An artist rendering of Don River Park, part of the mixed-use spaces that hallmark the Toronto Waterfront revitalization project.

About seven years ago, Rochester’s Fast Ferry offered daily service between Rochester, N.Y. and Toronto’s Waterfront.  Tens of millions of dollars later, the Rochester Ferry Company discovered that nobody in southern Ontario was that interested in a shortcut to Rochester, many locals found driving to Canada’s largest city faster, more convenient, and cheaper, and the point of arrival on the Canadian side was hardly a draw — situated in a rundown, seedy industrial wasteland.

By the end of 2006, the ferry was sold and sent on its way to Morocco, the CBC got a barely used International Marine Passenger Terminal (built for the Rochester ferry) to use as a set location for its TV crime drama The Border, and the rundown waterfront was well-embarked on a major reconstruction effort.

This week, Toronto’s Waterfront learned it was getting a broadband makeover as well, with the forthcoming launch of insanely fast 10/10Gbps fiber broadband for business and 100/100Mbps for condo dwellers along the East Bayfront and West Don Lands.

Best of all, Beanfield Metroconnect, the parent company responsible for constructing the network, promises no Internet Overcharging schemes for residents and businesses… forever.  No usage caps, no throttled broadband speeds, no overlimit fees.  Pricing is more than attractive — it’s downright cheap for Toronto:  $60 a month for unlimited 100/100Mbps broadband, $30 a month for television service, and as low as $14.95 for phone service.  Bundle all three and knock another 15 percent off the price.  The provider is even throwing in free Wi-Fi, which promises to be ubiquitous across the Waterfront.

The project will leapfrog this Toronto neighborhood into one of the fastest broadband communities in the world.

Toronto Waterfront Fiber Broadband Coverage Map

“Having this sort of capacity available to residents will allow for a whole new world of applications we haven’t even conceived of yet,” said chief executive Dan Armstrong.

The rest of Toronto, in comparison, will be stuck in a broadband swamp courtesy of Rogers Cable and Bell, where average speeds hover around 5Mbps, with nasty usage caps and overlimit fee schemes from both providers.  DSL service in the city is notoriously slow and expensive, as Bell milks decades-old copper wire infrastructure long in need of replacement.

The public-private broadband project is a welcome addition for an urban renewal effort that has been criticized at times for overspending. Created in 2001, Waterfront Toronto has a 25-year mandate to transform 800 hectares (2,000 acres) of brownfield lands on the waterfront into a combination of business and residential mixed-use communities and public spaces.  At least $30 billion in taxpayer funds have been earmarked for the renewal project, although project managers say no taxpayer dollars will be spent on the broadband project.

Waterfront Toronto’s efforts have been recognized as bringing Toronto’s first “Intelligent Community” to the city with the construction of the open access fiber network.

Still, the public corporation has its critics.  Earlier this spring Toronto city councilman Doug Ford called the urban renewal project a boondoggle.  Other conflicts rage with the Toronto Transit Commission and the mayor’s office over other redevelopment projects.  But the revitalization project’s broadband initiative has significant support, especially among knowledge workers that could eventually become residents… and paying customers.

The 21st century broadband project is also likely to bring broadband envy across the entire GTA, who will wonder why service from the cable and phone companies is so much slower and more expensive.

For broadband enthusiasts, Toronto’s broadband future looks much brighter than yesterday’s failed ferry service, which proves once again that regardless of the technology — slow, expensive, and inconvenient service will never attract much interest from the value-conscious public.

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Canada’s digital networks are some of the slowest in the world, running between one hundred to a thousand times slower than other countries in the developed world. In this episode of “Our Digital Future – The Need for High-Speed,” Bill Hutchison, Executive Director of Intelligent Communities for Waterfront Toronto describes the sorry state of Canada’s digital infrastructure, stressing the need for major investments in advanced broadband networks.  (4 minutes)

More than halfway into Glenn Britt’s appearance last week at a Wall Street-sponsored investor event, the head of the nation’s second largest cable company candidly admitted years of price hiking is finally driving a growing segment of America’s hard-pressed middle class out of the market:

“There is a segment of our economy that should be of concern.  We have a bifurcating economy where people who are college educated and like everybody in this room are doing okay.  For that segment, pay TV [pricing] is fine.  There is another group of people who are sort of falling out of the middle class.  For some of those people, pay TV is too expensive.”

That’s a remarkable admission from a cable company that has consistently raised prices for its products well in excess of inflation for at least a decade, and judging from the rest of his comments, there is plenty more of the same on the way.

Britt is nearing his 10th anniversary as CEO of what is now Time Warner Cable, formerly a division of AOL/Time-Warner.  In the past decade, the company he oversees has undergone a transformation in its business model. In 2001, digital cable was all the rage, delivering the 500-channel television universe at the cost of rapidly increasing cable bills.  Cable broadband was just coming back from the dot.com crash, with many Americans still mystified by the concept of “www” and whether a web address had a “/” or a “\” in it.

Time Warner Cable CEO Glenn Britt tells Wall Street investors at the Sanford Bernstein conference the company is using their customers’ addiction to high speed broadband as leverage for rate increases — three in the last three years. Britt’s world view for Internet Overcharging schemes like consumption billing are reinforced in a room where ordinary customers aren’t invited and the Wall Street types in attendance dream about the enormous profits such pricing would bring. June 1, 2011. (6 minutes)
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Today, broadband is threatening to become the cable industry’s most important product — one that Americans will crawl through broken glass to buy.  In larger cities, the competitive war between DSL and cable broadband has been settled and DSL lost.  That has brought Time Warner a steady stream of customers departing their local phone company and bringing their telecommunications business with them.  Even during the economic downturn, Britt notes, one of the last products people will agree to give up is their broadband Internet access.

“Broadband is becoming more and more central to people’s lives,” Britt said. “It is becoming our primary product. People are telling us that if they were down to their last dollar, they’d drop broadband last.”

Britt openly tells investors Time Warner Cable will take that last dollar, and many more.

“We are able to raise prices,” Britt notes. “As broadband becomes a utility, you can charge more.  So after a dozen years of not raising prices for broadband service, for the last three years we have been raising prices.”

Britt notes the company is also enjoying increased average revenue per customer as many upgrade their broadband service to higher speed tiers which deliver higher revenue to the cable operator.

But as the market for broadband matures, the next level of profits could come from so-called “consumption pricing,” which could make yesterday’s rate increases look like a miniscule price adjustment.  In 2009, Time Warner Cable sought to test new broadband pricing that would have tripled the cost of unlimited broadband from $50 a month to an astonishing $150 a month.  A firestorm of protests for this level of Internet Overcharging temporarily killed the prospect of OPEC-like profits, unsettling some Wall Street investors and analysts, many who refuse to let the dream die.

Among the biggest proponents of this kind of metered pricing is, in fact, Sanford Bernstein — the sponsor of the conference.  So it came as no surprise Britt faced additional browbeating in the hour-long interview to reintroduce these pricing schemes.  After all, Britt is told, AT&T has implemented a usage cap and Cable One has (what the interviewer calls) a “quite interesting” pricing model — delivering the smallest usage caps to customers with the highest speed tiers.  So when will Time Warner follow suit?

Once again, Britt said he’s a true believer in consumption billing and thinks the industry will move in that direction, but refused to give an exact timetable.  “Consumption billing” goes beyond traditional usage caps by establishing a combination of a flat monthly service fee, and additional charges for the amount of data you use.  Time Warner’s original proposal limited consumption to 40GB per month at today’s broadband prices, but added an overlimit fee of $1-2 for each additional gigabyte.

The strangest part of the hour was Britt’s defense of usage pricing with an impromptu discussion with his wife the evening before about the pricing models of public transit in European capitals (they’ve no doubt visited), and metropolitan New York City.

Britt shared that in the finest cities of Old Europe, bus and train travelers paid different rates based on how far they traveled within the city.  In New York, his wife noted, one price gets you access to any point in the city on the subway.  

How fair is that?

Aside from the hilariously unlikely scenario either Britt or his wife have stepped foot on a New York City public bus or subway train in the last decade, his rendition of “consumption billing is fairer”-reasoning fell flat because it argues a false equivalence between the cost to move data and the expenses of a public transit system.  Remember, Time Warner is the cable company that pitches unlimited long distance calling on the one platform that most closely resembles broadband — telephone service.

“People want us to invest more to keep up with the traffic,” Britt argued.  “People who use it should pay less — people who want to spend eight hours a day watching video online is fine with me, but they should pay more than somebody who reads e-mail once a week.”

This is the same Glenn Britt who just minutes earlier confessed the cable company has been raising prices on all of its broadband customers for three years in a row because they can.  Earlier attempts at consumption billing saved nobody a penny.  Light users were given a paltry usage allowance that could be largely consumed by downloads of security patches and software updates, after which a very punitive overlimit fee kicked in.  Besides, Time Warner Cable already sells a “lite” usage plan today that has few takers.  Most consumers want, and are willing to pay for a standard, flat rate broadband account.  That’s the account Britt and his Wall Street cheerleaders want to get rid of come hell or high water.

Britt is asked whether pay television is getting too expensive for the hard-pressed middle class. For many consumers, it is, which is why the company is developing its “welfare” tier called TV Essentials — a sampling of cable networks with plenty of holes in the lineup to remind subscribers what they are missing if they make do with this less expensive package. June 1, 2011. (3 minutes)
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Throughout the hour long interview, Britt’s read of the hard-pressed common American family comes across as more than a little hollow — more like hopelessly out of touch.  One part Marie “Let Them Eat Cake” Antoinette and one-part “we’ll throw a bone to some and raise prices on the rest,” Britt is content lecturing consumers — discouraging them from crazy ideas like “a-la-carte” cable pricing and reasonably priced broadband.

The Wall Street crowd loved every minute, and the friendly echo chamber atmosphere made Britt feel more than welcome at the conference.  While Time Warner Cable’s CEO spent more than a hour talking to Wall Street, he has no time to actually sit down and talk with his customers — the ones that want nothing to do with his Internet pricing schemes.  Indeed, at one point Sanford Bernstein’s host dismisses customers as “people who want everything for free,” a contention Britt partly agreed with.

Have another piece of cake.

If you are still wealthy enough to buy an iPad and are enjoying Time Warner Cable’s free streaming app, watch out. It may not be free for long. As Britt partially admits, Time Warner Cable is using the online video service as a “Trojan Horse” to get subscribers hooked on their online video, before they attach a price tag to the service. June 1, 2011. (3 minutes)
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And what about all of this much-ballyhooed “investment” in tomorrow’s broadband networks?

Britt confesses the cable company is spending less than ever on system upgrades and capital construction projects.  Why?  The company forecasts its demand and growth five years out and budgets accordingly.  The current target is to spend just 15 percent of revenue on such projects, and based on budget planning, there is no urgent need to upgrade Time Warner’s broadband networks to keep up with demand.  In fact, it was all smiles when Britt revealed one of the company’s biggest expenses — the costly set top box — may not be a permanent part of America’s cable future after all.  Britt offered there was a good chance capital spending might even decline further in the future.

Britt suggests the next generation of television sets will deliver the same functionality as today’s set top box at a cost paid by the consumer.  Time Warner’s slow march to all digital cable means the need for wholesale upgrades of cable systems is over for perhaps a generation.  And with an IP-based cable delivery platform, software upgrades and improvements can be made without paying the high asking price charged by today’s handful of set top manufacturers.

In fact, outside of programming costs, Britt doesn’t see any long term challenges to years of good times for investors. Even minor competition from the telephone companies, who generally charge prices very similar to what Time Warner Cable charges, pose no big threat.

His biggest nightmare?  A check on the industry’s near-unfettered power by Washington regulators.  Despite Britt’s claims the cable industry is already well-regulated, in fact it is not.  Since 1996, cable companies can charge whatever they choose for standard cable, phone and Internet service.  Consumption billing, which will almost certainly be seen as gouging by consumers, may trigger an unwelcome intrusion by Congress, especially if the industry continues to cause a drag on America’s broadband ranking, already waning.

For investors, the glory days of huge rate hikes for cable television are likely behind us, Britt warns.  But have no fear: for the generally well-heeled and barely-hanging-on there is plenty of room for more rate increases on broadband — and meters, too.

Once again, Britt unintentionally admits the truth: Time Warner Cable does not have a broadband congestion problem that requires an Internet Overcharging scheme to solve. In fact, he admits the cable company is spending less than ever on network upgrades for residential subscribers, and expects that trend to continue. He’s also avoiding overpaying for merger and acquisition opportunities. June 1, 2011. (6 minutes)
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Southern Cross has the monopoly for international fiber connections between New Zealand and the rest of the world.

Three companies — Telecom New Zealand, Verizon, and Optus jointly own the single underseas fiber network that connects New Zealand with the rest of the world.  Unless a second underseas fiber provider provides competition, the monopoly control on international connectivity may guarantee New Zealand an ultra fast fiber broadband network for domestic use, but leave consumers heavily usage-capped and subjected to monopoly price-gouging for international traffic.  Those are the claims of Sam Morgan, a venture capitalist and philanthropist who advises Pacific Fibre, the company that wants to bring that second underseas fiber cable to New Zealand.

American and Canadian providers routinely point to Australia and New Zealand as examples of countries with usage-caps firmly in place, arguing this provides justification to do likewise in North America.  But usage caps in the South Pacific are a product of international capacity shortages — a problem not found in either the United States or Canada, so their claims have no merit.

Morgan explores the implications of a second fiber cable reaching New Zealand — the imminent removal of the hated Internet Overcharging schemes.  The clip comes courtesy of TV New Zealand.  (17 minutes)

Stop the Cap! reader Cal believes AT&T cannot be reasoned with about Internet Overcharging until you threaten to cancel.

While a significant number of customers have already pulled the plug on AT&T DSL and U-verse service over their recently-introduced Internet Overcharging schemes, some are telling Stop the Cap! they have no plans to actually disconnect service until AT&T threatens to charge them overlimit fees.

For some AT&T customers, there is no suitable alternative to the phone company.  Rural customers without a cable provider, or those who are faced with two bad choices — AT&T or Charter Communications — say they are going to test AT&T’s resolve to actually overbill them.

Cal is an AT&T customer is Missouri.  His alternative?  Charter Cable, which has an Internet Overcharging scheme of its own and delivers what he calls “third world service” in his community.  Given a choice, he intends to stay with AT&T as long as possible, pulling the plug only after his third warning of exceeding the phone company’s new broadband usage limits.  He thinks AT&T’s customer service won’t ultimately let it come to that.

“My sister works for an AT&T call center where she lives, and there was some training on the subject of handling the company’s usage caps,” Cal reports. “Get the right representative or supervisor and they can make virtually anything go away with a few keystrokes, especially if you are prepared to cancel your service over the issue.  While they may not cancel the caps, they very well may credit back any overcharges.”

Cal says his family does not intend to change their usage habits one bit.  He’ll change providers before he rations his Internet usage.

“I maintain control over our Internet access here, they don’t and sure as hell won’t,” he said.  “We do not do illegal downloads and we don’t allow torrenting or anything else that can get my kids into trouble, but we do use a Roku box and watch Netflix instead of buying pay movie channels with programming not suitable for my family to watch.”

Cal says his five children are home-schooled, which makes daily Internet access an essential part of the education process.  Many companies that provide home-schooling materials increasingly require a broadband connection.  While not as bandwidth hungry as Netflix video streaming, with five children in the home, usage adds up fast.

“It is not hard to do 260GB of usage a month, which puts us just over their U-verse limit, and I’ll be damned if I am going to pay AT&T another $10 for 10GB over,” Cal says.  “This is another reason why the Obama Administration is no better than the last one — they are all masters of big corporations who will rob us blind and use the money to pay off Congress to look the other way.”

Cal used to be a Charter Cable customer, but left when that company implemented its own Internet Overcharging scheme.

“I told Charter with their lousy service they were lucky I was a customer, but after putting usage limits on, I left,” he reports.

Cal’s neighbor thinks he has an even better way to battle AT&T.

“My neighbor will cancel service under his name and sign up under his wife’s and bounce between them whenever AT&T threatens to send him a bigger bill; he has already been doing that for years back and forth between AT&T and Charter on new customer deals,” Cal says.

Cal, and many other readers touching base with us, believe AT&T is not very responsive to customer complaints unless customers threaten to cancel service, and they believe AT&T will only change its mind when shareholders see the usage limits as counterproductive.

“AT&T can buy enough people in Washington to make street protests irrelevant, but their shareholders sure won’t like it when they see customers and revenue dropping,” Cal notes.  “If you can’t get cable, you are stuck with AT&T, so you have to keep the pressure on — file complaints with the Better Business Bureau, the FCC, and Congress.  Make them spend more money defending their policy than they earn from its proceeds.”

Prime Minister Stephen Harper

Canada went to the polls last week and managed to deliver a predictable majority for incumbent Prime Minister Stephen Harper and his Conservative Party.  Even Americans ignorant of Canadian politics knew as much, but more than a few with an interest in the country’s telecommunications future were stunned to watch some long-standing parties get handed their hats and ushered out the door into the political wilderness (for at least a few years anyway).

The former mighty Liberal Party — the one that always saw themselves as Canada’s Natural Governing Party, succumbed to an embarrassing election failure.  Leader Michael Ignatieff not only oversaw the loss of more than 40 Liberal seats in the House of Commons, he couldn’t even manage to hold his own, losing his Toronto-area seat in Etobicoke-Lakeshore.  The centrist party won just short of 19 percent of the popular vote.  That’s a long fall for the party of former Prime Minister Jean Chrétien, who won three successive majority governments in 1993, 1997 and 2000.  Much of the party’s strong support in Ontario collapsed, with seats swiped by Conservative and NDP candidates.  The centrist era is evidently over for now.

The Liberals take on telecommunications issues seemed mostly to rely on bashing whatever the Conservatives were doing.  Much of their criticism seemed to delight in Tory missteps and disorganization, particularly over what the party felt was incoherent policy direction for telecom issues.  Unfortunately, presenting a credible digital strategy alternative was not a high priority for the Liberals, and voters fretting about Internet Overcharging saw as much.  The Liberals have also taken flak for being too “establishment” and business friendly in recent years.  As a result, many former Liberal voters took their votes elsewhere.  At least Liberal Industry critic Marc Garneau survived.  He was successful at crystallizing the usage based billing (UBB) issue (and the CRTC’s failure by adopting it) in a way that consumers could easily understand.

The biggest catastrophe befell the Bloc Québécois, the separatist-motivated party in Quebec.  Outside of wins on the Gaspé Peninsula riding that covers the rural regional county municipalities of La Haute-Gaspésie, La Matapédia, Matane and La Mitis, and a few victories around Trois-Rivières, the Bloc was effectively obliterated — left with just four seats.  They had 47. That means the BQ is now too small to even count as an official party in Canada.  Observers say it was Quebec’s version of “throw the bums out,” with a very strong voter sentiment against “the establishment,” which in Quebec means the BQ.  Which Canadian party is the least establishment?  The NDP — and votes flowed in that direction.

On telecom issues, BQ members didn’t seem to appreciate Bell and Videotron’s usage-based-billing policies any more than the rest of Canada, and Bell in particular endured harsh questioning from BQ members at earlier hearings.

But the big news from the election was the sweeping realignment of Opposition to the Tories into the hands of the NDP – Canada’s social-democratic, left-wing New Democratic Party.  The NDP has championed opposition to UBB like no other party in Canada. Digital affairs critic Charlie Angus, who is a brash firebrand against corporate telecom abuse and their lackeys on the CRTC, will get an even larger platform to blast away at anti-consumer policies on offer from the telecom regulator.  Both Angus and the NDP champion Net Neutrality as well.  Two MPs from Toronto, Peggy Nash and Andrew Cash, will also bring strength to the NDP’s policy platform on copyright issues.

The NDP won most of the seats lost by the BQ in Quebec, and also won strongholds in western Ontario, northern British Columbia, Manitoba, and the Western Arctic.  In fact, NDP wins in Quebec were so frenzied, Leader Jack Layton found himself presiding over a dramatically younger caucus, including three McGill University students and a bartender in the heavily francophone riding of Berthier-Maskinonge.  That presents a problem for newly elected Ruth Ellen Brosseau, who so disbelieved she was a serious candidate, she spent the last week of the campaign running around Las Vegas.  She also doesn’t speak French.  A local station that finally reached her in Las Vegas to discuss her win had to abandon the interview when she was unable to offer coherent answers to questions in Quebec’s majority language.  Rosetta Stone is in her near future.  So is a trip to her district — Brosseau told the Trois-Rivières newspaper Le Nouvelliste she has never stepped foot in the riding before.  But she offered the people there seemed nice.

While the NDP doesn’t have a majority, they are sure to call out any Conservative telecommunications policies that appear to be anti-consumer, and turn them into media events — good news for a country whose television media often ignores telecommunications stories.  A five minute interview with Charlie Angus will surely deliver plenty of amusing soundbites for the evening news.

With the strengthened majority of the Conservative Party, it’s a safe bet Canadian telecommunications policies will no longer be stuck in neutral.  There are open questions if Tony Clement, Industry Minister will retain his portfolio or make a move elsewhere in government.  Clement has steadfastly insisted UBB is unacceptable to him and the government.  The upcoming review by the CRTC of their earlier decision is likely to give the government some time to sort things out.  The Conservatives ignored Openmedia.ca’s request for a formal position against UBB, something that does give us pause.

It will remain important for Canadian consumers to keep the pressure on the Tories to act when regulatory bodies like the CRTC fail.  The natural view of the Conservatives in to let the marketplace sort things out, but even they recognize that is an impossibility in a duopoly.  When 500,000 Canadians sign a petition against UBB, standing with big cable and phone companies would be political suicide.

What Conservatives are likely to promote is increased competition.  So far, that has not meant much, especially as consolidation continues in the broadcasting and telecommunications sector.  The Tories best answer for now is throwing doors open to foreign investment in telecommunications, especially in wireless.  That will mean relaxing foreign ownership rules which could help new cell phone entrants — Wind Mobile, Mobilicity and Public Mobile expand their competitive reach.  If the Tories adopt the new rules, even AT&T could move north of the border — but that will bring no relief to Canadians seeking an escape from Internet Overcharging schemes.  Other issues likely to come up — copyright reform legislation, royalty taxes imposed on digital devices, and piracy.