Robert F. McDowell

Two Republicans serving on the Federal Communications Commission told attendees at Saturday’s Tech Policy Summit that “usage-based pricing” for wireless broadband could be a solution to congested cell phone data networks.

“Pricing freedom has to be essential, because a small number of users take up the majority of bandwidth. So charging some of the heavy users for that bandwidth makes sense,” Commissioner Robert McDowell said during a panel discussion at the 2010 Consumer Electronics Show.

“I think it’s time to let that happen,” he added. “Net neutrality proponents say it should be an all-you-can-eat price. But that will lead to gridlock.”

The discussion, Inside the FCC’s Communications Agenda, focused on the FCC’s agenda in light of the Obama Administration’s new policy initiatives and the current the impact technology has on regulatory policy.

McDowell was responding to industry reports that Verizon was prepared to abandon all-you-can-eat pricing for wireless data on its forthcoming 4G LTE wireless network, even though it doesn’t actually have such a plan in place at the time the panel discussion was held.

McDowell believes that since private money is constructing the networks capable of delivering LTE service, the company has a right to charge what it pleases for service, reducing demand with a correspondingly higher price for those who use the network more than others.

Meredith Atwell Baker

Consumer advocates argue that current profits in the wireless industry provide ample resources to build and upgrade networks without overcharging consumers with expensive usage based pricing designed to make customers think twice before using the service they pay good money to receive.  Unlimited use pricing is favored by consumers as well.  Most providers abandoned “all you can eat” plans at least a year ago.  Every wireless broadband plan carries some limitations somewhere in the fine print, particularly for plans that are designed for mobile netbooks or laptops.  Virtually all of them either limit usage to 5GB per month or throttle the user who exceeds that amount down to dial-up speeds for the rest of the month.

Meredith Attwell Baker, the newest Republican FCC Commissioner, seemed slightly out of her element in discussing the issue of consumption billing.

As panel moderator Kim Hart reported for The Hill newspaper, Baker has some novel ideas for easing congestion on wireless broadband networks.

“Maybe we move back to a world where people pay for roaming,” she said.

It's your fault our service doesn't work.

Central Floridians are angry and annoyed with a broadband provider that is more adept at randomly assigning blame than actually resolving serious service problems.  Bright House Networks customers in the Orlando area first noticed their Road Runner service began slowing down around December 23rd.  Web pages took minutes to render, if they finished at all.  Important e-mail was inaccessible at times for many accustomed to a much faster online experience than the bad old days of dial-up.

Problems worsened by Christmas Day, and despite complaints from across the entire region, Bright House technicians spent their time assigning blame elsewhere.  In a classic case of buck passing (Deluxe Goldman-Sachs Home Edition), the cable operator initially began blaming customers for the problems, claiming everything from virus infections to bad routers.

“The technician said he was certain it was either my router or my Windows XP had become hopelessly corrupted with viruses, and I might have to reformat my hard drive and start all over,” writes Stop the Cap! reader Kris.  “Two days before Christmas was the worst possible time for something like this to happen, and it was clear Bright House’s biggest priority was to get me off the phone as fast as they could.”

As customers abandoned all hope of using their broadband accounts on Christmas Day, calls continued to pour into Bright House customer support.  Even the media got involved, noting the cable company adopted a “mum’s the word” strategy on their website, saying nothing about the increasingly maddening service problems.

By then, company officials must have figured out blaming the customers wasn’t working too well, and they blamed Christmas instead.

“I was told heavy Christmas web traffic was responsible,” said Jed, a Stop the Cap! reader.  “They told me with everyone getting new computers and laptops and other electronics, it might be awhile before things got back to normal, perhaps even as late as next week when people returned to work.  Considering I was getting less than 56kbps service at this point, I wasn’t buying it.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WFTV Orlando Internet Outages Frustrate Bright House Customers 12-27-09.flv[/flv]

WFTV-TV in Orlando is credited for being among the first in the media to shine a spotlight on Bright House Networks’ failure to address their ongoing Internet service problems (2 minutes)

As the weekend wore on, enterprising customers learned it was probable a DNS server or other connection point further up the Internet was probably causing all of the trouble.  Yet that theory was repeatedly denied by Bright House, who was forced to begin issuing statements to the local press, still blaming others for broadband woes.

“Some Bright House Networks Road Runner Internet customers are experiencing intermittent problems accessing various websites,” Bright House spokesman Brian Craven wrote. “The issue is a result of off-network congestion. BHN engineers are working to resolve the issue.”

Customers were also on the receiving end of that old chestnut ‘the exaflood,’ the theory that the Internet is being crushes by a global traffic flood worthy of Noah’s Ark.  As comments piled up on Orlando media’s online message boards, customers traded the excuses coming from Bright House, wondering why the company couldn’t spend as much effort actually fixing the problems with Road Runner on Xanax.

Finally, several days later, company officials admitted the problems were coming from a lot closer to home — theirs, not yours. Brian “It’s Congestion” Craven was back with a revised statement:

“A hardware problem experienced by a Bright House Networks vendor caused some Bright House Networks customers to experience intermittent problems accessing some Internet websites. The issue was resolved at 11 p.m. Sunday. Bright House Networks Internet service was never down.  The situation only affected some customers’ ability to access certain Internet sites.”

Some websites like Google, for instance.

So it wasn’t your fault after all.  It was one of their “vendors.”  Customers pondered when they would be able to receive service credit for several days of useless broadband.

The answer?  Never… tough luck:

“Customer credits will not be given because at no time was Internet service down. It was a latency issue in which some customers experienced intermittent problems accessing certain websites. The issue was caused by a hardware problem experienced by a Bright House Networks vendor,” Craven added.

Customers began lighting the torches.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WOFL Orlando Bright House Outage 12-29-09.flv[/flv]

WOFL-TV in Orlando reports on growing customer rage over the lousy customer service being provided by Bright House Networks. (1 minute)

News accounts noted some customers disappointed by the company’s callous response were returning the favor by unceremoniously dumping their cable modems on the counter at the nearest Bright House cable store, canceling service.  For those brave enough to stay, lessons were learned. As one Web Worker Daily contributor lamented, the most effective way to get Bright House off their collective butts was to embarrass them in the media:

The biggest help [came] when the media started reporting the problem. A local TV station and the Orlando Sentinel both picked up the story. Within only a couple hours, the problem that supposedly didn’t even exist was magically solved, after having dragged on for at least a week.

The lesson I came away with was that fighting as a group is more powerful than going it alone — and even better is having a reporter or two in that group.

The Internet… interrupted: Bright House Networks’ holiday gift to you.  A week of buck passing, liberal use of the “excuse-o-matic” that blames others for their own problems, and a complete unwillingness to do the right thing by customers.  When a service doesn’t work properly, customers don’t want to hear a finger-pointing blame game.  They want the service fixed… fast, and receive credit for the inconvenience they experienced while trying to use your service.  Anyone aware of good customer relations already recognizes these are not unreasonable requests.

Too bad Bright House spent most of its time creatively not fixing its problems until the media got interested.  They should stay on the company’s case until it provides the credit customers deserve.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WFTV Orlando Bright House Not Taking Blame For Outage 12-28-09.flv[/flv]

WFTV-TV in Orlando reports on the inevitable customer blowback that happens when a service provider treats their customers with disregard.  [Apologies for the audio sync problem.] (2 minutes)

Comcast has agreed to settle a $16 million dollar class action lawsuit filed on behalf of broadband customers who experienced slowed speeds while using peer to peer applications.  The original lawsuit, Hart v. Comcast, accused the company of advertising broadband speeds that were unavailable to customers when using certain applications the company allegedly impaired from April 1, 2006 to December 31, 2008.  As part of the proposed settlement, Comcast denies any wrongdoing but has agreed to modify its “network management” policies and feels further litigation over the matter would not be in the company’s best interests.

Customers are eligible for a settlement up to $16:

If you live in the United States or its Territories, have a current or former Comcast High-Speed Internet account, and either used or attempted to use Comcast service to use:

• The Ares, BitTorrent, eDonkey, FastTrack or Gnutella P2P protocols at any time from April 1, 2006 to December 31, 2008; and/or
• Lotus Notes to send e-mail any time from March 26, 2007 to October 3, 2007.

Starting January 5, 2010 affected customers can file a claim online or by mail for their share of the settlement.  Additional information is available on the settlement website P2PCongestionSettlement.com.

BitTorrent's peer to peer protocol was impacted by Comcast's speed throttle

The Comcast throttling incident helped make the case for Net Neutrality proponents that broadband providers would, in certain instances, be willing to impede traffic it deemed undesirable or burdensome.  Peer to peer traffic has been blamed by several providers for creating congestion problems on their broadband networks, particularly those that share a limited amount of bandwidth among hundreds of customers.  Unlike typical file transfers, which originate in one location and deliver content to consumers, peer-to-peer relies on groups of people sharing individual pieces of files with one another until everyone obtains the complete file.  Because many peer to peer networks consider it good etiquette to share as much as one receives, upstream bandwidth is consumed at a much higher than average rate.

For consumers who leave file sharing applications running 24/7, the amount of traffic can build to considerable levels.  Many providers consider such traffic a nuisance that clogs their networks, and some have sought to artificially reduce the speed of such traffic.

Apple iPhone

AT&T Mobility, the still-exclusive provider of Apple’s iPhone in the United States, is floating trial balloons about the imminent end of “unlimited data” plans for iPhone customers.  Although the company has always defined their wireless broadband service as “unlimited” even though the fine print says they really mean “up to 5GB of usage per month,” the mandatory data plan forced on iPhone customers has retained its “unlimited means unlimited” definition.  We’ve never verified a customer thrown off of AT&T’s network for using too much data on their iPhone.

AT&T has managed the iPhone as both a success story and a major challenge to its network.  People will go to all sorts of trouble to acquire and keep an iPhone, including putting up with less 3G coverage and more congestion-related dropped calls and other service problems in some larger cities.

Considering the enormous revenue boost the iPhone has brought to AT&T, customers might wonder why the company simply doesn’t pour additional money into building more network capacity.  AT&T Mobility CEO Ralph de la Vega doesn’t agree.

He believes the answer isn’t going to be found in just upgrading AT&T’s network.  Instead, he wants to implement an Internet Overcharging scheme like consumption billing and do away with the “unlimited” plan altogether.

AT&T claims that three percent of smart phone customers consume 40 percent of network capacity, a substantial percentage if compared with the amount of data a mobile broadband dongle can help a laptop or netbook consume.  Of course, those numbers are AT&T’s and do not come with independent verification.

For de la Vega, consumption pricing “is inevitable.”  That allows AT&T to reduce demand on its network and manage upgrades at a level more comforting on that quarterly financial report.

“What’s driving [high] usage are things like video or audio that plays around the clock,” de la Vega said at an analysts conference. “We have to get to those customers and get them to recognize they have to change their patterns, or there are things we will do to change those patterns.”

Customers forced to ration their usage with the threat of a higher bill can work… for AT&T.

AT&T may be about to test the limits of the iPhone enthusiast.  After all, they’ve already been pushed into a two year contract for a premium-priced phone, enrolled in a high priced service plan with a compulsory data package add-on, and have to live with AT&T’s less-than-stellar coverage in several areas.  Will AT&T be able to punish its customers further by taking away their unlimited data plan and replace it with consumption billing and see if they’ll break?

We’re likely about to find out.

AT&T wants to embark on a part-conservation, part-education campaign to get customers to reduce usage.

“We need to educate the customer … We’ve got to get them to understand what represents a megabyte of data,” de la Vega says. “We’re improving all our systems to let consumers get real-time information on their data usage.”

That’s the AT&T version of the gas gauge, the usage meter that means more profits for them and less service for you.

A question customers might want to ask Apple and AT&T: If the sole provider of the iPhone in the United States is a hard luck case of an over-congested network and an inability to invest profits to expand it, perhaps it’s time that exclusive contract comes to an end, allowing other mobile providers to ‘share the burden.’  Then customers can decide if AT&T’s rationing, consumption billing, and education campaign is right for them.

Ralph de la Vega, CEO of AT&T Mobility

AT&T Mobility has news for its customers: “You’ll be hearing something from us in the near future,” says AT&T Mobility CEO Ralph de la Vega.  He was speaking about an end to “unlimited” usage of its wireless network.  Stop the Cap! reader Jeremy learned about it and sent word our way.

Of course, AT&T has always reserved the right to impose overlimit fees or terminate accounts that exceed 5 gigabytes per month, but most of the horror stories about enormous bills come from consumers using AT&T’s wireless broadband service on a computer.  For iPhone users, who are force-fed a mandatory $30 monthly “unlimited” data plan, their wireless usage has not been subjected to an AT&T crackdown for whatever they consider “excessive” that month.

But that is likely to change, and soon.  De la Vega warned listeners on a conference call held this week that AT&T’s considerations of ways to deal with extreme bandwidth users are “all in flux, but we will come up with ways that mitigate the [network] impact we’ve seen by a small number of customers who are driving inordinate usage.”

The company has been holding focus groups about Internet Overcharging schemes, trying to conjure up a public relations message that consumers will be duped into believing is fair.  They’ve tested everything from meal scenarios to toll roadways, comparing “heavy users” with 18 wheelers and ordinary light users with Mini Coopers, asking participants if they felt it was fair “for the truckers to pay more?”  One of our readers clandestinely participated in one of these, and managed to debunk their nonsense over a free lunch, with consumers incensed to discover the tolls they are charging are ludicrously profitable even at current rates.

When facts about Internet Overcharging are revealed, it’s not a question of who should pay more — it’s a demand to know why everyone isn’t paying less -and- why companies like AT&T aren’t investing a greater percentage of their fat profits in expanding their network.

As I’ve written on several previous occasions, it comes as no surprise to me that some companies in the broadband industry have been looking for an excuse to throw all of our “favorite” Internet Overcharging schemes on customers — usage allowances, overlimit fees and penalties, or just throttling your connection to dial-up speeds.  As I predicted, some will try an “either/or” scam on consumers, telling them they are “forced” to impose these kinds of profit grabs because the government is demanding Net Neutrality.  One has absolutely nothing to do with the other of course, but it’s a convenient excuse to help rally consumers against Net Neutrality now, and impose higher pricing on consumers anyway.  It is crucial that consumers do not fall for this ploy.  There is no fairness in being overcharged for Internet access, such plans never truly provide “only paying for what you use” pricing, and no one should be willing to give up one for the other.  In Canada, they ended up with no Net Neutrality -and- Internet Overcharging schemes, precisely what would happen here.

As has always been the case, AT&T blames a “small percentage” of their users for consuming massive amounts of bandwidth.  Earlier this summer it was “three percent of Smartphone users use 40% of AT&T’s wireless network.”  The us vs. them mentality is designed to divide consumers into finger pointing camps blaming their neighbors for “the problem” instead of asking pointed questions of the carrier making the claim.  Some questions are:

1. Exactly how much data do those “heavy Smartphone users” consume?
2. What is AT&T’s cost per megabyte/gigabyte to deliver that data to consumers?
3. Why does AT&T mandate iPhone customers purchase an “unlimited” data plan and then complain when customers utilize what they are paying for?
4. Will AT&T significantly reduce pricing for mandatory data plan customers, or simply throw a usage allowance on existing accounts and expect consumers to pay the same?
5. What percentage of AT&T’s profits are spent on their network and its expansion, and has that amount as a percentage increased or decreased in the last five years?
6. If AT&T is suffering from smartphone congestion, why continue an exclusive deal for the iPhone, which AT&T claims contributes to a significant amount of that congestion?
7. Why does AT&T marketing claim their wireless broadband plans are “unlimited” when, in fact, they are limited to 5 gigabytes of usage per month?

Jack Gold, an analyst at J. Gold Associates, told Computerworld carriers have a legitimate issue in considering an “overage charge,” for users who surpass a certain number of gigabytes of data per month.

“People will complain about an overage charge,” Gold said. “I guarantee complaints, but there’s no other way to deal with it short of building out more networks to give people the bandwidth they crave. There really are bandwidth hogs. You have 5% of the users taking up 90% of the bandwidth sometimes.”

Gold said he agrees with net neutrality rules that allow users to reach any Web site on the Internet, but argued that carriers can’t provide unlimited bandwidth to all users. Doing so “means everybody else is limited … The AT&Ts and Verizons have a legitimate point.”

Of course, Gold is in the business of representing business interests, not consumers.  Does Gold have direct evidence of his numbers, or does he simply repeat what he has heard carriers tell him?  Since consumers cannot easily find truly unlimited mobile broadband accounts in the American wireless industry today, de la Vega’s urgent statements about imposing limits on customers must target iPhone and other smartphone users specifically, because those are the only accounts AT&T hasn’t held hard to their 5GB usage cap.