Our good friends at Broadband Reports reported they discovered a new usage meter for Cox Cable customers that implied overlimit fees were on the way for those who exceeded the company’s arbitrary usage caps.

Now Cox Cable’s director of media relations is calling the appearance of the new glitzy usage gauge, and references to “overages” all a ‘big mistake‘:

“Thanks for bringing this to our attention,” Cox Director of Media Relations Todd Smith tells Broadband Reports. “This is an error and the language is being removed from the site. Our policy remains the same, we do not currently charge customers for exceeding bandwidth allowances.”

Cox did not make it clear how exactly the language was included in the meter by accident, and their statement does not preclude the possibility that they’re interested in moving this direction eventually.

Cox's New Meter (Courtesy: Broadband Reports)

Cox Cable customers upset the cable company has a usage meter and caps should first thank them for backing down on charging broadband users overlimit fees for “excessive use.”

After that, it is time to take Cox on and tell them you don’t want your broadband usage metered at all, especially at the prices they are charging for broadband service.

Just last June, Cox Communications President Pat Esser told an audience at the National Cable & Telecommunications Association Cable Show that the industry must keep asking customers what they want and find ways to satisfy those demands.

‘Cable must accept that fact that a robust broadband platform means the ‘industry won’t control everything,’ Esser told fellow cable executives.

Stop the Cap! thinks Esser needs help understanding Cox Cable customers do not want their Internet access limited with caps and additional fees.

You don’t want to check a usage meter and cannot understand why a company that earns incredible profits from broadband that costs less and less to deliver needs to cap your access.

Cable operators don’t unveil new usage meters and mentions of overlimit fees by mistake. It is likely their new usage meter “jumped the gun” and the company temporarily withdrew it.

This is your opportunity to deliver a death blow to Cox Cable’s Internet Overcharging.

Get Involved and Send Cox Executives the Message!

Call Cox Corporate Relations at (888) 566-7751 or e-mail them at [email protected]

Better yet, you can write directly to Cox’s top executive.  We have provided a sample, but you can be most effective writing it in your own words:

Mr. Pat Esser
President, Cox Communications
1400 Lake Hearn Drive
Atlanta, GA 30319

Dear Mr. Esser,

Last June, you told attendees at the National Cable & Telecommunications Association annual meeting that the cable industry needs to keep asking customers what they want and then find ways to satisfy those demands.  As a loyal Cox customer, I am taking advantage of that opportunity to write and express my profound concern Cox Cable has started to limit my Internet usage.  I cannot understand why Cox needs usage caps at a time when broadband revenue is skyrocketing and the costs to deliver the service are actually in decline. There is simply no justification for these limits, particularly after Cox upgraded its network to DOCSIS 3, which supports a considerably larger data pipeline.

Cox and other cable operators are introducing new, faster speeds for customers to earn more revenue.  But with usage caps, there is little incentive to pay more for faster service that remains constrained with a usage limit.  Would you buy a race car you could only drive around the block?

As competition for my telecommunications dollar continues to increase, I am willing to cancel my Cox service over this issue and take my business to another provider.  Some have shown a willingness to waive usage caps in order to win my  business, and I am happy to oblige. I’d prefer to stay with Cox, but not if your company keeps refusing to listen to its customers on this issue.

If you were serious in your remarks last summer in Chicago, then you should follow the lead of companies like Verizon, Cablevision, and Time Warner Cable which have all avoided imposing usage limits on customers. Time Warner Cable believes unlimited broadband should always be available to customers. Cox has imposed limits on everyone, and that has to change.

Very truly yours,

// Your signature here

When the nation’s largest phone and cable companies get together, it’s never good news for consumers.

Verizon has struck a backroom deal with a cartel of cable companies — including Comcast, Time Warner Cable and Cox Communications — to stop competing against one another and instead divvy up the spoils of the growing mobile market.  And they’re keeping mum on the details of this arrangement.

The cable industry wants to sell Verizon the mobile phone spectrum it originally considered using to give Verizon Wireless a little competition.  In return, Verizon Wireless is going to start selling you Comcast/Time Warner/Cox cable TV service.  It’s all great for them, but if you were waiting for Verizon FiOS or a better deal for your cell phone, these phone and cable companies want to make sure you’ll wait a long… LONG time.

They claim they are not getting together in an anti-competition pact.  They are just getting differently apart. It’s like divorcing someone by agreeing to move in with them.

It’s a bad marriage for consumers and now is the time for the Federal Communications Commission to deliver some parental supervision.

Stop the Cap! joins Free Press in calling on consumers to tell the FCC to expose Verizon’s backroom shenanigans.

Tell the Commission you aren’t happy with secret handshake deals that hand over the public airwaves to Verizon Wireless to consolidate its market concentration.

Even worse, you don’t want America’s largest competitor for big cable TV — telco-delivered broadband, TV, and phone service — eliminated so the phone companies can pitch you overpriced, non-competitive cable service from their new best friends.

What part of “monopoly cartel” doesn’t the FCC understand?  Tell them you want these deals stopped and you demand real competition, not more of the same.

Won 1.1 million new customers in 2011

Comcast and Time Warner Cable collectively picked up more than 1.5 million new customers in 2011, with most of the growth coming from dissatisfied DSL subscribers seeking better broadband speeds.

Leichtman Research Group, Inc. (LRG) found the eighteen largest cable and telephone providers in the US — representing about 93% of the market — acquired 3 million net additional high-speed Internet subscribers in 2011. Annual net broadband additions in 2011 were 88% of the total in 2010.

The top broadband providers now account for 78.6 million subscribers — with cable companies having over 44.3 million broadband subscribers, and telephone companies having over 34.3 million subscribers.

Stalled growth

Despite AT&T’s position as the second largest Internet Service Provider in the country, the company only picked up 117,000 new customers in 2011.  In contrast, Time Warner Cable, with 6 million fewer customers, added almost a half-million new broadband subscriptions last year.

Frontier Communications, which made broadband a primary target for expansion, has not seen considerable growth either.  The company only added just short of 38,000 new broadband customers last year, almost all getting DSL, often at speeds of 1-3Mbps.

Other key findings include:

• The top cable companies netted 75% of the broadband additions in 2011;
• The top cable companies added 2.3 million broadband subscribers in 2011 — 98% of the total net additions for the top cable companies in 2010;
• The top telephone providers added 750,000 broadband subs in 2011 — 68% of the total net additions for the top telephone companies in 2010;
• In the fourth quarter of 2011, cable and telephone providers added 765,000 broadband subscribers — with cable companies accounting for 82% of the broadband additions in the quarter.

Now serving 10.3 million

“Despite a high level of broadband penetration in the US, the top broadband providers added 88% as many subscribers in 2011 as in 2010,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “At the end of 2011, the top broadband providers in the US cumulatively had over 78.6 million subscribers, an increase of nearly 25 million over the past five years.”

Americans are increasingly treating broadband as an essential “utility” service, as fundamental as electricity or clean water.

The majority of consumers who lack the service either consider it irrelevant in their lives (a factor that increases with the age of the surveyed respondent), cannot obtain service from their provider because of their location, or cannot afford the service.

Sources: The Companies and Leichtman Research Group, Inc.
* LRG estimate
** Includes LRG estimates for Bright House Networks, and RCN
^ Totals prior to Time Warner Cable’s acquisition of Insight completed on 2/29/2012
^^ LRG estimate does not include wireless subscribers
Company subscriber counts may not represent solely residential households
Totals reflect pro forma results from system sales and acquisitions
Top cable and telephone companies represent approximately 93% of all subscribers

Netflix continues to step up its attacks on providers who implement Internet Overcharging schemes on their wired broadband customers.

That concern is understandable as Netflix increasingly transitions to broadband streaming instead of mailing DVD’s to customers.

Getting in the way are five of the nation’s seven largest broadband providers, all imposing limits on customers just as they discover they might be able to do without cable television.

Netflix’s streamed HD shows now consume around 2GB per hour, according to Netflix general counsel David Hyman.  That can eat through usage allowances quickly.  Hyman penned an op-ed in the Wall Street Journal last year blasting the practices of usage caps and consumption billing.

Hyman

“Wireline bandwidth is an almost unlimited resource due to advances in Internet architecture,” Hyman wrote. “The marginal cost of providing an extra gigabyte of data—enough to deliver one episode of 30 Rock from Netflix—is less than one cent, and falling.”

That doesn’t seem to matter much to Comcast, CenturyLink, Charter Communications, and Cox.  All four providers have introduced hard usage limits on customers — a usage cap.  Exceeding it gives any of those providers the right to cut off your broadband service.  AT&T, always one to see a financial angle, charges for excess use of their DSL and U-verse service — $10 for every 50GB. Time Warner Cable recently announced its own experimental “optional” usage pricing package for very light users who consume fewer than 5GB per month.  It will slap overlimit fees on those participating customers who break through the 5GB ceiling at a rate of $1/GB, an enormous markup.

Providers with strict caps usually argue they come as a result of their own network’s capacity problems.  Cable operators who do not consistently manage their network traffic can experience traffic clogs by overselling service without upgrading capacity to sustain user demand.  But providers like Comcast, Cox, and Charter resolved those capacity problems with upgrades to DOCSIS 3 technology, which offer operators an exponentially bigger pipeline for Internet traffic.

Although Comcast promised to regularly review and adjust usage caps since implementing them four years ago, the nation’s largest cable operator has thus far seen no need to raise them.

“We feel that that is an extraordinarily large amount of data,” says Comcast’s Charlie Davis. “That limit is there to make sure we provide a great online experience for every single paying customer.”

Wall Street bankers have closely monitored the industry’s early results from Internet Overcharging, and have been encouraged, so long as operators implement it carefully.

Credit Suisse in a 2011 report to its investor clients suggested the key for successful usage-based pricing is to introduce it slowly and keep “sticker shock to a minimum in the early days” to reduce backlash by consumers and lawmakers.

Once established, the sky is the limit.

Netflix itself is also battling an Internet Overcharging scheme it faces — double-dipping by cable operators like Comcast.  In addition to the fees Comcast collects from customers for its broadband service, the cable operator also wants to be paid directly by Netflix to allow the movie service’s traffic on its network.

That’s an Internet toll booth, charges Netflix and consumer groups.  It’s also uncompetitive, says Hyman.

This month Comcast unveiled its own movie and TV show streaming service — Xfinity Streampix — from which, unsurprisingly, the cable company has not sought extra traffic payments from itself.

Opposed to Internet Overcharging

Three providers which don’t cap customers don’t see a reason to try.

Verizon Communications says its fiber network FiOS has plenty of capacity and has no plans to restrict customers’ enjoyment of the service.  In 2009, Cablevision’s Jim Blackley told one panel discussion usage caps are not in the cards.

“We don’t want customers to think about byte caps so that’s not on our horizon,” Blackley said. “We literally don’t want consumers to think about how they’re consuming high-speed services. It’s a pretty powerful drug and we want people to use more and more of it.”

California’s Sonic.net Inc., goes even further.  Its CEO, Dane Jasper, believes the Federal Communications Commission needs to be more assertive about protecting America’s broadband revolution and the customers that depend on the service.

The fact different operators can take radically different positions on the subject, despite running similar networks, suggests technical necessity is not the reason providers are implementing usage restrictions and extra fees on customers.

As Hyman writes:

Bandwidth caps with fees piled on top are a lousy way to manage traffic. All of the costs of supplying residential broadband are for supporting peak usage. Bandwidth consumed off-peak is completely free. If Internet service providers really wanted to manage traffic efficiently, they would limit speeds at peak times. If their goal is instead to increase revenues or lessen competition, getting consumers to pay per gigabyte is an excellent strategy.

Consumer access to unlimited bandwidth is good for society. It fosters innovation, drives commerce, and advances political and social discourse. Given that bandwidth is cheap and plentiful and will only grow more so with time, there is no good reason for bandwidth caps and fees to take root.

Consumers and regulators need to take heed of what is happening and avoid winding up like the proverbial frog in a pot of boiling water. It’s time to jump before it’s too late.

...some of that juicy 700MHz spectrum Verizon is getting from the nation's biggest cable companies.

In an ironic turnabout, Deutsche Telekom’s T-Mobile USA, last year an acquisition target of AT&T, has filed comments with the Federal Communications Commission opposing Verizon’s spectrum purchase from the nation’s largest cable companies as “contrary to the public interest.”

Verizon Wireless is seeking to acquire a substantial block of unused AWS spectrum that is unlikely to provide any near-term benefits to Verizon Wireless customers (indeed, the company already holds other AWS spectrum and has not even put it to use yet). Rather, the principal impact of the acquisition would be to foreclose the possibility that this spectrum could be acquired by smaller competitors – such as T-Mobile – who would use it more quickly, more intensively, and more efficiently than Verizon Wireless. The acquisitions will limit the deployment of LTE by competitors of Verizon Wireless and the bandwidth available for such deployments.

If these transactions go forward, the end result will be less LTE capacity available overall and reduced competition in the provision of LTE, which would be contrary to the public interest.

T-Mobile, in particular, is upset because it owns no spectrum in the valuable 700MHz range — frequencies that can travel longer distances and easily penetrate buildings.  Verizon Wireless does, and will acquire much more if the FCC approves the deal to transfer spectrum from Comcast, Time Warner Cable, and Cox. [Correction: As one of our readers pointed out, the spectrum being acquired is in the AWS band, which T-Mobile argues in its filing is still suitable for a 4G network deployment.]  T-Mobile argues Verizon does not need the spectrum, and will effectively “warehouse” the frequencies to keep them off the open market.  Without prime spectrum, T-Mobile argues, it will be difficult for the company to deliver a 4G experience to its customers.

T-Mobile also has a bone to pick with Verizon Wireless and the cable industry over what it suspects is a non-compete agreement:

At least in effect, this has all the hallmarks of a pure horizontal allocation of markets.

From the limited information available, it appears as though Verizon, the majority owner of Verizon Wireless, has agreed (tacitly if not expressly) to halt its extensive efforts to expand into the cable business and the cable companies have, in turn, traded their control of valuable spectrum in exchange for this protection of their cable markets.

It has been publicly reported that, coincident with acquiring the cable companies’ spectrum, thereby eliminating potential new competition in mobile wireless, Verizon ended its FiOS build out plans and terminated its agreement to resell satellite television. This series of acts appears to limit Verizon’s activity as a potential competitor in the video market and limit the cable companies’ role as potential competitors in the wireless market, while at the same time foreclosing competing providers from one of the only available sources of spectrum.

As a result of this “triple play,” competition in both markets will be substantially reduced. The antitrust laws have long condemned such agreements, even among potential competitors.

Not All Frequencies Are Created Equal

Will Verizon ultimately warehouse its newest acquired spectrum?

Unless you are well-acquainted with the wireless industry, all most people know about their cell phones is that they turn them on and a signal strength meter indicates what kind of reception quality you are getting.  In fact, wireless companies use a range of frequencies across several different frequency bands to handle voice calls and data.  As an end user, you never know the difference.  But if your wireless company is forced to use higher frequencies, they often have a harder time penetrating buildings or provide only limited distance coverage.  That’s why AT&T and Verizon customers have a better chance of making and receiving calls in the middle of a supermarket or office building while others lose reception.

Clearwire has an extensive holding of very high frequencies at its disposal — frequencies the company cannot effectively use because they require considerably more infrastructure (ie. more cell towers) to provide an effective service to customers.  Clearwire customers already complain about poor reception inside buildings, a problem exacerbated by the very high frequencies the company has to use for its service.  Verizon and AT&T collectively control the majority of the best, more robust spectrum — the 700MHz band.  Verizon’s LTE network, for example, relies on spectrum that used to be used by high numbered UHF television channels.

Companies like T-Mobile rely on frequencies in the 1700MHz and 1900MHz bands.  While certainly adequate in urban and suburban areas, T-Mobile has to spend more on cell tower deployment and be especially concerned with rural coverage, especially in areas where the terrain makes “line of sight” reception from cell towers more difficult.

While today’s 2G and 3G networks have made due with current spectrum, companies like T-Mobile are having a hard time finding space to launch the next generation — LTE/4G technology — on their current spectrum.  Without LTE, T-Mobile (and others) will find themselves at a competitive disadvantage.  The company argues it should have the right to acquire some of the frequencies Verizon intends to capture from the cable industry, especially if Verizon has no immediate plans to use the spectrum.

Some of the wrangling by T-Mobile seems especially ironic because parent company Deutsche Telekom has indicated it wants to sell T-Mobile USA and leave the American wireless market.  It has shown little interest so far investing in a LTE/4G network upgrade.  Additionally, as part of AT&T’s failed merger bid, T-Mobile is expecting to receive frequencies from AT&T as part of the “failed transaction” clause in the original merger proposal.