What would you do if your broadband bill was the same as your monthly rent?

That’s a question 21-year-old Notre Dame de Grace resident Amber Hunter has been dealing with since the neighbors began hacking their way into her wireless router, gaining access to her cable modem service from Videotron, Ltd., and running her bill into the next province.

It’s the predictable outcome of what happens when Internet Overcharging schemes gain traction, leaving ordinary consumers literally holding the bill.

Videotron sells usage limited broadband service across Quebec, but heavy users who routinely exceed their arbitrary usage caps knew there was a limit on the overlimit fees Videotron charged.

Not anymore.

Videotron left the usage caps on, but removed the limit on how much they can charge customers who exceed their monthly usage allowance.

Videotron sets prices like the OPEC of the Internet -- the sky is the limit

“The sky is the limit, or at least your bank account,” writes our Montreal reader Hei.  “The only thing unlimited with Videotron are the overlimit fees.”

Hunter had no idea she was being hacked.

“I had no idea what a gigabyte was, so when I started getting higher bills, I just assumed it was from watching TV shows online,” Hunter says.

Her boyfriend told her otherwise, making it clear it was impossible for her to be running up 350GB a month in usage just from watching a few movies and TV shows.

Since August, Hunter has accumulated more than $1,800 in broadband bills stemming from parties unknown who hacked their way into her wireless router and “borrowed” her Internet account.  Videotron itself is directly responsible for part of this debacle, encouraging Hunter to upgrade to a higher tier of service that upgraded her from a 30GB usage allowance to a 100GB usage allowance, with a major catch.

Hunter had become accustomed to paying her usual broadband bill plus the $50 maximum penalty charged for her “overuse.”  So a Videotron representative suggested a higher usage allowance plan might lower her bill.  But somehow, the Videotron customer service agent forgot to mention that the new plan no longer included a limit on overlimit charges.

When Amber switched plans, her broadband bill exploded.  Now the waitress hands over most of her weekly salary to Videotron.

“I’m a student, and I work at a bar, and now most of the money I have goes to pay my Internet bill,” Hunter told the Montreal Gazette. “It’s more than I pay for school and books, and I don’t have a lot of money left for food.”

She still owes the cable company $506 and they aren’t interested in providing her any service credits beyond the $313 they gave her a few months ago.

It took a Videotron help desk employee to finally unravel the mystery of the Internet Overcharges — someone was hacking into her wireless network.  Exactly who has been living their online life usage-limit free at Amber’s expense may never be known. Those living in apartment complexes and other multiple dwelling units can often find a dozen or more wireless connections, some password protected, others not.

Hunter’s wireless network was secured with a difficult to guess password using a four year old Linksys router.  Unfortunately, older routers often lack robust security and are easily hacked.

A handful of Canadian ISPs still offer unlimited broadband accounts.

As far as Videotron is concerned, it’s all Hunter’s fault — she should have understood what a gigabyte was, how many she was supposed to be using, what the security capabilities of her router were, that they were properly enabled, that she checked her usage on a daily basis looking for anomalies — investing her time, effort, and energy to stop the cable company before it billed her an enormous amount… again.

Speaking for Videotron, Isabelle Dessureault said, “It’s a case where Videotron showed some understanding and listened to what happened. We’re well-renowned in the industry for our technical support team. We credited her account for $313, but at a certain point, we need to share the responsibility. We don’t like these kind of situations.”

Videotron’s responsibility to their customers stopped where their profit margin began.  The company could have sent Amber a bill for the wholesale cost of her Internet usage, which she could have paid with a few of her bar tips.

Because Hunter’s broadband bills were now rivaling her monthly rent she decided to invest in her financial future, buying a new router and making sure the wireless was turned off.  Today she runs dozens of meters of Ethernet cable between all of her computers, just to keep the neighbors off her connection.

Although Videotron has become intractable, demanding Amber pay up, one of their competitors used the opportunity to score public relations points that Videotron sacrificed.

Jarred Miller, the president of the Internet Service Provider YOUMANO offered to cover all of Hunter’s overage fees amassed over the past year that also includes a free year of Internet service with his company, a generous offer Hunter will take.

YOUMANO is one of a handful of Canadian ISPs still offering unlimited Internet access, and do not think of themselves as the OPEC of the Internet.

The entire affair is a warning to Americans.  If you think Videotron is an Internet evildoer, imagine what Verizon, AT&T and Comcast could do to your bank account.  If they have their way, you’ll need to become intimately familiar with your router, the concept of a gigabyte, and take a class in “negotiating to win” when fighting over your future enormous broadband bills.

Listen to an interview with Amber Hunter. She appeared on this morning’s Daybreak on CBC Radio Montreal to discuss her experience with Videotron Internet Overcharging. (8 minutes)
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The cable company best known for serving suburban New York City has gone west with the purchase of Bresnan Communications

The new owner of Bresnan Communications is promising customers in Montana and Wyoming an end to anemic broadband service, but subscribers wonder who is going to pay for it.

Bethpage, N.Y.-based Cablevision is telling subscribers upgrades are on the way to bring faster broadband, better cable and phone service to 300,000 Mountain West customers formerly served by Bresnan.

John Bickham, president of Cable & Communications for Cablevision, told readers of the Billings Gazette improvements would arrive over the next year-and-a-half:

We’re going to start by increasing the number of high-definition channels we provide, with a goal of providing more than 100 free HD channels over the next 18 months. We will also be adding more movie choices and more free video-on-demand titles, including prime-time shows from leading broadcast networks.

High-speed Internet service in the towns we serve is going to get faster. Over the next 18 months, we will upgrade the speeds of our basic level of Internet service to up to 15 megabits per second, nearly double what they are today. And with our award-winning and top-rated phone service, we will be adding even more features, functions and value to the phone service available in these communities today, including access to an innovative Web site to manage account preferences, review calling records or check voice mail from any computer.

For many subscribers, the improvements cannot come soon enough.

One reader in Jackson Hole, Wyo., said Bresnan rarely provided broadband service at the advertised rates, noting their 8Mbps service really was closer to 3-4Mbps.

But residents in both Wyoming and Montana warn that if Cablevision plans to manage all of the spiffy upgrades with a rate increase, they’ll cancel.

“I’ll be watching my bill. If it goes up because of all these changes, I’ll drop you in a heartbeat,” wrote one Montana customer.

This slide, produced to sell "network management" equipment, is the best argument for Net Neutrality around.

Want to visit Facebook?  That will be two cents per megabyte, please.  Skype?  You can get a real bargain this month — your ISP is only charging you $5 for an unlimited monthly permission pass.  YouTube?  All customers with a deluxe bundled broadband plan get a special discount — just 50 cents for up to 60 videos, this month only!

All of these charges, levied by your Internet Service Provider, are real world scenarios being sold by two equipment vendors — Allot Communications and Openet, for immediate use on Net Neutrality-free wireless broadband networks.  Thanks to Stop the Cap! readers Lance and Damian for sending us the story.

Both companies are excited by the potential harvest of bountiful revenue — for themselves in selling the equipment that will carefully monitor what you do with your Internet connection and then control what kind of experience you get, and for providers who can finally bend the usage curve down while “finally” getting average revenue per customer shooting sky high once again.

In the webinar, run last Tuesday and moderated by Fierce Wireless, the two companies carefully divided their one hour presentation between the technological and financial benefits of “network management” technology.  For every statement about how their bandwidth management system would improve the predictable responsiveness of the provider’s network, another comment followed, touting the enormous new revenue potential this technology will bring providers, all without costly network upgrades.

Poor provider. His stuffed pockets of profit are leaking your money paid to access websites you want to visit. But with Allot and Openet's products, the pot 'o gold is just a few steps away.

On Tuesday, the Federal Communications Commission will vote on a watered-down Net Neutrality proposal that would do nothing to prevent this nightmare scenario from becoming reality.  The webinar and its accompanying slides couldn’t illustrate Net Neutrality-proponents’ arguments better:

1. Such technology requires providers to carefully track and monitor everything you do with your web connection, obliterating privacy and creating a potential data trail that could be exploited for just about anything.  Indeed, Allot and Openet treat the data tracking feature as a benefit, opening the door to marketing campaigns to upsell your broadband connection or target upgrade offers based on your web history;

2. It’s all about the money.  Allot and Openet see their products as a cost-saver for providers to control expenses by cutting speeds/access for heavy users to provide a more consistent service for others, reducing the urgency to upgrade networks.  The companies also heavily focus on the revenue opportunities available from Internet Overcharging schemes;

3. The webinar includes a slide showing that providers can charge individual fees just to visit and utilize third party websites and applications, while letting providers deliver their own content, services and applications for free.  Got a bothersome competitor?  Just make a quick change with Allot’s product and your customers will face a withering admission fee in the amount you choose before they can even use the application;

4. The technology allows providers to wreak special havoc on peer-to-peer traffic, always the bane of traffic-conscious ISPs;

5. Want to extract more cash from an individual subscriber?  Providers can custom-design packages based on web site habits, usage, speed, and even the time of day the person is most likely to use the web.  Providers can then develop so many different usage packages, comparison shopping becomes meaningless.  The price you pay may be different than what others on your street pay, and you may never know by how much or why.

These Big Telecom workmen are not hard at work upgrading networks to meet demand. They are wrangling an Internet Overcharging scheme to reduce your usage while charging you more. (All of these slides were produced by the vendors themselves.)

Public Knowledge legal director Harold Feld saw right through the slide show: “If you want the slide deck to show why we need the same rules for wireless and wireline, this is it.”

Listen to the audio portion of “Managing the Unmanageable: Monetizing and Controlling OTT Applications,” which does not include the slide show. (60 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Broadband advocates have been warning providers have been dreaming of this kind of pricing for a few years now.

“I have been saying that this is where they want to go for a while,” Barbara van Schewick wrote to Wired. “The IP Multimedia Subsystem (IMS), a technology that is being deployed in many wireline and wireless networks throughout the country, explicitly envisages this sort of pricing as one of the pricing schemes supported by IMS.”

Although the system described by the webinar is currently being sold for use on wireless networks, nothing prevents providers from adopting similar schemes on their wired networks, arguing their use is about “intelligent network management,” not content or pricing discrimination.

It’s a scenario likely to be tested soon, especially with FCC Chairman Julius Genachowski’s watered down Net Neutrality proposals.  More than one observer believes the chairman has made a deal with the Big Telecom Devil: observe our watered down rules, don’t sue to have them thrown out, and the Commission will not invoke Title II and reinstate regulatory authority over broadband.

But as anyone who watches the broadband industry must realize by now, providers always break these deals.  They will sue the moment a controversy erupts that is not in their favor, and they are very likely to win.

HP's Snowjob: The company that brought you the $70 ink cartridge supports an end to flat rate Internet service to "save" you money.

HP’s Joe Weinman argues consumers are behind the drive to abandon flat rate, “all you can eat” broadband pricing.

Weinman, whose company sells products and services to some of America’s largest broadband providers, has taken up their position that flat-rate Internet service is bad for you, claiming many are paying too much for Internet service they use too little.

In an essay posted on GigaOM, Weinman brings back the all-y0u-can-eat buffet metaphor:

For the record, I like unlimited Internet access just as much as anyone else. However, such plans appear to be on their way out, and here’s why. As I’ve explored in ”The Market for Melons” (PDF), pay-per-use is not an evil plot by greedy robber barons, but a natural outcome of independent, rational consumer choice. Consider a town with an all-you-can-eat (flat rate) buffet and an a la carte (pay-per-use) restaurant. Smart shoppers on diets will save money by patronizing the a la carte restaurant, whereas heavy eaters will save money by visiting the buffet. As patrons switch, the average consumption of the buffet will increase, driving price increases for the luncheon special, causing even more users to switch to pay-per-use.

Bottom line: it is not the proprietors driving this dynamic, but the customers themselves acting out of pure, rational self-interest—light users, by deciding not to subsidize the heavy ones, foster the vitality of the pay-per-use model.

Unfortunately for Weinman, most American broadband customers don’t believe a word of this, and even he was forced to admit as much when he noted consumers “often prefer to overpay for flat-rate rather than save money but risk bill shock.”

Karl Bode at Broadband Reports wasn’t suckered for a moment either, noting:

[…]Cable industry lobbyists would like the public to believe that such a shift isn’t about making more money, it’s about helping the poor. Not only is the metered billing push absolutely about making money, it’s about artificially constricting the pipe to protect uncompetitive carriers and TV revenues from Internet video. But instead, there’s a very concerted effort afoot to portray this shift as necessary, inevitable, and even altruistic.

Most consumers prefer the simplicity of flat rate pricing, and understand that ISPs are perfectly profitable under the flat-rate pricing model. They also understand that this is a pipe dream forged by never-satisfied investors, and once implemented ends with ever soaring per gig fees and ever shrinking usage caps.

Weinman’s essay completely ignores the reality his preferred pricing model already delivers to those who live under it in Canada.  Canadian broadband rankings continue to decline as customers there pay higher prices for a lower level of service, with usage caps that actually decline when new competitive threats from online video emerge.

Just what the doctor ordered: HP's Rx for American Broadband

We had to take time out to respond directly to Weinman and his cheerleading friends (see the comments section), some who wrote comments below the piece and couldn’t be bothered to disclose they owe their day jobs to industry-backed dollar-a-holler groups that are committed to delivering on behalf of their provider benefactors:

When Big Telecom comes ringing with promises of savings from metered or capped broadband, hang up immediately.

These plans save almost nobody money and expose dramatic overlimit fees to consumers, creating the kind of bill shock wireless phone users endure.

The OPEC-like Internet price-fixing on offer from big players delivers broadband rationing and sky high prices, while retarding Internet innovations that providers don’t own or control.

Consumers are forced to double check their usage and think twice about everything they do online out of fear of being exposed to huge overlimit fees up to $10 a gigabyte for exceeding an arbitrary limit ranging from 5-250GB.

Americans already pay too much for Internet service and now the providers want more of your money. The rest of the world is moving AWAY from the pricing schemes Weinman would have us embrace. It’s such a serious issue in the South Pacific, the governments of Australia and New Zealand are working to address the problem themselves.

Providers are already earning BILLIONS in profits every quarter from their lucrative broadband businesses. Now the wallet biters are back for more, with the convenient side benefit that limiting consumption is a great way to prevent Internet-delivered TV from causing cord-cutting of cable TV packages.

As far as consumers are concerned, and Weinman admits as much, people are happy with today’s unlimited price models. When Big Telecom complains people are overpaying for broadband, wouldn’t their shareholders be telling them to shut up and take the money? There is more to this story.

Weinman defends the extortion proposition Big Telecom would visit on us: either give us limited use pricing or we’ll raise all of your prices.

But as consumers have already figured out, these providers never reduce prices for anyone. When was the last time your cable bill went down unless you dropped services?

Don’t be a sucker to Big Telecom’s “broadband shortage” or pricing myths. Broadband is not comparable to water, gas, or electric. The closest comparison (and the one they always leave out) is to telephone service, and as we’ve seen, that business is increasingly moving TOWARDS flat race, unlimited pricing.

Want to know what metered pricing does to the wallets of consumers? Just ask Time Warner Cable customers in Rochester, Greensboro, San Antonio, and Austin what they thought about the cable company’s “innovative” pricing experiment that tripled the price for the same level of broadband customers used to get for $50 a month. After the torches and pitchforks were raised over $150 a month broadband service, Time Warner backed down.

Either with or without metered pricing, the cable company raised its prices three times last year alone.

The industry’s meme that “usage-based pricing” in inevitable is only true if consumers allow it to happen.  The parade of Internet Overcharging advocates all share one thing in common — they earn a living from the providers that dream about these pricing schemes.  Always follow the money.  As we’ve exposed repeatedly, the vast majority of defenders of these kinds of pricing schemes are not consumers.  They are:

• The providers themselves;
• Wall Street banks, investors, and the business media catering to them;
• Non-profit groups receiving substantial contributions from providers;
• Industry-funded “think tanks” and research that can carry the industry’s public policy agenda, hoping the media that quotes them are too lazy to follow the money;
• Equipment and service vendors, unions, and other groups who depend on the business or jobs they get from providers.

Phillip "Of course you know this means war" Dampier

Sizing up the big winners from FCC Chairman Julius Genachowski’s latest Net Neutrality proposals is as simple as putting those praising Genachowski in column “A” and those outraged by downsized consumer protections into column “B.”  It comes as no surprise Big Telecom, the employees whose jobs depend on those companies, their trade associations and lobbyists are all living it up on the “A” side while consumers and public interest groups sit in the dark in column “B.”

Among the high-five club is Kyle McSlarrow, the outgoing head of the National Cable and Telecommunications Association, the cable industry’s top lobbying enterprise.

On the NCTA’s blog, an indication of your broadband future has been placed front and center — a meter.  Perhaps putting a coin slot on your cable modem or a credit card reader on the side of your monitor would be a bit too brazen, even for this industry.

McSlarrow, among others, heaped bountiful praise on the FCC chairman for his ‘enlightened’ views on Net Neutrality.  That hardly a surprise considering Genachowski has opened his phone line, and apparently his heart, to industry propaganda and arguments.

Genachowski’s remarks about usage-based pricing, in particular, were a breath of fresh air to Wall Street and providers clamoring to dispense with unlimited broadband service for consumers to increase profits:

Our work has also demonstrated the importance of business innovation to promote network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing.

“This approach reflects a responsible and considered view of a fast-moving and highly dynamic marketplace but it doesn’t assume that there is any one ‘correct’ answer,” McSlarrow wrote.

It’s also a view consumers strongly disagree with, but those opinions are off the FCC’s radar.  Consumers don’t have the chairman’s direct phone number.  If they did, they could argue the fact “matching price to cost” would mean a dramatic reduction in pricing for today’s unlimited broadband account.  Instead, we have a lobbying effort to end “unlimited” entirely, backed by manufactured studies funded by providers expecting pre-determined conclusions.  Too bad the FCC doesn’t read provider financial reports.

Writes McSlarrow:

Some consumers don’t see the need to go online.  Others are constrained by cost.  Still others want to use the service they have in cutting-edge ways.  And the ability to pigeonhole companies and their business plans as being one thing or another is breaking down, particularly in an environment where Internet applications, content, and services change the way we behave as consumers, provide new opportunities for providers and consumers and alter how we all interact with both traditional and new devices and features.

The key point is that that we need to focus on what best serves consumers.  With all this change, it is necessary to have the flexibility to test new business models – and perhaps new pricing plans – in order to see if they make sense.

A usage-based pricing model, for instance, might help spur adoption by price-sensitive consumers at the lower end of the socioeconomic ladder.  As Sanford Bernstein analyst Craig Moffett noted in a report issued yesterday, “{u}sage-based pricing for broadband would have profound implications.  At the low end, it would allow cable operators to introduce lower priced tiers that could boost penetration and help in efforts to serve lower income consumers.”

McSlarrow

Evidently, to chase the small percentage of Americans who either don’t have an interest in going online, or think it costs too much, the NCTA wants those already online to face Internet Overcharging schemes ranging from usage caps to metered billing.  Is it flexible for consumers who face the end of broadband pricing as they’ve lived with for more than a decade or is it flexible for providers who can run to the bank with the higher profits rationed broadband delivers?

McSlarrow quotes Moffett’s quest for higher profits for his clients — Wall Street investment banks, but ignores the implications Moffett himself admits — consumer rebellions, self-rationing of usage, a stifling of online innovation from independent companies not connected with providers, and higher prices.

American providers look north for an example of Big Telecom’s pot ‘o gold — Canadian ISPs that have managed to wreak havoc on the country’s broadband rankings, forcing consumers to live with higher prices and, in some cases, declining usage allowances.  Canada’s broadband innovation graveyard is an object lesson for Americans: usage-based pricing doesn’t deliver savings to anyone except the most casual users living under constrained speeds and paltry allowances as low a 1GB per month.  For everyone else, broadband prices are higher, speeds are slower, and usage allowances deliver stinging penalties for those who dare to exceed them.  What do Canadian providers do with all of the money they earn?  A good sum of it goes towards acquiring their competitors, further reducing an already-poor competitive marketplace.

As one Ontario reader of Broadband Reports noted, “our largest cable company has the money to buy three professional sports teams but not enough to roll out DOCSIS 3 [to all of its customers.]  Our largest phone company, Bell, has the money to buy half the news stations in Canada, but cannot seem to get users off of 3Mbps DSL service.  The whole system is a scam.”

While the rest of the world is decidedly moving away from limited-use broadband, American providers have sold Genachowski that rationing the Internet is “innovation.”

Of course, you and I know real innovation means investing some of the enormous profits providers earn back into their networks to keep up with growing demand.  Providers can innovate all they like to attract price sensitive customers, so long as current unlimited plans remain available and affordable.  But as AT&T illustrated earlier this year, the first thing off the menu is “unlimited,” replaced with overpriced and inadequate wireless data plans that only further alienate their customers.

AT&T should take a lesson… from AT&T.  While it gouges its customers on the wireless side, the company has managed to solve the affordability question all by itself, without resorting to wallet-biting.  It dramatically reduced prices on its DSL services — now just $14.95 a month for its customers, which includes a free gateway and modem.  That sure sounds like a solution for budget-conscious customers and delivered all without antagonizing those who want to keep their current unlimited service plans.

AT&T seems to have managed to solve the affordability question without overcharging their customers.

Cable companies deliver their own budget broadband plans, but it comes as no surprise they barely market them, fearing their premium-paying customers could downgrade their service.

In short, Internet Overcharging is a solution chasing a problem that simply does not exist in a responsible broadband marketplace.

McSlarrow says he’s not arguing for or against any particular model.  All he is really confident about is that the marketplace is changing and that “companies will have to adapt to that change.”

But as is too often the case, McSlarrow, his industry friends and colleagues, and Chairman Genachowski have forgotten it’s ultimately consumers who have to adapt to change, and we promise it means all-out war if providers tamper with unlimited broadband service.