Ontario residents enjoy less than half a serving of broadband their neighbors in Quebec enjoy from Bell, for less money

Residents of Quebec enjoy more than double the broadband usage allowance Bell provides its Ontario customers, showing once again h0w arbitrary Internet Overcharging schemes are for consumers in North America.

Broadband Reports reader Ironsight200 ponders why customers in Quebec enjoy substantially less abuse from the skimpy usage allowances Bell imposes on its customers.

The prices charged differ as well, with Quebec residents also getting an out-the-door lower monthly price because Bell does not impose charges on the modem Ontario customers rent for $3.95/month — $6.95 a month with the Fibe 25 service.

Let’s take a look (and don’t worry Ontario readers, Bell promises you can still look at least 624,999 additional web pages this month without incurring overlimit fees):

Quebec users get more than double the usage allowance of...

...their neighbors in Ontario.

Pricing for Bell broadband service at the bundled price:

*- includes $3.95 modem rental fee. ^- includes $6.95 modem rental fee.

Stop the Cap! comments: After today’s confirmation of the story below, it turns out that not only will Charter enforce its usage caps, it is also implementing a throttling scheme that will turn down speeds for “heavy users” when Charter’s overburdened broadband network is congested.  We’ve seen how that works in Europe.  Network management techniques like throttling and usage caps allow providers to turn up the speed and usage controls and turn down the level of investment to grow their broadband networks to meet growing customer demand.

Wall Street will certainly encourage this kind of behavior so long as Charter customers have few alternative choices.  This is bad news for Charter customers who may find the phone company’s unthrottled and typically unlimited broadband a much better alternative, even if it does run slower.

Two separate e-mails arrived in our mailbox this evening from individuals claiming to work for Charter’s call center informing us customer service agents are required to attend a meeting Thursday to explain Charter Cable’s new hard-usage cap Internet Overcharging policy.

It’s too late for us to touch base with company officials for verification, but both our sources shared nearly-identical details of the forthcoming hard usage cap program:

“Effective Nov. 16th, Charter will begin enforcing their Usage Cap policy strictly:

• Base Service: 100GB per month
• Plus & Max: 250GB per month
• Ultra: 500GB per month

Violators will receive two warnings and then face service suspension for up to six months unless they switch to a Business Class broadband product.”

Our other source tells us CSR’s are being trained to deal with irate customers who are deemed violators, all because Charter is in no financial position to keep up with network demands.

Until we receive absolute verification, this should be considered unconfirmed information.

Charter Cable has maintained soft usage caps for some time, rarely enforced on a system-by-system basis with phone calls.  The details are buried on Charter’s website.  They have generally left most customers alone.  But if Charter intends to enforce a formal Internet Overcharging scheme, customers will have just one more reason to despise the company, which already rates as the worst cable broadband provider in the United States according to Consumer Reports (only Wildblue and HughesNet — both satellite fraudband providers scored worse for broadband).

Updated 3:04pm ET:  Here is a statement we received from Charter regarding this matter:

Charter is introducing some new programs designed to improve our high-speed Internet service.  We had planned to send information your way when we start to inform our customers directly; however, in the spirit of flexibility here is a quick summary for you today.

As I know that you know, Charter has long offered graduated tiers of Internet service, ranging from lower speed “Lite” (1 Mbps) versions to “Ultra60” (60 Mbps) and each service level has a monthly usage threshold within which customers are supposed to limit their usage.  Until this point, we haven’t taken action to enforce our thresholds; however, in order to continue providing the highest quality Internet service, we do plan to begin enforcing our “No Excessive Use of Bandwidth” policy documented in our Acceptable Use Policy (AUP). The thresholds are substantially above typical use for approximately 98% of our customers.

In December, we will begin reaching out to a select group of customers whose use is excessive to make them aware of their usage patterns, to help identify possible causes (e.g., unsecured wireless routers or viruses) and review security options with these customers to reduce the risk of unauthorized Internet use. We are currently working on a way to present data usage to customers so they can self-monitor their bandwidth usage.  Until we make that tool available directly, customers who are notified of excessive use will be provided a contact at Charter who can check the customer’s usage throughout the month to help them better manage their Internet usage. If the excessive usage continues repeatedly, their Internet service could be suspended. Our intent is to prevent the very small number of users who are consuming excessive amounts of bandwidth from negatively impacting the experience for the majority of our customers.

In tandem with enforcing our “Excessive Use of Bandwidth” policy, we will also introduce a congestion management policy to improve the Internet experience for all of our customers.  Congestion Management will become part of our standard Network Management practices, and the policy will be protocol agnostic, which doesn’t distinguish among the online activities, protocols or applications a customer uses. It applies only during periods of congestion (which we find to be relatively rare).  It affects only the heaviest users (less than 1%) in small time increments, who will have their bandwidth limited during times of congestion, however, no Internet activities will be blocked.  We based this system on the “fair share” model described to the FCC in September of 2008.

We certainly wanted you to know about these initiatives and believe these steps will help us deliver the best possible Internet experience for our residential users.

Anita Lamont

[Updated 12:14pm ET:  We reached out to Charter Cable’s social media reps and media relations in e-mail this morning and are still waiting for a confirmation/denial/comment on this story.  If/when we get one, it will appear here as an update.]

A Facebook group has been established to oppose Clear's Internet Overcharging schemes

The clock may be running out on Clearwire, America’s “4G-WiMax” wireless broadband provider controlled by Sprint, with close investment ties to Comcast and Time Warner Cable, who both resell Clear wireless broadband under their own brands.

At issue is money — the lack of it, and the wireless company’s cash on hand has grown so perilously low, Clearwire was forced to admit to its investors it may not survive beyond the first half of next year:

Based on our current projections, we do not expect our available cash and short-term investments as of September 30, 2010 to be sufficient to cover our estimated liquidity needs for the next 12 months. We also do not expect our operations to generate positive cash flows during the next 12 months. Without additional financing sources, we forecast that our cash and short-term investments would be depleted as early as the middle of 2011.

The Securities and Exchange Commission rules governing public companies represent a public relations nightmare for anyone trying to put a positive spin on bad news, and Sprint chief Dan Hesse desperately tried to make lemonade out of the financial lemon Clearwire increasingly represents for the wireless company.

“If you get to the point where you don’t have 12 months of cash in the till, even if you’ve got negotiations going on, or what have you, you have to, from an accounting perspective, say you have a going-concern issue,” Hesse said. “That doesn’t mean that Sprint and other partners won’t continue to fund Clearwire.”

With Sprint’s 54 percent stake in Clearwire defining the entity as a subsidiary of Sprint, its demise could risk Sprint’s own financial well-being, something Sprint plans to address in 2011, potentially ending its majority stake in the company.

For Hesse and his cable partners, Clearwire’s financial problems are being spun as a result of the venture’s success.  The company says it cannot afford the rapid expansion it has undertaken to expand its WiMax network into additional cities across the country, and faces serious financial challenges from the subsidies consumers demand when buying smartphones.

Hesse particularly complains about the latest whiz-bang smartphones consumers demand, many costing upwards of $600.  Consumers in the United States don’t pay full retail price.  In return for two year contracts carrying steep cancellation penalties, carriers cut the price of most high end phones to $200 or less.

“Subsidies are going through the roof in our industry,” Hesse said. Nearly 40 percent of Sprint customers use the company’s 4G network, and that number is rising.

Revenues are up 114 percent from a year earlier to US$147 million. But Clearwire’s losses for the last quarter alone amounted to $139 million, or $0.58 per share.

As a result, Clearwire slashed 15 percent of its staff, laying off nearly 600 employees and has indefinitely suspended its expansion plans to bring the network to additional cities.  Clearwire will also shutter many of its planned retail outlets — some already built — and delay the introduction of its own branded smartphone.

But even that may not be enough.

Although Clearwire’s growth has been double the level anticipated, achieving a net gain of 1.23 million subscribers in the third quarter — reaching 2.84 million total subscribers, not all of those customers are sticking around once they begin using the service.

Complaints about the company’s poorly disclosed speed throttling continue to be a regular topic on Clear’s support forums.  At least 1,000 complaints have been logged on Clear’s own support forums and elsewhere online about the speed traps.  A Facebook group opposing the schemes has also been established.

Stop the Cap! filed a formal complaint with the New York Attorney General’s office accusing the company of false and misleading advertising and fraud for claiming customers would enjoy “blazing fast speeds” with no limits or speed throttling, despite the fact company officials later admitted they were throttling customers deemed to be “using the service excessively.”  Dozens of additional complaints from Clearwire customers have been filed with state Attorneys General across the country, as well as with the Federal Trade Commission in Washington.

Just how much is too much has never been made clear by the company, but many users report the speed throttle reduces speeds to 250kbps, often for hours at a time.

Clearwire told Electronista:

Throtting is based on the current utilization for each cell tower, and many low-use towers do not throttle speeds at all. For high-use towers, throttling occurs during peak-use times.

A customer’s maximum speed is based on the number of gigabytes of data transferred in the past seven days and the download speeds for the past 15 minutes. Speeds are recalculated every 15 minutes, at which point a throttled customer will be bumped up to a higher speed. Rather than implementing one speed for throttling, the calculations will move customers between 48 different speed brackets.

The worst offenders using peer-to-peer software on Clearwire’s network may face repeated throttling.

Clearwire advertises a faster Internet experience for their 4G service, but many report they receive speeds far slower, even if they have engaged in very little usage.

Many consumers are also unknowingly finding themselves back on Clear’s network even though they signed up with a third party provider.  Clear resells access to its network under a variety of different brands not limited to Sprint, Road Runner Mobile, Comcast Internet2Go, and Best Buy Mobile/Wireless.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Clear Speed Woes 11-10-10.flv[/flv]

This Clearwire customer visits a Clear hotspot location and discovers even on a Wi-Fi network, Clear’s speeds don’t match their advertising claims.  Then, he discovers just how sneaky Clearwire gets in disclosing important information about the company’s wireless speeds customers might want to know before signing up.  (5 minutes)

A firestorm erupted this week on Broadband Reports over news that Shaw Cable was turning its existing “soft” Internet Overcharging scheme into a “hard” system filled with usage limits and overlimit fees.  One of Shaw’s social media representatives tried to throw some water on the fire:

I’ve seen a lot of discussion here about the new policy, and quite a bit of inaccurate or incomplete information and speculation, so I’d just like to set all of this straight.

Essentially, the system works like this: your package includes an allowance for a certain amount of traffic. If you exceed that traffic for one billing cycle, you will receive a notice on your bill advising you of the fact. We also automatically activate your traffic monitor so that you can monitor your usage from that time forward.

Since the bill arrives, of necessity, after your billing cycle ends, we give you a cycle’s grace between the period when you exceeded and when we start charging. That is to say that if you exceed in billing cycle one, you’ll receive your bill part of the way through billing cycle two, and so we won’t start charging for excess traffic until billing cycle three.

As to how much bandwidth will cost, here’s how it works:

If you exceed your monthly traffic allowance, you’ll receive a bill for $1 per GB for Extreme and above, $2 per GB for High Speed and High Speed Lite. Considering how much media, etc, you can obtain in 1 GB, $1 is not expensive.

However, if you plan to exceed by a considerable margin, data packs are also available, and what these do is allow you to increase the traffic allowance by the following amounts:

• $5 for 10 GB
• $20 for 60 GB
• $50 for 250 GB

So this gives you the option to increase your monthly traffic allowance to meet your needs. It’s also considerably less expensive than the standard $1-$2 per GB rate.

The best part about the data packs is that you can apply them at any time up to three days before the end of your billing cycle. So if you discover that you’ve exceeded your included usage allowance, and still have three days to the end of the billing cycle, just give us a call (or chat) and ask that we add the appropriate data pack for you.

[…]I’ve seen some posts here suggesting that this new policy has been financially motivated to avoid upgrading our networks. That’s actually not the case. In fact, just a few weeks ago we increased the included usage for all of our services by 25%, just in time for NetFlix. If you want to think about it in financial terms, just consider how much more bandwidth the network would need to allow a 25% increase for every customer, and how much that kind of network upgrade would cost. It’s pretty clear that our motives are not financial. If they were, increasing the included usage would not be very sensible, would it? It would, after all, considerably reduce the number of customers exceeding their monthly traffic allowance, would it not?

I hope that this clarifies the situation, but if there are any questions, please do feel free to ask.

James – Shaw

Shaw tinkers with their Internet Overcharging scheme

In part, this rebuttal was also directed to Stop the Cap!, because we are actively participating in that discussion.  Shaw’s argument about usage limits and how the company’s implementation of them benefits their customers is familiar to many of our readers who fought off usage caps proposed by Time Warner Cable last year.  Somehow, the same company that sets unjustified limits and penalty prices on already-overpriced broadband service is doing customers a real favor by offering alternative pricing plans for heavier users that reduces war-crime profiteering to pickpocketing.

That’s logic Stalin might have appreciated, but most customers already burdened with high cable and broadband bills won’t.

Our response:

Don’t you just love it when Internet Overchargers always claim their new gotcha fees are never about the money?

“James” from Shaw offers a classic example of what happens when your broadband provider implements a scheme to boost your broadband bill and then claims it’s good news that the company has some options to keep those overlimit fees from stinging too badly.

When Internet Overchargers tell you it’s not about the money, it’s really ALL about the money.

Here's what happens when a third provider ruins a Canadian broadband duopoly

Who knew that an invisible border that makes unlimited Internet possible in Vancouver, Washington makes it impossible in Vancouver, B.C. Using Shaw’s argument, providers south of the border are headed straight for bankruptcy court while companies like Shaw barely hold on with “free usage upgrades” of existing limits.

But of course the financial reports for shareholders Shaw’s social media mavens don’t talk about tell the real story. Shaw enjoys considerable revenue from their broadband division thank you very much, and plans to do even better now that they can achieve ‘revenue enhancers’ from their enforced Internet Overcharging schemes.

That’s another way of saying Shaw’s Wallet Biters are back for more of YOUR money.

Whether it’s 20 cents per gigabyte (at least a 100 percent markup) or $2 (rape and pillage pricing), these schemes are hardly good news for Shaw customers. Indeed, if Shaw was truly concerned about saving their customers something under their cap ‘n tier regime, they’d deliver those “usage paks” to customers automatically instead of forcing them to call the company to add them when they go over the limit. If you remember to ask, Shaw gets extra profits they can take to the bank. If you forget, Shaw throws a Money Party on the extra high everyday overlimit rates.

What Shaw forgets to tell you is the cost to deliver increased usage and bandwidth to customers is ALWAYS dropping, and dropping fast. The price charged to move 10GB of traffic not too long ago moves 100GB today. So it’s hardly rough on Shaw to expand yesterday’s unjustified limit to today’s higher, still unjustified limit.

When one also considers yesterday’s “soft cap” is about to become tomorrow’s budget-busting “hard cap,” few Shaw customers are calling 1-800-FLOWERS to send a thank-you bouquet to Calgary.

Having been to Calgary, I know the people in Alberta and elsewhere across western Canada know a ripoff when they see one. They ask, “why is our broadband so overpriced and usage limited?” They wonder where the CRTC has been. They wonder why countries in Asia and even eastern Europe are now beating the pants off Canadian broadband with faster speeds at lower prices.

The fact is, Shaw pulls these overcharging tricks on their customers because they can. The broadband duopoly in Canada from cable and phone companies deliver punishing usage limits on Canada that are being banished in other countries around the world. Even notorious cappers like Australia and New Zealand are finally ridding themselves of broadband that is always capped, always throttled.

What would be sensible is that Shaw, a multi-billion dollar major player in Canada would plow some of their enormous profits into network capacity upgrades that can accommodate the needs of Canada’s growing knowledge economy, not inhibit its growth. Then, earn additional profits by selling even faster speed tiers and content customers can access over those networks.

Considering even Shaw admits only a small percentage of customers create traffic problem on their networks, it’s not hard to see the company’s new reliance on hard Internet Overcharging is designed to capture new revenue from those hitting their caps, thanks to the increasing number of broadband customers using their fast connections for high bandwidth content.

And hey — bonus: it also discourages those customers from even considering pulling the plug on their cable package to watch everything online.

Reed Hastings, CEO of Netflix, shows off the company's growing reliance on broadband streaming, moving away from its original DVD-by-mail rental business.

Last week, Netflix CEO Reed Hastings was showered with questions from Wall Street during the company’s third quarter-results conference call.  At the top of the agenda — the company’s shifting business model away from DVD rentals-by-mail gradually towards instant on-demand streaming over broadband networks.

At issue is how Netflix can survive a broadband industry that controls the pipeline Netflix increasingly depends on for its continued existence.

Hastings tried to assuage his cable competitors by telling investors the company is hardly a threat to cable-owned movie channels and basic cable.  But he admits ultimately the company will be in a real mess if Internet Overcharging schemes like usage caps and speed throttles limit the amount of content customers can affordably access:

“We have some vulnerability depending on capped usage and what happens. Comcast has a cap, but it’s 250 gigabytes and so most users feel that they have an unlimited experience, and it gives us plenty of room to deliver a high-def stream. On the other hand, AT&T Mobile data on an iPad is now capped at two gigabytes, [and that’s] not enough room to deliver hours and hours of high-def.  We are definitely sensitive [to the issue] in the long term [whether] the industry ends up at 250 gigabytes or two at the other extreme.”

There is some limited evidence Netflix’s success in Canada is already being tempered by usage limits near-universally imposed in the country.  Rogers, a major cable company in eastern Canada, even reduced usage caps for certain tiers of service around the same time Netflix announced its imminent arrival north of the border.

Barry McCarthy, Chief Financial Officer notes fewer Canadians are converting their free trials of Netflix’s streaming service into paid subscriptions.

“We anticipate we are seeing slightly lower conversion rates in Canada than we see in the U.S.,” McCarthy told investors.

As Netflix moves towards higher quality video streams, the amount of data consumed increases as well.  In Canada, that eats into broadband usage allowances, and fast. As soon as customers start receiving warnings they are nearing their monthly usage limit, or receive a broadband bill with overlimit fees, Netflix is likely to lose that customer.

Cable and phone companies in Canada are already warning customers that online video is a major culprit of exhausted usage allowances.  Both are also happy to remind their customers they are happy to sell them access to unlimited video — through cable or telco TV subscriptions.  Rogers owns a major chain of video rental stores as well.

What can Netflix do about usage capped broadband?  Not much, admits Hastings.

“There is a not a lot of improvement in compression techniques. But what we can do is just deliver a lower bit stream, a lower quality video experience. So, for example, not too high-def. So, that’s one possible way to partially mitigate that impact,” Hastings said.

Netflix will soon face increasing competition, especially from the cable industry’s TV Everywhere projects, and they won’t deliver a lower quality video experience.

Time Warner Cable and Comcast this month both formally introduced their respective video on demand services.

Comcast’s Xfinity online service arrives after months of beta testing.   Comcast customers can watch video selections from nearly 90 movie and television partners, including programming from HBO, Viacom, and Paramount.  Ultimately, the online video service is expected to deliver access to dozens of cable channels and individual programs from studios and networks at no charge to those who subscribe to a cable television package.

Time Warner Cable took a more modest approach last week by introducing ESPN Networks to its cable subscribers who register with the cable company’s MyServices website.  The new customer portal allows subscribers to review and pay their cable bill, add new services (but not cancel existing ones), remotely program DVR boxes, and also verifies subscriber status for future cable subscriber-only online video programming.

Netflix may soon find itself at the mercy of the cable and telephone companies which deliver broadband access to the majority of Americans.  Not only is it difficult to convince customers to pay a monthly fee for programming the cable industry may eventually give away for free, it may be downright impossible for Netflix to survive if those providers decide to squeeze the customer’s pipeline to unlimited Netflix content.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Comcast Xfinity Ad Spot 10-2010.flv[/flv]

Comcast Ad Introducing Xfinity Online.  (1 minute)