log your complaint with Ofcom. We monitor complaints about the behaviour of communications providers and if there is a high volume of complaints about a particular issue, we do investigate and take action as required.”

(Thanks to our reader “PreventCAPS” for sharing the story with us.)

What would you do if your broadband bill was the same as your monthly rent?

That’s a question 21-year-old Notre Dame de Grace resident Amber Hunter has been dealing with since the neighbors began hacking their way into her wireless router, gaining access to her cable modem service from Videotron, Ltd., and running her bill into the next province.

It’s the predictable outcome of what happens when Internet Overcharging schemes gain traction, leaving ordinary consumers literally holding the bill.

Videotron sells usage limited broadband service across Quebec, but heavy users who routinely exceed their arbitrary usage caps knew there was a limit on the overlimit fees Videotron charged.

Not anymore.

Videotron left the usage caps on, but removed the limit on how much they can charge customers who exceed their monthly usage allowance.

Videotron sets prices like the OPEC of the Internet -- the sky is the limit

“The sky is the limit, or at least your bank account,” writes our Montreal reader Hei.  “The only thing unlimited with Videotron are the overlimit fees.”

Hunter had no idea she was being hacked.

“I had no idea what a gigabyte was, so when I started getting higher bills, I just assumed it was from watching TV shows online,” Hunter says.

Her boyfriend told her otherwise, making it clear it was impossible for her to be running up 350GB a month in usage just from watching a few movies and TV shows.

Since August, Hunter has accumulated more than $1,800 in broadband bills stemming from parties unknown who hacked their way into her wireless router and “borrowed” her Internet account.  Videotron itself is directly responsible for part of this debacle, encouraging Hunter to upgrade to a higher tier of service that upgraded her from a 30GB usage allowance to a 100GB usage allowance, with a major catch.

Hunter had become accustomed to paying her usual broadband bill plus the $50 maximum penalty charged for her “overuse.”  So a Videotron representative suggested a higher usage allowance plan might lower her bill.  But somehow, the Videotron customer service agent forgot to mention that the new plan no longer included a limit on overlimit charges.

When Amber switched plans, her broadband bill exploded.  Now the waitress hands over most of her weekly salary to Videotron.

“I’m a student, and I work at a bar, and now most of the money I have goes to pay my Internet bill,” Hunter told the Montreal Gazette. “It’s more than I pay for school and books, and I don’t have a lot of money left for food.”

She still owes the cable company $506 and they aren’t interested in providing her any service credits beyond the $313 they gave her a few months ago.

It took a Videotron help desk employee to finally unravel the mystery of the Internet Overcharges — someone was hacking into her wireless network.  Exactly who has been living their online life usage-limit free at Amber’s expense may never be known. Those living in apartment complexes and other multiple dwelling units can often find a dozen or more wireless connections, some password protected, others not.

Hunter’s wireless network was secured with a difficult to guess password using a four year old Linksys router.  Unfortunately, older routers often lack robust security and are easily hacked.

A handful of Canadian ISPs still offer unlimited broadband accounts.

As far as Videotron is concerned, it’s all Hunter’s fault — she should have understood what a gigabyte was, how many she was supposed to be using, what the security capabilities of her router were, that they were properly enabled, that she checked her usage on a daily basis looking for anomalies — investing her time, effort, and energy to stop the cable company before it billed her an enormous amount… again.

Speaking for Videotron, Isabelle Dessureault said, “It’s a case where Videotron showed some understanding and listened to what happened. We’re well-renowned in the industry for our technical support team. We credited her account for $313, but at a certain point, we need to share the responsibility. We don’t like these kind of situations.”

Videotron’s responsibility to their customers stopped where their profit margin began.  The company could have sent Amber a bill for the wholesale cost of her Internet usage, which she could have paid with a few of her bar tips.

Because Hunter’s broadband bills were now rivaling her monthly rent she decided to invest in her financial future, buying a new router and making sure the wireless was turned off.  Today she runs dozens of meters of Ethernet cable between all of her computers, just to keep the neighbors off her connection.

Although Videotron has become intractable, demanding Amber pay up, one of their competitors used the opportunity to score public relations points that Videotron sacrificed.

Jarred Miller, the president of the Internet Service Provider YOUMANO offered to cover all of Hunter’s overage fees amassed over the past year that also includes a free year of Internet service with his company, a generous offer Hunter will take.

YOUMANO is one of a handful of Canadian ISPs still offering unlimited Internet access, and do not think of themselves as the OPEC of the Internet.

The entire affair is a warning to Americans.  If you think Videotron is an Internet evildoer, imagine what Verizon, AT&T and Comcast could do to your bank account.  If they have their way, you’ll need to become intimately familiar with your router, the concept of a gigabyte, and take a class in “negotiating to win” when fighting over your future enormous broadband bills.

Listen to an interview with Amber Hunter. She appeared on this morning’s Daybreak on CBC Radio Montreal to discuss her experience with Videotron Internet Overcharging. (8 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.