The Public Interest Advocacy Centre just released a report that found deregulation in Canada's telecommunications marketplace delivered most of the benefits to providers, leaving consumers holding the higher bill.

Four years after Canada deregulated its telecommunications industry with the promise it would bring competition, better service and lower prices, Canadian consumers are instead paying too much for broadband service that delivers too little.

That is the conclusion of a new report from the Public Interest Advocacy Centre, a non-profit consumer protection organization that compared provider promises with the bills ordinary Canadians ultimately pay for their Internet service.

Michael Janigan, the report’s author told CBC News that deregulation has brought “super-normal” profits for Bell, Telus and Rogers — among Canada’s largest telecom companies — while those same providers continue to increase prices and, in some cases, reduce the amount of broadband usage customers can access before overlimit fees kick in.

“We still have three big players with over 90 per cent of the market, and they’re pretty fat and happy,” Janigan said in an interview with CBC News. “We’re still seeing the incredible clout of the big telcos in relation to their ability to swing competition in their favor.”

Bell, Canada’s largest telecom company, stands to gain even more power over the broadband marketplace with a ruling from Canada’s telecommunications authority that has direct implications for Canada’s independent service provider market.  Most third party providers obtain their Internet connectivity from Bell at wholesale pricing.  Thanks to a now-approved-request from Bell to charge wholesale customers usage-based pricing, providers are now forced to pass along those artificially high prices to Canadian consumers.

“The days of unlimited Internet service are about to become extinct in Canada,” says Stop the Cap! reader Giles in Trois-Rivières, Quebec.  “How surprised can you be that the company that sells access to competitors has managed to find a way to price that competition out of business.”

For one such competitor, Primus, the effect of Bell’s usage-based pricing will have an immediate impact on their customers’ monthly bills.

The company is now notifying customers that effective Feb. 1, the unlimited service plans that appealed to those opposed to usage-limited broadband will be now limited to just 25GB of usage per month.  Primus directly implicated both Bell and the the Canadian Radio-television and Telecommunications Commission (CRTC) for the pricing changes.

Those who exceed the limit face overlimit fees of $2.00 per gigabyte, up to a maximum of $60 per month.

Here today, gone tomorrow: Primus is discontinuing its unlimited use services. Effective Feb. 1, overlimit fees of $2/GB kick in after just 25GB of usage.

Those limits could put Primus at a competitive disadvantage with larger providers delivering lower cost plans with higher usage allowances.

“Why would you still be a Primus customer after this,” asks Giles.

Primus will not be alone among third party DSL service providers — almost all will be forced to adopt similar pricing.  The result? More expensive service for Canadian broadband customers, and major troubles for third party competitors whose new pricing could turn customers away.

The price increase is a direct result of a recent decision by the Canadian Radio-television and Telecommunications Commission (CRTC) to approve Bell Canada’s request to introduce Usage Based Billing on wholesale Internet services. Over the last four years, critics charge the CRTC with abandoning its watchdog role to protect Canadian consumers from unfair and uncompetitive practices and kowtowing to the interests of large telecom companies.

“In 2006 and 2007, the government stepped in to tell the CRTC to deregulate as a priority and to deregulate local telephone service faster promising better deals for consumers. As a our report notes, this did not happen despite all the hype”, said Janigan, author of the report, Waiting for the Dream, The Consumer Brief for Telecom Reform 2010.

In fact, the report concludes that Canada’s performance in telecommunications services such as broadband and wireless has been less than impressive, and the results for customers of cable and satellite services from deregulation of basic service has been the opposite of what should be expected in competitive markets.

“It is one thing to try a course of action that doesn’t work out: it is another to ignore the results and simply try more of the same,” said Janigan. “It doesn’t now make sense to have a government Policy Direction in place that hampers both competition and consumer protection”:

This report concludes that the failure of the regulatory reform of the last two decades to deliver the goods for ordinary residential consumers is not one that has its roots in theory, but in practice. Here, the interests of powerful stakeholders have affected the service landscape. In the same way that incumbent players used their political and economic influence and regulatory capture to get their way in the monopoly era of regulation, the winners have used the market- based system to their advantage. Neither regulation nor deregulation will engineer a thriving telecommunications industry producing innovative and efficient products and services with resultant economic growth for Canada if the decision making processes for each are skewed by conditions and assumptions that favour some stakeholders over others.

Most importantly, the governance and regulation of the telecommunications industry in Canada must respond to results. For the most part, the restructuring of telecommunications has been guided by untested economic theories, largely provided by experts engaged by the largest stakeholders. The relatively poor performance of telecommunications service for ordinary consumers should have long ago engendered a review of the  regulatory framework and market structure that is producing the same. In the last five years, the only acknowledged measure of success has been how fast telecommunications services have been deregulated with predictable market results.

The solution is not a return to old regulation but new models. First of all, there are a variety of consumer issues associated with basic rights for information, quality of service, security of service, disconnections, privacy etc. that should be met by all carriers whether they are incumbent or not. Basic service, obligations to serve, complaints resolution, and burdens of service in uneconomic areas have to be in place for all across the board. The best way to ensure that this occurs is for mandatory licensing for all carriers, with appropriate codes of conduct and enforcement with meaningful force in the form of administrative monetary penalties. The Telecommunications Act should be amended to reflect these improvements.

Interconnection with essential telecommunications facilities should be available for competitors at rates that are fair to users and suppliers. We cannot let abstruse theories supposing innovation and duplication in the absence of access to govern this important issue.

No, don't get up. We've got it.

Want an example of the kind of lazy journalism you get from one of America’s largest news operations, about to become a part of the Comcast family?  Look no further than MSNBC’s Wilson Rothman, who shared some serious Net Nonsense in his piece: ‘Open’ Internet just a pipedream.

Rothman apologized in a tweet after publishing the essay, admitting it was “cynical.”  But we want to know where the apology is for being wrong on the actual facts.

The author tells readers it’s a Comcast world this winter:

As long as you buy Internet access via cable provider, wireless carrier or telecom, you’re going to have to play — or at least pay — by their rules. They’ll just have to make sure to tell you what those rules are. That seems to be the real gist of the FCC order that was ratified today.

[…]The only people currently getting throttled by their broadband providers are file-sharing pirates who wouldn’t be protected by any net neutrality regulation anyway; meanwhile, wired and wireless broadband networks are increasingly controlled by a smaller, more powerful cadre of competitors.

Tiered pricing has to happen

You can use as much electricity from the power grid as you want, but you have to pay by the kilowatt hour. If you think of the Internet as a utility — and why shouldn’t you? — network management should look something like that. Prices offered by regulated private companies should be competitive and reasonable, but highly metered. Sadly, that means no more flat-fee unlimited access.

[…]I don’t mean to sound cynical, but I come at this from a technology background, not a legal or political one. What I see are all the ways in which “public” access to utilities become profit centers for increasingly massive companies.

After the break-up of the Bells, the phone companies eventually consolidated and worked their way back together like some kind of liquid-metal Terminator. The good news? Instead of a single monopolistic phone company, we have two Leviathans and some smaller fish. Long-distance service used to be their cash cow; now it’s wireless and broadband, and they’re not going to let those slip so easily.

“Give that man a raise,” said Brian Roberts, Comcast CEO.

Seriously, Rothman might come from a technology background, but he sure doesn’t know his way around the broadband public policy debate. Digging into the reasons for today’s broadband mess would require actual reporting.

Rothman suggests Americans are effectively required to accept today’s decision from the Federal Communications Commission.  That’s akin to telling Time Warner Cable customers they should have just knelt down to the cable company’s 2009 pricing experiments.  Or that North Carolina needed to padlock community broadband networks until they could be sold on eBay to the highest Big Telecom bidder.  Or that Frontier can and should get away with a 5GB usage cap.

We said no.  You said no.  And we won all three of those battles.

Today’s FCC vote has relevance only until the first major cable or phone company (or interested third party) files a lawsuit.  The outcome is predictable — the same court that threw out the FCC’s authority earlier this year will do so again, for many of the same reasons.  For consumers, that isn’t all bad.

Rothman’s claim that only pirates are victims of speed throttling is demonstrably false, and nothing less than journalistic malpractice.  Innocent consumers are routinely throttled on wireless and wireline broadband networks using “network management” technology.  Are Clear’s customers all pirates?  How about Cricket’s clients?  Exceeding an arbitrary amount of usage on these networks guarantees you a spot in the dial-up-like doghouse.

The author also misses the point about increasing consolidation in the Big Telecom marketplace.  Cadre?  Sure.  Competitors?  Hardly.  Most Americans endure a broadband duopoly for reasonable Internet access — a cable and phone company.  Cable and phone companies have quite a deal.  They effectively charge around the same price for service and never have to worry about a third cable or phone company entering the marketplace.  Cable companies don’t compete with other cable companies.  Same for telephone companies.  Community broadband networks deliver the only real competition some areas have, which is why Big Telecom wants to ban these upstarts wherever they can.  Big Telecom believes Americans should not get to choose an alternative cable company if Comcast delivers terrible service.  Consumers living in small communities like Penn Yan, N.Y., live with Verizon DSL, if they are lucky.  Outside of the immediate town limits, there isn’t a cable competitor, much less another phone company.  That’s the real “take it or leave it” Americans contend with.

Rothman's electric utility analogy is as valid as charging for broadband by the foot.

Why shouldn’t Americans think of broadband as just another electric utility?  Because it isn’t.  This common talking point/analogy adopted by Rothman’s future employer has as much validity as pricing broadband by how many feet of wire was necessary to install it.

Broadband is neither a limited resource nor a product that requires a utility to purchase raw materials to perpetually generate.  His argument works only if a provider “generated” the actual content you consume online.  They don’t — they simply transport content from one point to another over a network that becomes enormously profitable once the initial construction costs are paid.  Rothman can discover this for himself reviewing the quarterly financials of broadband providers.  After billions in profits are counted, it’s clear this is one recession-proof industry that is hardly hurting.

It’s no mistake these analogies always leave out the one utility that is most comparable to broadband — telephone service.  You know, the one service that is rapidly moving towards unlimited, flat rate — talk all you want.  Providers using the consumption billing argument cannot afford to include phone service in their analogy, because then the ripoff would be exposed.  One would think a reporter for NBC News might have managed to figure that one out as well, but no.

The fact is, there is no healthy competition in broadband.  You know what that means — high prices for limited service.  Rothman seems ready and willing to take whatever Big Telecom wants to dish out, but then his paycheck is about to be paid by one of those companies, so he can afford to be cynical.

Unfortunately for his readers, Rothman is oblivious to the reasons why phone companies have consolidated and consumers are stuck with the results.  The recipe:

• A multimillion dollar lobbying effort that includes huge contributions to politicians, astroturf “dollar-a-holler” groups paid to front for Big Telecom’s agenda, and a mess of scare tactics predicting horrible things if they do not get their way;
• A supine media that simply accepts provider arguments as fact, deems the abusive practice that follow as inevitable, and apologizes later for being cynical;
• An uninformed public that decreasingly relies on media companies that also happen to have direct financial interests in the outcome of these public policy debates.

Consumers have more power than Rothman thinks when they take a stand with elected officials.  When taking AT&T money becomes more costly than voting for their constituents, elected officials will do the right thing.  That takes individuals letting elected officials they are watching them closely on these issues.

Consumers can also tell their local elected officials that the Big Telecom Money Party needs to come to an end.  A community-owned broadband network that throws out the online toll booths and creates a network for Main Street instead of Wall Street is the functional equivalent of handing unruly Verizon and Comcast their coats and escorting them the door.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Franken FCC Net Neutrality Plan Flawed 12-20-10.flv[/flv]

Sen. Al Franken (D-Minn.) took to the Senate floor this weekend to explain his strong opposition to the proposed Comcast-NBC/Universal merger, how some of the nation’s largest telecom companies use limited competition to maintain confiscatory pricing for service, and why feeding the Big Telecom beast with favors requested in multi-million dollar lobbying campaigns will cost ordinary Americans more money for less service in the future.  Franken’s remarks are a refreshing change of pace from the usual Congressional rhetoric, reduced to “Obama’s takeover of the Internet,” “socialist broadband,” and “Maoist net policies” we usually hear about.  It’s well worth the time to educate yourself about Big Telecom’s agenda.  (25 minutes)

In a welcome turn of events, the League of United Latin American Citizens (LULAC), which has routinely turned up as a member of Big Telecom-backed astroturf campaigns and takes money from AT&T, has come together with Latinos for Internet Freedom to issue a joint statement calling on the Federal Communications Commission to adopt equal Net Neutrality policies for wired and wireless broadband services.

“Although we disagree on some of the components of the proposed network neutrality regulations, there is one point on which we are in lock step: the FCC’s network neutrality rules must apply equally to wireline and wireless internet access.  Of course we understand that what is ‘reasonable network management’ may be slightly different over different types of connections.  Cost is the primary barrier to broadband adoption, and Latinos are turning to their mobile phones as their only onramp to the internet.  We are committed to finding ways to lower broadband costs by increasing competition through wireless access and other means.  It is therefore essential that the FCC ensures that users of wireless and wireline services are protected by its openness rules.”

Of course, broadband providers’ demands for deregulation and unified opposition to Net Neutrality have never delivered and will never provide cheaper Internet service to anyone.  In fact, the court ruling that eliminated the FCC’s authority over broadband gave providers nearly a year of a wide open marketplace, yet many providers are now sending out notices they are -increasing- broadband prices for subscribers.  Net Neutrality has never been enforced against wireless networks either, and as a result most either usage cap, throttle, or charge enormous overlimit fees for users deemed to be “using too much.”

Increased competition can bring lower prices, but only if it extends well beyond today’s duopoly.  In areas where one provider is likely to maintain a de facto monopoly, effective oversight is required to ensure consumers receive adequate service at fair prices.

Still, it is a surprising and welcome change to see LULAC recognizing the true nature of broadband access for many economically-challenged Americans, especially in minority communities where unemployment continues to be catastrophic.  Some consumers are finding prepaid wireless broadband service to be one way onto the Internet, yet Big Telecom has sought to keep those networks exempt from any Net Neutrality consumer protections.  That cannot be allowed to happen.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizon vs. Latinos for Internet Freedom.flv[/flv]

Watch these two competing spots from Verizon and the Latinos for Internet Freedom.  One is self-serving and a tad condescending, the other calls for a free and open Internet where individuals get a level playing field to tell their own stories and live their own lives without fear or special favor.  (2 minutes)

Don’t want blazing fast fiber optic broadband speeds?  Unhappy with fiber optic quality video and want to go back to putting a satellite dish on your roof?  If the answer to either question is “yes,” Frontier Communications has good news for you.

The phone company, which assumed control of a handful of communities formerly served by Verizon’s fiber-to-the-home FiOS network, has announced it will begin marketing DSL and satellite TV services to its fiber customers.

Frontier CEO Maggie Wilderotter told investors on a third quarter results conference call that FiOS broadband could be too expensive.

Wilderotter noted Verizon would not allow customers in a FiOS neighborhood to buy DSL service, which leaves budget-minded customers behind.

“Now, FiOS starts at like 50Mbps and it’s very expensive. It’s like $50 a month for a customer. So they left a whole host of customers behind from an affordability perspective who didn’t need that kind of capability on broadband.” Wilderotter explained. “We have just over the last 30 to 60 days opened up DSL in all of the FiOS markets to give the customer choice. So the customer can choose whether they want FiOS broadband or they want high-speed Internet service, typically, and in those markets we’re offering around 6 to 7Mbps.”

Time Warner Cable occasionally runs promotions helping customers break free from Frontier's multi-year service contracts.

Of course, Frontier FiOS starts at 15Mbps — not 50, and that costs $50 a month for standalone service.  For $99, ($89 in Verizon FiOS areas), customers can get broadband, cable TV and unlimited phone service.  Frontier’s “Turbo” DSL service is priced at $40 a month for up to 7.1Mbps service.

Wilderotter also noted their FiOS customers can also choose to skip fiber video and go with DirecTV.

“We think that customers should be able to choose what kind of video they want,” she said. “We have aggressive offers in the market for both DirecTV and for FiOS video, but in our vernacular, what we care about is keeping the customer, getting the customer to take more products and services from us and making sure the customer is happy with the choice.”

Wilderotter said Frontier is prepared to tolerate more congestion on its DSL circuits than Verizon permitted, which opens the door to potential traffic slow-downs down the road.

“We’ve opened up in many of these locations the opportunity to sell high-speed service up to 95% capacity on the equipment that we have out in the field. Verizon had set a parameter at 75%,” Wilderotter said.

The company continues to study whether Frontier FiOS is worth maintaining or expanding outside of the Verizon territories where it was originally constructed.

“We are still evaluating it from a financial perspective and a customer perspective, and from a cost perspective and a revenue perspective,” Wilderotter told investors. “In terms of what that does for us overall, what it does for churn, how much does it really cost to extend this capability in the markets that we’re in today — we think that analysis and evaluation will go on through the first quarter [of 2011] and then we’ll be able to make some [decisions] in terms of what we want to do with FiOS from an expansion perspective or a maintenance perspective.”

Frontier Communications CEO Maggie Wilderotter answered questions about broadband expansion and the impact of the fall elections on telecommunications policy in Washington. (11 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Frontier's largely rural service areas provide a captive audience for the company's DSL broadband service.

In the near term Frontier has several plans to get more aggressive in the marketplace to meet its target goal of losing only 8 percent of their customers per year — a goal that illustrates legacy phone companies are still on a trajectory towards fewer and fewer customers:

1. Don Shassian, executive vice president and chief financial officer of Frontier reports expansion of DSL remains a top priority for Frontier.  The company is on track to deliver access to 300,000 additional homes by the end of the year.  Verizon delivered access to 64 percent of Frontier’s acquired territories.  Frontier wants to get that number up to 85 percent.  But part of that target is not just expanding service to unserved areas.  It’s also trying to win back customers lost to other providers through promotions and incentives.
2. Frontier plans to resume aggressive promotions in the coming weeks and months, including its “free Netbook” promotion, which provides a Netbook computer to new customers signing up for several packages of services, committing to remain with Frontier for at least two years.
3. Frontier intends to push “price protection agreements” on as many customers as possible.  Their “Peace of Mind” program locks customers into multi-year contracts with stiff cancellation penalties.  Wilderotter noted: “I think, as you know, in our legacy markets, 96% of all of our sales are on a price protection plan and we have close to 60% of our residential customers on a one-, two- or three-year price protection plans. That number is below 15% in the acquired markets. So we’re also driving for price protection plans with every sale that we’re doing in these new markets as well.”  Such contracts dramatically discourage a customer from disconnecting Frontier, because fees for doing so can exceed $300 in some cases.  Frontier has been heavily criticized by some customers and State Attorneys General for deceptive business practices regarding contracts.

Frontier continues to enjoy a lack of solid cable competition in its largely rural service areas.  Shassian reports Comcast competes with Frontier in only about 32% of homes in some areas, Time Warner Cable in about 23%, and Charter below 15%.  With reduced competition, Frontier often represents the only broadband option in town.

Frontier is also spending an increased amount of time coping with copper thefts, especially in West Virginia where the company is warning would-be thieves it will prosecute to the fullest extent of the law.

“Damage to our facilities can affect communications access in an emergency, increase company costs and consumer rates, and disrupt community phone and broadband connections,” said Lynne Monaco, Frontier’s Director of Security. “When network connections are severed by copper thieves, it endangers customers and emergency responders and poses significant risks of personal injury and property damage.”

Just last week, West Virginia state police solved another copper caper that disrupted service for some customers.

The Charleston Daily Mail reports:

Stephanie Burdette of Charleston was arrested in connection with a copper wire theft.

Trooper A.B. Ward from the South Charleston detachment went to the Fishers Branch area of Sissonville last Thursday afternoon when a Frontier worker discovered a section of the communications line missing. The worker found that 300-feet of the 400-pair line, valued at about $5,000, was missing, according to a complaint filed in Kanawha Magistrate Court.

A trooper who had worked on a similar investigation told Ward to check the home of Ervin “Tubby” Page, 49, where troopers had previously found evidence of wire burning. Ward went to Page’s home, described as a Goose Neck travel trailer parked next to the Guthrie Agricultural Center in Sissonville, and found three burn barrels about 50 feet in front of the trailer. One of them was on fire.

Page’s girlfriend Stephanie Marie Burdette, 25, of Cross Lanes, was at the scene when the trooper arrived. Ward spoke to her then checked out the barrels where he found aluminum wrap, which is used to cover the copper communications wiring, and pieces of copper cabling, the complaint said.

Frontier customers are encouraged to report any suspicious activity around telecommunications equipment and facilities by calling the company’s toll free security line 1-800-590-6605. Anyone witnessing a theft in progress should not confront the suspects but should immediately call 911 and then call Frontier. Vehicle and suspect descriptions are very useful. This is a community safety problem, and the cooperation of the public is critical.

[flv width=”500″ height=”395″]http://www.phillipdampier.com/video/WOWK Charleston Copper Thieves 11-15-10.flv[/flv]

WOWK-TV in Charleston covers Frontier’s difficulties with copper wire thieves across the state of West Virginia.  (1 minute)