AT&T’s forthcoming changes to their broadband service include more than just an Internet Overcharging scheme.

As the Los Angeles Times reporter David Lazarus discovered, AT&T now reserves the right to terminate your service if you excessively annoy the company’s employees, perhaps while calling to complain about the company’s new 150-250GB usage limits.

Lazarus reports AT&T’s contract now stipulates the company can cancel your service “if you engage in conduct that is threatening, abusive or harassing” to the company’s workers, or for “frequent use of profane or vulgar language” when dealing with service reps.  At least they won’t wallop you with an early termination fee if they pull the plug on you.

But that’s not all.  AT&T also followed Verizon’s lead telling their existing DSL customers once something better arrives from the company, they can stop selling DSL. For AT&T, this means they can switch your standalone DSL service to U-verse with or without your permission, billing you for a potentially more expensive broadband service.

While U-verse delivers a much improved broadband experience over traditional DSL, some budget-minded AT&T customers tough it out with DSL because it often carries a lower price and does not require an expensive bundle of video and phone service to win substantial discounts.  U-verse does.

AT&T spokesman John Britton told the newspaper he couldn’t imagine the company actually doing this to customers, but he acknowledged that this is what the new contract says.  More than a few AT&T customers couldn’t image the nation’s largest phone company would need to cap broadband usage of their customers because of alleged “congestion” problems either.

Two years ago, when Time Warner proposed to limit consumption of consumer broadband accounts with an Internet Overcharging experiment, Stop the Cap! suggested they should instead upgrade their networks to meet the demands of their Internet-hungry customer base.

With thanks, they have taken our advice.  As DOCSIS 3 upgrades continue to roll across the cable company’s service areas, it is bringing immediate benefits to every Road Runner customer, and the company itself.

Several weeks ago, we shared the story of Time Warner customers in Webster, N.Y.  Time Warner had hopelessly oversold its broadband service in the growing town just northeast of Rochester.  Speeds plummeted to as low as 900kbps most evenings and weekends, and did not return to normal until most customers were back at their day jobs.

As a shared network, cable broadband delivers a limited amount of bandwidth into individual neighborhoods, shared by every customer.  When too many people pile on, speeds plummet.  When this happens, cable companies are supposed to either increase capacity, or more commonly divide a congested area into two or more parts, each served with their own broadband pipe.  In less densely populated towns, or where less net-savvy consumers tend to reside, capacity upgrades may come only once or twice over several years, and speeds are consistently fast day and night.  But where college students predominate, or where new housing developments deliver plenty of new upper-income homeowners more likely to leverage their broadband connections, the tell-tale evening and weekend slowdowns create problems.

A speedtest performed before the upgrade

“A good clue of overcongestion is when download speeds suffer, but upload speeds remain fairly consistent,” shares Prakash Patel, who consults with cable companies on HFC “cable” broadband deployment.  “Typically, if both speeds falter at different times of the day, that is usually a sign of a technical fault on one’s cable connection — not network congestion.”

For Stop the Cap! readers in Webster, the ongoing congestion made Road Runner virtually unusable during the evening and weekends, particularly for higher bandwidth applications like video or downloads.

Several of our readers filed complaints with the cable company and one took his case to the Better Business Bureau, who obtained a sympathetic response from Time Warner — but no immediate solution.  The Bureau accepted that explanation and “administratively closed” the complaint.

As we recommended, customers remained very vocal about the ongoing congestion problems in the town.  We’ve found the old adage, “the squeaky wheel gets the grease,” effective in moving upgrades higher up the list of priorities cable engineers deal with in maintaining their networks.

Original plans to deal with the problem were scheduled for late March, but Time Warner bumped the upgrade forward to this past weekend.  Instead of simply dividing up the town, Time Warner installed DOCSIS 3 technology, which greatly increases the size of the broadband pipeline available to customers.  The upgrade did the trick.

Our reader Tim shares the good news:

“I ran some speed tests Tuesday night and the improvement was very noticeable,” he writes.  “We were able to achieve speeds in the early evening that were previously only possible in the very early morning hours.”

Patel believes cable companies will continue to win a majority in the broadband marketplace using DOCSIS 3, which he considers an affordable and easy-to-deploy upgrade.

The results after the upgrade was completed.

“Not only is DOCSIS 3 relatively inexpensive, it provides plenty of new revenue opportunities for the companies that deploy it,” Patel says.  “It also fits well from an engineering standpoint, because it is an evolutionary update to a successful technology.”

Patel believes DOCSIS 3 and future versions of the cable broadband standard will allow operators to successfully compete, at least in download speeds, with virtually any provider.

“Cable companies can simply bond several channels together and accelerate download speeds,” Patel says.  “Upload speeds are proving to be a bigger issue, as most companies limit them to around 5Mbps.”

At least for now, customers in Webster are happy they are once again getting the service they paid to receive.  The upgrade solved the congestion issue for Time Warner, and the cable company plans to sell higher speed service to interested customers later this spring, earning new revenue to pay for the upgrades.

That’s a win-win everyone can appreciate — all done without an Internet Overcharging scheme.

"It's like night and day."

Tim pays Time Warner Cable around $45 a month for 10/1Mbps service.  Jake pays Comcast $35 a month for 12/2Mbps service.  Neither reader of Stop the Cap! actually receives those speeds once the sun goes down, however.

Jake, who lives in a neighborhood near Philadelphia populated by loads of college students watches his download speed plummet to 4Mbps in the evening, even lower on weekends.  Tim, a reader in the North Ponds Park region of Webster, N.Y., does even worse — 1.2Mbps evenings and weekends.

Neither reader is alone.  The disparity in marketed speeds vs. actual speeds reveals the truth about cable modem technology — if not properly managed, congestion can bring the broadband party to a sudden halt (or at least rebuffering.)

Both are examples of “overselling,” the practice of piling too many customers onto too small a broadband pipe.  If nobody is using the connection in the neighborhood, speeds are great.  But as students get out of class and mom and dad get home from work, everyone wants to be online.  Soon enough, the pipeline gets filled and speeds drop as the network tries to accommodate everyone.

Most cable companies use fiber optics to bring a limited amount of bandwidth into individual areas of their network.  Some might cover the better part of a town, others only a few city blocks.  Every customer in the area shares that bandwidth.  Cable companies monitor these connections looking for signs they are becoming overcongested during peak usage times.  When those alarms start sounding consistently, companies are supposed to upgrade the area (or divide it up) to keep broadband service working close to advertised speeds.

But some companies are waiting until broadband service becomes practically unusable before spending the money to upgrade their networks.

“I knew they were overselling this area when I noticed downloads speeds fell off the cliff, but the upload speed was near normal,” Jake writes. “The time of day also tells the story.  Starting after 4pm, speeds begin to drop and become downright terrible after dinner and on weekends.  Sunday night is always the worst.”

It’s a similar story in west Webster, near Lake Ontario, where neighborhoods several miles apart all watch their Road Runner speeds slow to a crawl.

“Browsing is slow, downloads are painfully slow, latency is very high and streaming any sort of video online is impossible,” Robert, another Webster resident, told Time Warner Cable (and us).  “I have been a customer since 1998 and for me to not even be able to download at a 1 Megabit speed when this service is supposed to be 10 megs (and more with PowerBoost) is inexcusable.”

The problem of overselling is also common in larger cities like New York and Philadelphia, where some neighborhoods endure “broadband” speeds that resemble “dial-up” when customers pile on the network.

“Comcast says they never see a problem and have repeated that to me over and over, even when they send a truck out,” Jake tells Stop the Cap! “Of course, their truck rolls in the daytime when there isn’t a problem.”

Time Warner customers in eastern Monroe County have been told the cable company is well aware of the congestion problems, and technicians dispatched to area homes candidly admit the company has not kept up with the growth of new housing developments.  Several customers have asked for, and won, several months of service credits for broadband they simply cannot use.

Tim says the entire affair has left him with doubts about Time Warner’s reputation to provide quality broadband service.

“At one time, I considered myself a candidate to upgrade to Time Warner wideband when it became available,” he tells us. “My thinking on that has changed and I am looking into viable alternatives to Time Warner. Money has become of less importance to me than principle, and I may end up with a higher cost solution than staying with Time Warner.”

Ground Zero Bandwidth: The impacted area of Webster, N.Y.

With our encouragement, these customers (among others) have filed complaints with the Better Business Bureau and have tried to get attention focused on their neighborhoods.

A broadband speed test in Webster, N.Y.

A representative of Time Warner today told Robert the company has confirmed Webster has a problem and it is being worked on, but no specific date has been offered when things will return to normal.  He received a credit for one month of service.

Jake wants answers about how a company the size of Comcast can ignore a problem of this magnitude.

“Is it really about the money,” he asks.  “This company just bought NBC and doesn’t have the resources to sell Internet service that at least comes close to the speeds they advertise?”

Stop the Cap! advises customers with speed problems to make your feelings known.  The squeaky wheel gets the upgrade.  Start with customer service and work your way up.  Demand service credits, an in-person repair visit to check your lines, and then escalate complaints to supervisors and social media networks like Twitter and Facebook.  Also consider contacting local media “consumer reporters,” and file complaints with the Better Business Bureau.  Sooner or later, a manager will escalate your case to a department that is empowered to authorize upgrades without red tape.

Considering the enormous amount of revenue earned from selling broadband service, it is only fair to expect you will have access to something close to the speeds offered when you signed up.

If you are a Time Warner Cable “digital phone” customer living in New York or western Massachusetts, you can get a few dollars of your money back thanks to serious outages that have plagued the cable company for the past two weeks.

The worst problems occurred yesterday, when customers across the entire region couldn’t make or receive calls in many instances.

“My wife said it was like the whole system crashed,” reports Stop the Cap! reader Marcus, who lives near Syracuse.  “A lot of people here are very upset.”

Marcus reports he couldn’t even work around the outage by trying to set up call forwarding to send calls to his cell phone or another Voice Over IP provider.

“I tried to forward my Time Warner calls to a Vonage number I have and that didn’t work either,” Marcus writes.

We heard from several readers in Rochester, Albany, Syracuse, and even into western parts of Massachusetts that calling a Time Warner Cable customer from a cell phone or a landline from Verizon or Frontier was nearly impossible without getting a recording or busy signal.

Small business customers using Time Warner’s phone service were also impacted in some cases.

Lakeview Deli in Saranac Lake posted a message on its Facebook page just before noon, advising its customers to call in their lunch orders using a cell phone number because of the problems with its main phone line. Owner John Van Anden said he normally gets 30 to 40 calls around the lunch hour; he got only four on Tuesday.

“It hurt (business) quite a bit just because you can’t get phone calls from customers,” he said.

The outage, which lasted more than 12 hours, was reportedly finally fixed by the cable company last evening at around 11pm.  No explanation for the outage was given by Time Warner Cable.

This is the third major service problem for Time Warner’s phone service this month:

1. Time Warner misdirected 911 emergency service calls to a call center in Colorado;
2. Time Warner underestimated call volumes, leaving customers in central New York with “all circuits are busy” recordings or busy signals;
3. Yesterday’s collapse of Time Warner’s phone network.

“Wow, this is starting to make Frontier look good again,” says our Rochester reader Kevin.  “I’ll be dropping my phone service with the cable company when my promotion ends and sticking with my Verizon cell phone.”

With all of these service outages, you know what that means — it’s time to go grab those service credits.  Customers in central New York can apply for at least a week of service credits because of the ongoing problems the company faces handling call volumes.  Everyone else in the region with “Digital Phone” service qualifies for a day’s worth of credit.  But you won’t get it unless you ask.  We’ve made asking simple, with our cut and paste process:

Stop the Cap! Presents Your Easy Service Credit Request Menu

Customers in the northeast can request one day of credit for yesterday’s phone outage.  Residents in central New York, including Syracuse — can ask for one week of credit for ongoing call congestion problems.

Sample Request You Can Cut and Paste:

I am writing to request one day service credit for the phone service outage that occurred in my area yesterday, Tuesday Jan. 18th. Please credit my account.

[Central NY Residents ONLY]: I am writing to request a credit for one week of telephone service to cover the company’s ongoing intermittent call connection problems in our area as well as yesterday’s (Jan. 18) more widespread service disruption.  I am concerned about the repeated problems Time Warner seems to be having in correctly servicing my telephone needs.  Please credit my account.

Use the Online E-Mail form, select Billing Inquiry, and send a message requesting credit.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WSYR Syracuse Another Phone Outage 1-18-11.flv[/flv]

WSYR-TV in Syracuse is spending plenty of time covering Time Warner’s phone outages and other problems.  Here’s the fourth report this month, covering yesterday’s widespread problem. (Warning: Loud Volume) (2 minutes)

Studies find few surprises for cable and phone companies that pay for them.

Internet plans with term contracts, usage limits, and other pricing tricks are good for consumers and save them money over comparable unlimited usage plans.

That is the conclusion of a new study from the Technology Policy Institute, an industry front group funded by AT&T, Comcast, the National Cable & Telecommunications Association, Qwest, Time Warner Cable, T-Mobile, and Verizon.

Scott Wallsten and James Riso’s “study,”Residential and Business Broadband Prices, Part 1: An Empirical Analysis of Metering and Other Price Determinants,” claims to have taken a comprehensive look at 25,000 plans offered across North America, Europe and the Pacific to make their case that a residential service plan with a 10GB monthly usage cap would save consumers 27 percent over the price of a comparable unlimited plan, as long as data use stays below the cap.  They also suggest additional savings can be had if consumers lock themselves into term contracts with service providers (most of which carry hefty fees to exit early.)

These results suggest that the unlimited data plans typically offered by most U.S. wireline broadband providers may not be optimal for many consumers. The details of capped plans matter, and how an individual user is affected depends on the base price, allowed data usage, and consequences for exceeding the cap. Nevertheless, because capped plans are—all else equal—cheaper than unlimited plans, many consumers, particularly the low-volume users, are likely to pay less for broadband with data caps than they would for plans offering unlimited data transfer.

Wallsten and Riso make much of AT&T’s recent decision to end unlimited usage for wireless broadband, suggesting that consumers are saving money with new, low-use plans over the company’s old unlimited pricing.  The authors claim close to 70 percent of iPhone users consume less than 200 MB per month, which is the cap for AT&T’s cheaper data plan.

But the authors concede that usage is growing — rapidly in the case of online video, which sets the stage for consumers saving money today, but facing serious overlimit charges on their bills tomorrow:

Some analysts, however, remain concerned that these plans make video streaming impractical given the bandwidth it consumes, could eventually cost consumers more as they use their wireless devices more intensively, and generally make it less likely for wireless to become a viable substitute for wireline broadband. To be sure, while Figure 3 shows that the vast majority of users consume small amounts of data today, it also shows per user mobile data consumption growing quickly, so the number of people who exceed the caps could increase significantly in a relatively short period of time.

Major U.S. wireline providers have not yet introduced metered pricing successfully, though, as shown above, it is common in other countries. An experimental metered pricing plan by Time Warner Cable garnered strong reaction, prompting one group to demand that Congress ―investigate ongoing metered pricing practices to determine the impact on consumers. Some in Congress did, in fact, hold hearings on the plans. In response to this backlash, Time Warner Cable canceled its experiment.

Despite the political reaction, all consumers are not inherently worse off or better off with metered pricing. Low-volume users are likely to be better off under metered plans and high volume users worse off. The net effect on any given consumer depends on his data use, the base price, how much data the base price allows, the price of data when exceeding the cap, and how much he would have paid for an unlimited plan.

Wallsten and Riso also admit several parts of their study are “incomplete,” and “lack data.” We would also include the facts they ignored whether consumers prefer unlimited plans, how customers would feel about a bill with overlimit fees attached, or whether the usage cap levels the authors note in their study are adequate.  They also completely ignore the critical issue of bandwidth cost trends and their relationship to consumer pricing.

But of course they would, considering the same providers who want these pricing schemes are paying the costs for the study.

Welcome to the world of Hired Gun Research.

Wallsten, in particular, has been singing the same cap-happy tune for several years now, churning out the same industry-financed conclusions about broadband.  Back in 2007, he delivered a piece trumpeted by the Progress & Freedom Foundation and the Heartland Institute — two groups notorious for parroting corporate-friendly talking points.  Back then it was about Internet overloads and supporting Internet toll booths for “congestion pricing” after Comcast got caught secretly throttling broadband customer speeds.

Dave Burstein of DSL Prime notes most consumers don’t like caps, lock-in contracts, or speed throttles.

“Policymakers should normally assume that imposing caps generally results in negative consumer welfare. The small efficiency gains don’t come close to making up for a second rate Internet,” Burstein writes. “Everyone is better off with a robust, unthrottled Internet. It allows for an important form of video competition and market access for innovative new net offerings. It’s a better experience for the user and hence more people will be connected, a good thing.”

In this latest study, the two authors completely ignore some very important facts:

• Who sets the pricing for unlimited and usage-capped broadband?  Providers.  Do consumers save money from usage limited plans because of decreased provider costs passed along to consumers or pricing schemes that artificially inflate unlimited broadband pricing to drive customers to “money-saving” limited plans that teach usage restraint or expose consumers to dramatic overlimit fees?

• What are the trends for wholesale bandwidth costs and how does that trend comport with industry pricing schemes that have increased broadband pricing in the United States?  An honest study would reflect these costs are dropping… dramatically, and would introduce the very real question of whether unlimited broadband is a problem in search of a revenue-generating solution that would come from further monetizing broadband with so-called “consumption pricing.”

• What is the consumer perception of usage-limited broadband?  An important part of this equation is whether consumers want unlimited broadband service to be discontinued.  Every study to date not paid for by the providers themselves shows consumers are willing to pay today’s prices for the peace of mind they receive in not being exposed to limits or overlimit fees.  Wallsten and Riso touched on the consumer backlash, to a considerable part coordinated by Stop the Cap!, over Time Warner’s pricing scheme which would have tripled broadband pricing for an equivalent level of service.  But the authors charge on with their pro-cap conclusions regardless.

• Wallsten and Riso’s study only casually mentions the dramatically different paradigms of wireless and wireline broadband.  The former is delivered using technology that is recognized to have limitations that can only be seriously addressed with additional spectrum allocation that could take years to address.  The latter is already being mitigated by cable broadband technology upgrades, fiber optics, and improved backbone connections that often deliver much better access at a fraction of the price providers paid just a few years earlier.  Drawing comparisons between AT&T’s wireless broadband pricing and wireline broadband is dubious at best, especially since two companies largely control pricing and service for the majority of wireless customers in the United States.

• To prove its contention limited broadband service is “common in other countries,” the authors cite a Frequently Asked Questions article by Comcast trying to justify that company’s own usage cap to its customers.  So because Comcast’s PR department says it, it must be true.  In fact, in countries where usage capped broadband has been a traditional problem, consumer demand and public policy efforts have moved providers towards offering unlimited service plans to meet popular demand.  In fact, in countries like Australia, New Zealand, and South Africa, governments have cited usage caps as a serious disadvantage to growth of the digital economy.  Consumers certainly agree.

Burstein adds:

Caps or other throttling measures are almost never imposed because of actual congestion problems (on large, wired networks.)  The caps would be at far higher levels if they were, like Comcast’s 250 gigabytes. The usual explanation is bogus. The typical consumer advocate believes the caps are about preventing competition to the carriers’ own video package. That’s certainly common, but so is price discrimination to yield increased potential revenues. As Scott notes, price discrimination in a strongly competitive market can work out well for all concerned. With strong competition, the benefits flow through to consumers. Since competition in broadband is typically weak, I believe it far more often has little consumer benefit but is good for company profits.

The authors conclude that despite limitations on data available, “The policy implications, however, are clear.  Policymakers should not immediately conclude that data caps and other pricing schemes that differ from traditional unlimited plans are necessarily bad.”  Instead, the authors suggest pricing trends should be evaluated over time to identify the effects on prices, investment and usage.

Although that’s a point Burstein agrees with, we feel there is substantial evidence this debate is based not on experimental pricing to find new customers, but rather a defensive position to respond to an inevitable public backlash against Internet Overcharging schemes.  Providers are desperately looking for excuses to further monetize broadband, cut costs, and deliver an effective impediment to online video competitors using broadband networks to deliver alternative, less expensive services to consumers.

Policymakers should listen to their constituents, who are more than comfortable with today’s unlimited broadband experience.  Nobody objects to experimental low usage plans with discount pricing, but not at the expense of ending or repricing existing unlimited service into the stratosphere.  Today’s broadband industry earns billions in annual profits, even as their costs decline.  Providers have done considerable profit-taking in the last few years from their broadband divisions, slashing upgrades and other investments to keep pace with traffic demands.