Apple iPhone

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

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

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

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

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

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

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

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

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

We’re likely about to find out.

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

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

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

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

Phillip "No, I won't take your word for it" Dampier

Did you realize if you are pro-Net Neutrality, you’re probably pro-piracy and a broadband hog?  That’s the new low achieved this past week by Net Neutrality opponents who are spending millions trying to protect their broadband fiefdoms from any regulation.  But even if they lose their fight to stop Net Neutrality when they find consumers won’t accept a throttled “network managed” broadband future, providers will be “forced” to control those dirty pirates and broadband hogs with usage limits and overlimit fees to help “pay for network expansion.”

It’s why Net Neutrality and Internet Overcharging schemes like usage caps and “consumption billing” go hand in hand.  What providers can’t profit from on one end they’ll try from another.

Longtime readers of Stop the Cap! already know how this scam works.  Canadian broadband users got stuck with both: speed throttles -and- usage caps and overlimit fees.  Assuming purposely throttled speeds are banned by Net Neutrality policies, simply under-investing in network expansion, despite the rampant profit-earning capacity broadband delivers, gets us to the same place — throttled speeds from overcongested networks and a convenient excuse to impose usage limits and other control measures to more “fairly” provide service to every customer.  Best of all, providers can pocket the overlimit fees charged to customers who exceed their allowance and train them to use less broadband with fears of more stinging penalty fees on their next bill.

Back in 2008, when Stop the Cap! launched, we challenged providers to provide the raw data to prove their assertions that they needed to impose formal limits and so-called “consumption-based billing” and abandon the lucrative flat rate pricing model that earns them billions in profits every year.  Of course, they have always refused, citing “competitive reasons,” “customer privacy,” or some combination of laws that supposedly prohibits any third party analysis.  Of course, they’re only too happy to characterize usage themselves, and we’re supposed to trust them — the same people that want to use that data to justify Internet Overcharging schemes.  Independent analysis?  When broadband pigs fly!

Now, telecom analyst Benoit Felten from the Yankee Group is asking the same questions on his Fiberevolution blog and issuing a challenge:

So here’s a challenge for them: in the next few days, I will specify on this blog a standard dataset that would enable me to do an in-depth data analysis into network usage by individual users. Any telco willing to actually understand what’s happening there and to answer the question on the existence of hogs once and for all can extract that data and send it over to me, I will analyse it for free, on my spare time. All I ask is that they let me publish the results of said research (even though their names need not be mentioned if they don’t wish it to be). Of course, if I find myself to be wrong and if indeed I manage to identify users that systematically degrade the experience for other users, I will say so publicly. If, as I suspect, there are no such users, I will also say so publicly. The data will back either of these assertions.

Felton’s co-author Herman offers his assessment:

Unfortunately, to the best of our knowledge, the way that telcos identify the Bandwidth Hogs is not by monitoring if they cause unfair traffic congestion for other users. No, they just measure the total data downloaded per user, list the top 5% and call them hogs.

For those service providers with data caps, these are usually set around 50 Gbyte and go up to 150 Gbyte a month. This is therefore a good indication of the level of bandwidth at which you start being considered a “hog”.  But wait: 50 Gbyte a month is… 150 kbps average (0,15 Mbps), 150 Gbyte a month is 450 kbps on average. If you have a 10 Mbps link, that’s only 1,5 % or 4,5 % of its maximum advertised speed!

And that would be “hogging”?

The fact is that what most telcos call hogs are simply people who overall and on average download more than others. Blaming them for network congestion is actually an admission that telcos are uncomfortable with the ‘all you can eat’ broadband schemes that they themselves introduced on the market to get people to subscribe. In other words, the marketing push to get people to subscribe to broadband worked, but now the telcos see a missed opportunity at price discrimination…

TCP/IP is by definition an egalitarian protocol. Implemented well, it should result in an equal distribution of available bandwidth in the operator’s network between end-users; so the concept of a bandwidth hog is by definition an impossibility. An end-user can download all his access line will sustain when the network is comparatively empty, but as soon as it fills up from other users’ traffic, his own download (or upload) rate will diminish until it’s no bigger than what anyone else gets.

Rep. Eric Massa (D-NY) has a better idea to stop Internet Overcharging: the Broadband Internet Fairness Act (HR 2902), which would ban unjustified billing schemes for broadband

The arbitrary nature of what constitutes a “hog” invalidates providers’ arguments at the outset.  Frontier defines a hog as someone who consumes more than 5GB.  Comcast sets their definition of a broadband piggy at 250GB.  The gap between the two is wide enough to allow a small planet to slip through unencumbered.

If a consumer does all of their downloading from midnight to six the following morning, are they as much of a hog on a shared cable modem network as the user watching Hulu during prime broadband usage time?  Probably not.  If a cable provider tries to force too many homes to share the same finite amount of bandwidth available in a designated area, service will slow for everyone during peak usage times.  But nobody will notice or care if customers are maxing out their connection in the middle of the night.  The appropriate answer, especially for an industry that enjoys enormous profits, is to expand their network to maintain basic quality of service at peak times.  DOCSIS 3 upgrades for cable are cost efficient, flexible and often profitable, because providers can market new, premium-priced speed tiers to those who want cutting edge service.

Instead, some providers see delaying upgrades as a better answer, enjoying the cost savings that follow implementation of usage caps, limits and other overcharging schemes which artificially limit demand and further monetize their broadband service offerings.

Unfortunately, even if Felten got responses from providers, he’ll be forced to trust the integrity of data he didn’t collect himself.  Rep. Eric Massa has a better idea.  His proposed Broadband Internet Fairness Act would ban such overcharging schemes unless providers could prove to the satisfaction of a federal agency that such pricing was warranted.  The big difference is that providing “massaged” data to Mr. Felton might be naughty, but would be downright criminal if tried with the federal government.

Shouldn’t the central lesson here be to “trust but verify?”

Mark A. Jamison

Stop the Cap! reader Joe sends along news of another one of those guest opinion hit pieces on Net Neutrality that pop up regularly in the media.  This one, The Internet is Never Neutral, printed in today’s Sun-Sentinel in south Florida, comes from Mark A. Jamison and Janice Hauge, a dynamic duo who have co-written several papers that always manage to turn up favorable conclusions for big telecommunications companies, including these page-turners:

• “Bureaucrats as Entrepreneurs: Do Municipal Telecom Providers Hinder Private Entrepreneurs?”
• “Subsidies and Distorted Markets: Do Telecom Subsidies Affect Competition?”
• “Dumbing Down the Net: A Further Look at the Net Neutrality Debate.”

The two are also working on other papers purporting to study regulatory policy and competition issues.  Let me illustrate my psychic powers by guessing they’ll find regulatory authorities to be obstacles to the well-oiled telecommunications machine and competition will be most hearty if there are no pesky regulations to hamper it.  We’ve seen how well that has worked so far for consumers in North America.

Remember Al Gore calling the Internet the information superhighway? The metaphor wasn’t and isn’t perfect, but it is instructive. Suppose we applied net neutrality to our transportation system — there would be no high-occupancy vehicle lanes during rush hour, no car-only lanes on interstates, and no toll road as an alternative to I-95 in South Florida. Transportation would be more costly and provide less value.

Forcing net neutrality would have similar results. Time-sensitive information, such as stock market transactions, would wait in line behind football game highlights.

Jamison, who is a former manager at Sprint Communications, and Hauge miss the entire point of the Internet’s biggest strength: its equal treatment of traffic from the smallest blog to Amazon.com.  Assuming providers, earning billions in profits even as their costs decline, invested appropriately in those networks, there would be no need for high-occupancy vehicle lanes and toll roads.  These kinds of “traffic management” techniques are proposed because provider dollars don’t keep up with consumer demand.  Social engineering tries to throttle traffic downwards by discouraging it with toll fees or manage it with special high cost lanes reserved only for those willing to pay or follow arbitrary rules governing their use.  More often than not, those premium lanes go underutilized while the rest of us remain stuck in the slow lane.

Net Neutrality would not impede network management that enhances the efficiency of traffic, except when it comes at the expense of someone else’s traffic. Net Neutrality also throws up a roadblock against providers who would plan to cash in with enhanced connectivity services that cannot exist unless  a market is created to sell them.  It’s similar to providers in Canada limiting your access to broadband, then throwing a penalty fee on your bill… unless you sign up and pay for their “insurance” plan to protect you from those charges.

Want to run a video streaming application on the Internet?  Pay for a broadband provider’s deluxe delivery insurance, and customers will be able to watch that video without buffering.  The alternative is to be stuck waiting because your video is being delivered on an artificial “slow lane.”

If you are thinking that it sounds like net neutrality restricts innovation and hurts customers, you’re right. Our research has shown that net neutrality limits innovation, contrary to the claims of the net neutrality proponents. How can this be? Imagine a one dimensional network — one that does nothing but carry information from point to point, which is how the old Internet has worked. What kinds of content providers flourish in that context? Those big enough to distribute their software across the net and those whose software takes advantage of the great bandwidth that they don’t have to pay for.

Their research makes numerous assumptions that might prove accurate in a laboratory environment, but simply discounts provider mischief in their efforts to maximize profits and minimize costs.  Providers have earned countless billions providing this “one dimensional network” to consumers.  It’s the one bright spot in a lackluster telecommunications sector.  Those who innovate new broadband applications have flourished.  Some providers who have not want to innovate in a different way – by inventing new Internet Overcharging schemes to profit from the service without actually improving it.  When their interests are at stake in owning and managing their own content services, bandwidth suddenly becomes plentiful.  The TV Everywhere project will potentially provide a value-added service to cable and telco TV providers, all made possible in marked contrast to their argument that other producers’ video content is clogging their networks.

Another naked fallacy in the authors’ argument is that content providers don’t pay for the bandwidth to host and distribute their content.  They do — to the companies that host their content and provide connectivity to the Internet.  That’s the job of web hosting companies.  Internet service providers simply want to be paid extra for doing their job – providing connectivity to consumers who pay $4o or more a month Free Press found costs about $8 to provide, and then also charging content creators a second time to facilitate delivery of that content.  That’s akin to charging a phone customer for placing a long distance call and also demanding to bill the person who answers.

Now, suppose that the network can offer enhancements that improve customers’ experiences. Content providers whose sites would not benefit from such enhancements could ignore the offering. But there will be some content providers who could improve their services by buying the enhancements, such as priority packet delivery. These sites become better without net neutrality and offer customers more service. In other words, there is more innovation and greater customer welfare without net neutrality than with it.

Promises, promises.  Just getting these providers to upgrade broadband speeds to consumers has been a never-ending quest.  Many consumers are willing to pay for “improved service” in the form of faster connections to the Internet.  Consumers are not willing to pay more for artificially limited service, be it through throttled speeds or usage caps.

At the conclusion of their study, which assumes providers will not leverage their duopoly in most American markets to increase pricing/revenue and reduce costs by limiting demand on their networks, they readily admit they did not take into account several possible scenarios:

One issue is how the offering of premium transmission might affect the network provider’s incentive to change the standard transmission speed. At least AT&T has committed to not degrade service for any network user, but it is unclear how such a commitment would be enforced.

Secondly, we do not analyze the effects of peer-to-peer communication, which is growing in importance on the Internet.

Thirdly, we do not consider the effects of vertical integration by the network provider and whether this would provide an incentive for foreclosure.

The PURC is part of the University of Florida, but also receives private corporate funding

Because the broadband industry fights any attempt to regulate their service, it is unlikely any such promise from AT&T would be enforced.  What AT&T defines as “degraded” service is open to interpretation as well.  As broadband demand is dynamic and growing, should AT&T leave standard transmission speeds exactly as they are today, that non-premium service would be degraded through inattention to broadband growth.  Peer to peer communication is largely a story from the first round of the Net Neutrality debate in 2006-7.  A more significant amount of traffic is now attributed to online video.  Finally, not considering vertical integration in the cable and telephone industry is a fatal flaw.  The history of telecommunications regulation has largely been written during periods when the cable and telephone industry abused their market position to overcharge consumers for service, lock up content distribution channels, and forestall competition wherever and whenever possible.

Frankly, Jamison and Hauge’s world view only innovates new, even fatter profits for providers like AT&T.  Perhaps some of those profits can go towards even greater funding for the Public Utility Research Center, where Jamison serves as director and Hauge as a Senior Research Associate.  The PURC, part of the University of Florida, just happens to have, among others, AT&T and Embarq Florida as sponsors, and both companies have seats on the PURC Executive Committee.

Sun-Sentinel readers don’t have that information because it’s not included in the disclosure at the bottom of the piece.  Following the money would shed a lot more sun on this important debate.

Rogers Communications wants you to watch television on your broadband service, but not too much.  The Canadian cable company’s On Demand Online service was previewed Monday at a media event with plans for a public launch on November 30.

On Demand Online will showcase specific television shows as well as the entire lineup of certain channels.  The service has more than a dozen partner networks providing programming, among them TVOntario, Treehouse, Citytv, SuperChannel, and Sportsnet.

Premium programming will be available to Rogers subscribers who also receive those networks as part of their cable television package.  No cable TV package?  No access for you.  (Update: Rogers says it will offer the service to customers of any Rogers service.)  For now, company officials say the service will be available for no additional charge, but will be ad-supported.  Using On Demand Online will count against your usage cap/consumption billing allowance.  The service offers two speeds for viewing – a low resolution 480kbps feed and a higher resolution 1Mbps feed.  Rogers intends to increase the quality of the high resolution service to 2-2.5Mbps in the near future.

Rogers rations your online TV experience with usage allowances that make sure you don't spend too much time online watching shows you should be viewing on your Rogers cable TV service.

Rogers’ usage allowances, a part of their well-established Internet Overcharging scheme, will make it difficult for those already spending a lot of time online to enjoy the service.  Watching the current high speed, higher resolution feed could exceed 1GB of usage in just over two hours according to Digital Home.  That drops in half when Rogers upgrades the quality of the feed.

Customers who blow through their allowance face overlimit penalties and fees on their next bill.

Qualified subscribers will access the service through Rogers’ broadband web portal using established account names and passwords.  While the service will work “on-the-go,” Rogers says it will be keeping an eye out for password sharing and will also impose any viewing limitations required by content producers.  That could mean what is okay to watch in Ontario is not okay in Alberta, due to licensing issues.

Stop the Cap! reader Ibrahim in Toronto wonders how Rogers expects to get a lot of customers excited about a service that will help erode their monthly usage allowance.

“Isn’t is fascinating that Rogers wants to effectively charge you for every hour you watch online when you’ve already paid for the channel on your monthly cable bill?  What’s next, a meter on top of the television set demanding a quarter for every 15 minutes of viewing?” he asks.

Susan in North York wonders why she’ll have to pay for every ad.

“When I read about this service, I thought we were finally going to get something like Hulu here in Canada, but with usage-based billing, who is going to use up their allowance watching shows with ads all over them — ads I am now going to pay to watch,” she wonders.  “I guess it’s newsgroups for me — I can download my shows without ads and pay less.”

While the program content can be fast-forwarded or rewound, commercial advertisements on the service cannot be skipped or hurried through.  Initially, the service is expected to show just one ad per program, but Rogers intends to eventually run the same number of ads consumers would find if watching the program live on television.  With up to 12 minutes of advertising per hour, that also helps slowly eat away your monthly allowance.

What are the monthly usage allowances for Rogers Hi-Speed Internet service?

Ultra Lite – 2 GB
Lite – 25 GB
Express – 60 GB
Extreme  – 95 GB
Extreme Plus – 125 GB

Please note: The grandfathered Ultra Lite and Lite monthly usage allowance is 60 GB. Also, Rogers Portable Internet and dial-up services do not have usage allowances at this time.

Will I be charged if I go beyond my monthly usage allowance?

Yes. If you exceed your monthly usage allowance, you will be charged as follows:

Ultra Lite – $5.00/GB to a maximum of $25.00
Lite – $2.50/GB to a maximum of $25.00
Express – $2.00/GB to a maximum of $25.00
Extreme – $1.50/GB to a maximum of $25.00
Extreme Plus – $1.25/GB to a maximum of $25.00

Please note: the grandfathered Ultra Lite over-allowance fee is $5.00/GB with no maximum, and the grandfathered Lite over-allowance fee is $3.00/GB with no maximum.

Annoying usage caps, allowances, and consumption billing irritate broadband users in those places where Internet Overcharging is established.  But the demand by consumers for unlimited broadband is so strong, some ISPs are giving way, looking for competitive edges that can win them new customers and keep the ones they already have happy.

Orcon, a DSL provider serving New Zealand, has announced it is exempting visits to YouTube from its data allowance until the end of January 2010.

“YouTube is one of the hottest properties on the web – with an almost endless supply of content. It makes up a big chunk of our customer-base’s usage every month. With the school holidays looming and the festive season in full swing we’re expecting a big uptake from our customers,” said Orcon chief executive Scott Bartlett.  “Streaming and downloading can rapidly chew through gigabytes of data so these holidays mums and dads can rest assured their data cap won’t take a beating. It is also a great opportunity for families to make and share their own holiday home movies with friends and family around the world.”

Orcon presently exempts several domestic websites, including TV New Zealand, from its usage allowance.  YouTube is one of the first international sites Orcon has exempted.

Orcon services its customers over the telephone network using ADSL and, in selected areas, ADSL2+ which provides service theoretically up to 24Mbps.

For Orcon customers, any streaming video exemption is good news, considering the ISP’s tiny usage allowances.

Orcon charges prices that would shock Americans:

Orcon’s Purple Plan provides a variable download speed (often 8Mbps or less downstream) and 128kbps upstream service with a 1GB monthly usage allowance for $29US a month.  Each additional gigabyte costs $1.50.  Their Platinum Plan doesn’t provide additional speed, just a bigger usage allowance.  For 20GB of usage per month, prepare to spend $95 per month.  Domestic long distance and local calling is also included in the Platinum Plan.  Orcon’s new ADSL2+ network is even more pricey, but can deliver faster speeds (12-15Mbps seem to be real world ranges for downstream).  The usage allowance is slightly higher on the ADSL2+ network, but not by much.  The highest allowance available tops out at 25GB.

[flv width=”640″ height=”405″]http://www.phillipdampier.com/video/Orcon Broadband Iggy Pop Ad 11-16-09.flv[/flv]

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p style=”text-align: center;”>Orcon Broadband ran an advertising campaign to find eight New Zealanders to help Iggy Pop re-record ‘The Passenger’ live via Orcon Broadband.  This is the result. (November 16, 2009 – 2 minutes)