Cisco has released the results of the third annual study from the Saïd Business School at Oxford University, which looks at broadband quality in 72 countries and 239 cities around the world.  The results are an embarrassment to much of North America’s broadband.

Using data from 40 million real-life broadband quality tests conducted in May-June of 2010 on the Internet speed testing site, Speedtest.net, the researchers were able to generally evaluate broadband conditions in the 72 countries which generated enough tests to provide useful results.

Although these kinds of studies often end up indirectly promoting Cisco’s own products (which they’d argue go hand-in-hand with broadband improvement), the findings highlight the very real problem that most aggressive broadband development is taking place outside of North America.  Here at home, reduced investment and foot-dragging has kept growth in check, even as prices continue to rise.

Based on the findings, the countries with the most sophisticated and advanced broadband networks are:

While the United States and Canada both languish in 15th place, broadband in South Korea has gone from excellent to outstanding as it continues aggressive, almost revolutionary improvements in service and speed:

• South Korea tops the broadband leadership ranking for the second year in a row;
• Broadband quality in South Korea is ranked the highest and has set a new benchmark for the world;
• Average download throughput is 33.5 Mbps, an increase of 55% from 2009, average upload throughput is 17 Mbps, an increase of 430%, and average latency is 47ms, an improvement of 35% vs. 2009 figure;
• South Korea has achieved 100% broadband penetration.

Cisco’s study found North America is in peril of falling even further behind because providers are trying to incrementally upgrade inferior, obsolete copper-wire phone networks on the cheap instead of replacing them.

As long as providers in the United States and Canada maintain a Dollar Store-mentality towards broadband improvement, both countries will increasingly fall further and further behind countries many Americans couldn’t find on a map.

Developing economies, especially in eastern Europe, are poised to leapfrog over North America and potentially become new powerhouses in the digital global economy of the future.  Among the nations on the verge of blowing past the United States and Canada: Lithuania, Latvia, Bulgaria, Romania, the Czech Republic and Hungary.

Welcome to the 500GB Broadband Economy

Cisco’s study also includes some important findings about data consumption that expose North American broadband providers who support Internet Overcharging schemes as direct threats to our economic future in a knowledge economy:

The study assessed the average consumption of different household segments and found major differences between basic-digital homes and smart and connected homes:

• Basic digital homes which mainly use the web for simple-quality requirement applications such as web browsing, instant messaging and social networking, consume about 20 GB per month;
• Smart and connected households, who would use the web for high definition video communication, high definition entertainment, tele-education or telemedicine, home security and others, can easily consume 500 GB per month and require an assured bandwidth of 18 Mbps.

Under these terms, Canada’s digital economy is already destined to fail because virtually every provider in the country limits broadband consumption to levels far below that required by “smart and connected households.”  In the United States, some providers have suggested as little as 5GB would represent “enough usage” under residential broadband accounts.  The nation’s largest cable company, Comcast, limits consumption to half the amount required.  Those advocating unlimited broadband or far higher limits are accused of being “bandwidth hogs” or pirates by many of these providers and their dollar-a-holler friends.

World leaders in broadband have some things in common: availability of inexpensive, unlimited broadband delivering fiber-fast speeds.  Those falling behind or at the bottom are raising broadband prices, putting limits on consumption and delivering slow broadband speeds that would draw laughter in countries as diverse as Japan, Sweden, and the United Arab Emirates.

Shaw Communications is preparing to introduce a formal Internet Overcharging scheme for its customers across western and central Canada.  Although the company has maintained “soft caps” that have generally been unenforced, that is about to change.

An Edmonton reader of Broadband Reports first noticed the appearance of a new formal Internet Data Usage Policies section on Shaw’s website.  Some customers also received access to a usage meter that was roundly criticized for being inaccurate.

She's blown away by her high broadband bill.

In short, Shaw Cable plans a “three strikes and then you pay” approach to usage limit enforcement.  After a customer exceeding plan limits receives three warnings from the company, excess usage charges will start to appear on customer bills.

A participant on Broadband Reports inferring he’s a Shaw employee admits the company’s usage meter was so inaccurate, it has been pulled.  So has much of the information on Shaw’s website, which now provides a more general “stay-tuned” announcement:

Thank you for your interest in Shaw’s Internet Data Usage policies. Please stay tuned as we develop information specific to your area on this topic.

Shaw currently sells four levels of service in most areas (“Nitro” is available in limited areas with DOCSIS 3 upgraded service), sold by both speed and data transfer limits:

*Service availability may vary by market. Docsis modem required.
^† Limited areas that are not DOCSIS 3.0 ready will receive 25 Mbps download and 2 Mbps upload.

In contrast, most Americans pay lower prices for equivalent levels of service, with no data transfer limits.

Shaw customers will soon see usage graphs on their monthly bills and face the prospect of paying overlimit fees once they exhaust their usage warnings.  While Shaw works to implement its broadband overcharging scheme, it is also making hay out of its new 1Gbps fiber-based broadband trials in British Columbia (primarily to stay competitive with its nemesis — competitor Novus Entertainment) and Alberta:

This service launched in select Vancouver neighbourhoods in June – and Pinebrook, a suburb west of Calgary, will be the latest area to try out the 1 Gigabit Internet service FREE for six months!

Our test neighbourhoods have the advantage of “future proofing” as they receive the best technology has to offer with Fibre-to-the-Premises (FTTP) and will be able to support new, cutting-edge Internet applications that will require faster download speeds – compliments of Shaw.

At the end of the six month trial, customers will still be able to retain their existing services without any change in features or function.

This is a great opportunity for our customers and we are thrilled to be the first provider in Canada to offer this incredible service.

Of course, most of the applications that require faster broadband speeds also consume plenty of data, and when Shaw formally introduces the fiber service, limits on its use are likely to come along for the ride.

Telephone companies will lose up to half of their broadband market share if they insist on sticking with DSL technology to deliver Internet access, according to a new report from Credit Suisse analyst Stefan Anninger.

Anninger predicts DSL will increasingly be seen as the “dial-up” service of the 2010s, as demand for more broadband speed moves beyond what most phone companies are willing or able to provide.  Credit Suisse’s analysis says DSL accounts sold in the United States top out at an average speed of just 4Mbps, while consumers are increasingly seeking out service at speeds of at least 7Mbps.  The higher speeds are necessary to support high quality online video and the ability for multiple users in a household to share a connection without encountering speed slowdowns.

A lack of investment by landline providers to keep up with cable broadband speeds will prove costly to phone companies, according to Anninger. He believes a growing number of Americans understand cable and fiber-based broadband deliver the highest speeds, and consumers are increasingly dropping DSL for cable and fiber competitors.  Any investments now may be a case of “too little, too late,” especially if they only incrementally improve DSL speeds.

Anninger says providers may be able to offer up to 18Mbps in five years by deploying ADSL 2+ or VDSL technology, but by that time cable operators will be providing speeds up to 200Mbps, and many municipal providers will have gigabit speeds available.

The impact on phone company broadband market share will prove bleak for phone companies in all but the most rural areas, Anninger predicts.  He says by 2015, cable companies will have secured 56 percent of the market (up by 2 percent from today), phone companies will drop from 30 percent to just 15 percent, Verizon FiOS, AT&T U-verse, and wireless broadband will each control around 7 percent of the market, with the remainder split among municipal fiber, satellite, and other technologies.

Anninger is also pessimistic about wireless broadband being a wired broadband replacement in the next five years.

A Credit Suisse online survey of 1,000 consumers in August found that less than half would consider going wireless only.  The reasons?  It’s too slow, too expensive and most plans have Internet Overcharging schemes like usage caps and speed throttles.

Although cable companies are on track to be the big winners in broadband market share, still have one giant hurdle to overcome — a lousy image.  Just 36 percent of cable customers say they are “very satisfied” with their local provider.  More than 60% of FiOS and U-verse’s broadband customers said they are “very satisfied” with the services these advanced telephone company networks provide.  Consumer Reports has regularly awarded top honors to Verizon FiOS for the last several years.

Independent phone companies and smaller cable operators routinely score at the bottom, typically because they are relying on outdated technology to supply service.

This makes the marketplace ripe for disaffected consumers to jump to an alternative provider.  Unfortunately, as most Americans face a duopoly of the cable company they hate and the phone company that doesn’t deliver the services they want, there is no place for them to go.

Anninger also predicts the risk of broadband reform by reclassifying broadband under Title II at the Federal Communications Commission is now “minimal.”  That suggests Net Neutrality enforcement at the FCC is not a priority.  The Credit Suisse analyst says if action hasn’t been taken by winter or spring of next year, it’s a safe bet the Commission will never re-assert its authority.

"DVD's are so five years ago!"

Netflix, which has seen its Canadian streaming-only video service welcomed with usage cap reductions by Rogers Cable, has finally started to wake up to the threat its online video business model is one speed throttle or usage cap away from oblivion.

As the video rental company now contemplates launching a streaming-only version of its service in the United States, it has now firmly waded into the Net Neutrality debate.  In a filing earlier this month, Netflix impressed upon the Federal Communications Commission the importance of prohibiting providers from establishing blockades to keep its competing video service from threatening cable-TV revenue:

“The Commission must assure that specialized services do not, in effect, transform the public Internet into a private network in which access is not open but is controlled by the network operator, and innovative Internet-based enterprises are permitted effective access to their consumers only if the enterprises pay network operators unreasonable fees or are otherwise seen by such network operators as not threatening a competitive venture.”

Netflix online video packs a real wallop, as Americans embraces the service as a suitable and cheaper replacement for premium cable movie channels.

Sandvine, which pitches “network management” products to the broadband industry, reported Netflix now represents more than 20 percent of all downstream broadband traffic in the United States during peak usage times between 8-10pm.

The company’s financial results seem to affirm its growing impact as an online video entertainment player.  The Washington Post reports in the third quarter, Netflix saw a 52 percent gain in subscribers to 16.9 million. Revenue increased 31 percent to $553 million. But most interesting: 66 percent of subscribers watched more than 15 minutes of streaming video compared with 41 percent during the same period last year. The company predicted Wednesday that in the fourth quarter, a majority of Netflix subscribers would watch more content streamed from the Web on Netflix than on DVD.

That prompted CEO Reed Hastings to say Netflix should now be considered a streaming company that also offers DVD-by-mail service.

If providers launch Internet Overcharging schemes that limit broadband usage or throttle their competitors to barely usable speeds, that growth could come to an end quicker than the introduction of the next “unfair usage policy.”

Sandvine’s research confirmed something else.  As broadband speeds increase, so does usage.  In Asia where broadband speeds are dramatically higher than in the United States, Sandvine found median monthly data consumption is close to 12 gigabytes per household compared to 4 gigabytes in North America.  And Asians stay very close to their broadband connections, using them on average for almost 5.5 hours per day, compared to just three hours for North Americans.

When one considers the majority of broadband users are only starting to discover online video, those numbers are headed upwards… fast.

GCI, an Alaskan Internet Service Provider, is getting pummeled by angry customers as they continue to learn the company has launched an Internet Overcharging scheme that limits their broadband use.  Some customer claim the company is actively trying to trick those previously enrolled in unlimited plans into limited service tiers with tantalizing “free speed upgrades.”

Stop the Cap! reader Thomas was one of more than a dozen readers who complained to the Anchorage Daily News about the broadband ripoff.

He is outraged by the bait and switch tactics employed by GCI that sold customers on expensive bundled service packages that promised “unlimited Internet” service the company is now trying to take away.

Thomas first learned GCI had slapped limits on his broadband account… from Stop the Cap! GCI never bothered to inform him, or many other customers, about the new usage limits.  After he read our earlier story, he called GCI and learned he was a victim of Internet Overcharging.

GCI’s limits range from 40-100GB on plans ranging in price from $45-105 per month.

GCI, like most Internet Overchargers, tries to blame its customers for the imposed limits.

GCI estimates that 5 percent of its Internet customers are consuming 70 percent of the company’s available bandwidth. These users share a portion of their Internet cable with other GCI customers, and they have been slowing down the other households’ Internet speed, GCI spokesman David Morris told the Anchorage newspaper.

In an effort to prove their contention that usage limits improve service, GCI handed out free speed upgrades along with usage allowances and attempted to conflate the two.

In reality, most broadband slowdowns come from overselling access and being unwilling to invest in appropriate capacity upgrades to meet the growing needs of customers.  For companies like GCI, imposing usage limits to scare users away from high bandwidth services is cheaper and more profitable than meeting customer demand.

“Most of the under-30 crowd that I know use Netflix and Hulu streaming services so we can watch what we want, when we want. Cable TV does not give us the flexibility we want,” Sean Hogan, an Anchorage accountant, told the newspaper.

“I’m getting charged $180 per month and I don’t even want the phone or cable,” said Mike White, an Anchorage customer who upgraded his data-usage plan recently because he was worried about violating GCI’s limits.

GCI claims its new limits allow customers to do many things they had no interest in doing under their old unlimited plans, like sending millions of e-mail messages or browsing tens of thousands of web pages.  To make the limits sound generous, they made a chart:

Of course, these limits ignore the reality customers do most or all of these things, and if they use their high speed connection to download files or watch the increasing amount of video content delivered in High Definition, they’ll blow through some of GCI’s limits with little effort.

Despite GCI’s claims of generosity, its customers think otherwise, and many are moving to curb their usage to avoid potential penalty fees or service termination the company could impose with enforcement of their caps:

Morris said that most of GCI’s customers will discover that their Internet usage is far below the new limits. Depending on the plan, the limits range between 50 and 125 gigabytes per month.

Chris Bruns, an Anchorage father and college student, isn’t so sure. “I’m in the high-30 (gigabyte) range every month,” he said.

GCI’s cheapest substitute for an unlimited plan is 40 gigabytes — the equivalent of downloading and watching 60 movies per month on your computer.

Bruns found out recently — after calling GCI to ask some questions about his family’s Internet speed and usage — that his previously unlimited plan, called Ultimate Xtreme, now had a 40 gigabyte ceiling.

“I was pretty miffed. It came as a surprise,” he said.

“When we signed up, we specifically got the unlimited plan because we knew we used it a lot,” he said.

He said he has since curbed the family’s Internet usage to be on the safe side. He said he and his wife regularly download movies for themselves and cartoons for their two children on Netflix to watch on their computer. Using Netflix is a way to keep the kids from seeing “garbage” on TV, Bruns said.

Ed Sniffen, a consumer-protection attorney in the Alaska Department of Law, may a victim of GCI’s bait and switch broadband himself.

Sniffen said he has had an unlimited-data plan with GCI and didn’t know on Tuesday afternoon whether he received a notice about the new policy. He said anyone who has a concern should contact the Law Department’s consumer-protection office.

The story in the newspaper prompted an enormous response — some 265 comments and counting.  A sampler:

GCI provides terrible service compared to companies in the lower 48 at exorbitant prices. They are a monopoly that needs to be tweaked.

GCI’s Network costs are FIXED. They are raping and pillaging us.

“GCI said it hasn’t yet charged anyone fees for exceeding the data limits…” — GCI lies. Just a few months ago I was charged nearly $100 for exceeding the bandwidth limit. Since then, I’ve upgraded my package to a ridiculous amount of bandwidth (at a ridiculous price) just so I can avoid that problem.

This is crazy. You go anywhere in the lower 48 and almost every Internet provider out there has some sort of unlimited plan, and it doesn’t involve payment with an arm, a leg, a kidney, or a first-born child. GCI needs to get this crap sorted out.

I got an offer to double my Internet speed and usage for a few bucks extra, and free cable (the good package, not the basic cable). Two months later, I still haven’t seen anyone show up to do anything, and I’m still getting charged out the tail end for overage charges. I keep requesting to up my Internet (I have a college student who takes some Internet classes) but they never do it. The only reasons I switched from ACS were because when it rained we had no phone OR internet (they said the problem was with our lines – our landlord at the time needed to fix it, but the contractor said it was ACS’s line problem – THEY needed to fix it.)  If there was another alternative to phone/Internet, I would so be there.

I was out and out LIED to by a GCI Rep. I was told if I changed my plan I would receive higher speeds with NO OTHER CHANGE for the same price. I questioned the GCI rep about this in detail several times before agreeing. The next day I no longer had unlimited downloads. I was LIED to and RIPPED OFF by GCI.

GCI’s statement that they have not charged overlimit charges is incorrect as over ten individuals that I know including myself have been hit with bills ranging from $300 to $2000 for one month of service.