McBee, part of Chesterfield County, S.C.

Residents of McBee, S.C., have been without cable and Internet service since last November, when rural cable provider Pine Tree Cablevision closed its doors and turned the services off in scores of small communities in New Hampshire and South Carolina.  For residents of Lamar, another South Carolina community served by Pine Tree, it wasn’t much of a service to lose.  Pine Tree’s “broadband” in Lamar was limited to 50kbps, with the entire community’s Internet delivered on a single AT&T-provided T-1 line.

But even the loss of a company like Pine Tree was immediately felt by area residents and businesses, now without cable TV and Internet service.  In Lamar, December 10, 2009 will remain a day of infamy:

“I was in the middle of submitting reports to SLED (the State Law Enforcement Division) when [Pine Tree pulled the plug and the cable and broadband system] went down,” Police Chief Charles Woodle told SC Now. Woodle now goes home twice a day to check his work e-mails.

The town’s water office closed December 21st because the town clerk could not upgrade the software needed to process water bills.

In Elloree, residents and local officials found out about Pine Tree’s financial problems when channels started dropping off the cable system, followed by the complete loss of service.  In December, customers mailing payments to Pine Tree had them returned by the post office undelivered.

The now defunct Pine Tree Cablevision used to serve rural communities in New Hampshire and South Carolina.

Elloree Town Clerk Chasity Canaday told The Times and Democrat Pine Tree’s ultimate demise was a travesty.

“It shows a remarkable lack of professionalism to cut services from customers without any prior notice,” Canaday said. “For the majority of our residents, their notice that the cable service was terminated came when their televisions quit working.”

Despite claims from Pine Tree officials that new owners would take over the business they left behind, Canaday says that just isn’t true.

“It has been very, very difficult to get somebody else,” she said. “There is not a large enough customer base to entice a new company to come in. Most people have already switched to satellite.”

The newspaper noted after contacting 20 other municipalities, Canaday said most rural towns have no local cable provider and instead rely on satellite service.

Throughout rural South Carolina, tiny cable companies serving just a few hundred subscribers have come and many more have gone.

The town of Cameron lost Almega Cable about three years ago.  Other communities have said goodbye to operators like Brookridge Cable, SRW Inc., South Carolina Cable Television, Pine State Management Co., and Mid Carolina Cable.

In most cases, satellite television’s ability to deliver hundreds of digital signals it an easy choice over cable systems delivering only 2-3 dozen channels.  Because of a lack of investment to expand rural cable lineups, customer erosion has left many systems financially untenable.  One Texas cable system had just a dozen paying customers left when they called it quits.

That’s why the community of McBee is creating a lot of buzz in rural South Carolina.  They reportedly have Time Warner Cable, the nation’s second largest cable operator, in discussions to take over where Pine Tree left off, restoring cable and broadband service for a community of just 700 people.

But that service may come with a significant price — an indefinite franchise agreement that could eventually threaten the area’s local, customer-owned telephone cooperative.

Town Attorney Tony Floyd says Time Warner Cable in eager to expand into rural areas.  But the question is, will McBee concede too much just to attract a cable company?

“This is a long term contract,” he told SC Now. “If you grant a franchise, Time Warner will be able to keep competition out.”

Newly re-elected councilman Shilon Green is the biggest proponent for the deal.  He will propose an ordinance granting a franchise to the cable company at a town hall meeting to be held tomorrow.  He says Time Warner will bring better cable and broadband service to the area and introduce competition for phone service with their “digital phone” product.

But some other council members are concerned about Time Warner Cable’s impact on the area’s local, customer-owned phone company, Sandhill Telephone Cooperative.

Councilmen A.C. “Kemp” McLeod said he’s afraid the cable company could bully the co-op out of business.

“I know Sandhill is expanding their service into the TV business, and they’ve been very good serving rural communities,” McLeod told the newspaper. “I’d like to check with them first.”

“If [Time Warner] wants to come in [and] lowball this area, they can do it, then run our small business out of business,” McLeod said. “A big company can make it look good, make it look appealing, then once they have the market and run the small guy out, then they can raise the rates. At Sandhill, we have representation.”

Rural communities are often bypassed by cable providers because they lack enough closely spaced customers to make the infrastructure costs worthwhile.  Where smaller communities do cluster most of their population inside the town limits, cable systems have been built.  Many are independently owned and operated by small providers because larger companies have shown no interest in serving areas with just a few hundred potential customers.

That has left town leaders with the prospect of offering generous incentives to attract cable operators.  In addition to franchise agreements that never expire, some communities offer significant tax breaks and other concessions to encourage cable operators to bring service to area residents.  Despite complaints from big city residents that Time Warner is hardly benevolent, its brand and reputation do mean a lot in rural areas burned by Pine Tree’s sudden demise last year.

Green hopes the cable giant will bring a level of cable service not seen before in towns like McBee.

“A little competition is good,” Green said.

Time Warner Cable's offices on Mt. Hope Avenue in Rochester, N.Y.

Bad marks to Time Warner Cable, who left large areas of metropolitan Rochester, N.Y., with barely/non-functional Internet service and non-working “digital phone” service for 10 hours yesterday.

No explanation for the outage has been given, which resulted in inaccessible websites and traffic bouncing back and forth between equipment in western New York.  “Digital phone” customers were unable to reach… anyone. Customer service lines were jammed as the outage began just after 12 noon.

The disruption extended from Monroe County into both Wayne and Ontario counties, where residents in Newark and Canandaigua also reported service problems.

Time Warner Cable’s automated customer service attendant was the Helen Keller of cable outages:

“I’m not seeing an Internet outage in your area,” came her reply — even after a local employee recorded a message telling callers there were problems with phone and Internet service across the Rochester region.

While some websites still worked, many more were unreachable.  Some customers reported slow, but working service in the early evening.  Full service restoration to the area would not happen until 10pm.

Time Warner Cable’s social media representatives took several complaints from local residents about the extended outage, without reminding them they are qualified to receive service credits for the interruption.

Here at Stop the Cap!, we will remind you, and in fact encourage you to request a full day of credit for the phone and Internet service you did not have from the cable company yesterday.  Of course, we represent your interests and they represent theirs, which is why credits come only to those who ask.

Stop the Cap! Presents Your Easy Service Credit Request Menu

Customers can request one day of credit for both phone and Internet service (assuming you have both services, of course).  Make sure you request -both- credits if you are entitled.

Sample Request You Can Cut and Paste:

I am writing to request one day service credit for the phone and Internet outage that occurred in Rochester yesterday, Wednesday Oct. 6th.  We were without service for most of the day.  Please credit my account.

Methods to Obtain Credit:

1. Use Time Warner Cable’s Online Chat system, select Billing Inquiry, and type to a customer service representative.
2. Call (585) 756-5000 or toll free 1-800-756-7956 and speak with a customer service representative.
3. Use the Online E-Mail form, select Billing Inquiry, and send a message requesting credit.

[Update: 2:47pm ET:  A day’s credit was provided just three hours after submitting the request using the e-mail method, so this was as painless as can be.]

Videotron last week unveiled 120/20Mbps broadband service loaded down with tricks and traps that will cost many Canadians far more than the $149.95CDN monthly asking price.

Québec’s largest cable operator introduced Ultimate Speed Internet 120 for “users who want to experience the fastest Internet access in Québec.”  But with a download limit of just 170GB per month combined with an upload limit of a paltry 30GB per month, what many Internet enthusiasts are also likely to experience is a huge bill.

Videotron is rolling out a high-speed Internet access service that will give residents of the Québec City area the fastest speeds in Canada. As of tomorrow, Ultimate Speed Internet 120 will support download speeds of 120 mbps and upload speeds of 20 mbps, a first for Québec City.

“Ultimate Speed Internet 120 pushes back the frontier for intensive Internet users,” said Robert Dépatie, President & CEO of Videotron. “Today, we are launching the high-speed Internet service of the future. With the pace at which users’ needs are changing, we are not so far from the day when 120 mbps will be a must-have convenience.”

Astonishing capacity
As of tomorrow, Ultimate Speed Internet 120 will be available in nearly 80% of the greater Québec City area, or to nearly 310,000 households and businesses. The service will be accessible throughout the Québec City area by December 31, 2010 and will then be gradually rolled out to other parts of Videotron’s service area.

Astonishing Overcharging

Yanette is going to the bank to withdraw more funds to pay her exorbitant Videotron broadband bill.

Unlike many other Internet Overcharging plans from Canada’s usage cap-happy providers, Videotron’s highest-speed plans don’t limit the amount of overlimit fees customers will be exposed to once their allowance is exhausted.  In little more than three hours of usage at near-maximum speeds, overlimit fees of $1.50CDN per gigabyte kick in until your usage allows resets the following month.  That’s more than $50 an hour in overlimit fees if running the service near top speeds.

Videotron’s press release says those limits are “well in excess of the current needs of heavy bandwidth users.”

Even worse, Videotron targets its highest speed broadband plan for “traffic management,” which throttles upload speeds dramatically for customers who “have uploaded a statistically significant amount of data,” which is never defined:

Every 15 minutes, a system checks the usage rate for each upload channel (each upload channel typically serves a few dozen modems). If the usage rate has reached a threshold beyond which congestion is imminent, the system identifies the USI 120 modems on that channel that have uploaded a statistically significant amount of data. Uploading from these modems is then momentarily given lower priority. Depending on the severity and duration of the congestion, uploading speed may be slowed for these modems.  […]The above measures are applicable at all times.

That assures customers of a less-than-blazing-fast broadband experience they have paid top dollar to receive.  In effect, this means Videotron’s customers who pay three times the regular price for a concierge-like-broadband-experience are pushed to the back of the line if they actually use it.

A Videotron customer on Broadband Reports wrote, “It’s like driving a jet-car in an alley. You can probably start the engine, but don’t open the gas too much!”

Another customer from Montreal noted it takes no time at all for customers to blow through those kinds of limits:

This is merely a political play to be able to advertise as “the fastest ISP in Quebec/Canada”. Obviously such ridiculous caps are nowhere near the needs of someone who would pay $150 for that kind of speed, but they don’t mind saying things like “well in excess of the current needs of heavy bandwidth users” because 90% of the population, even the journalists themselves, have no idea what gigabytes are in the first place.

Considering most recent games released on Steam/D2D can be over 20GB, one HD episode is 1.3GB to stream each, 170GB is very little.

The cable operator will also throw some small bones to their existing customers effective Oct. 13:

• Customers with Videotron’s standard High Speed Internet service ($42.95CDN – 7.5Mbps/720kbps) will get a 10 gigabyte usage allowance increase — to 40GB of usage per month.  The overlimit fee remains a stunning $4.50 per gigabyte, up to a maximum of $50 per month;
• Upstream speeds on Ultimate Speed Internet 50 service ($81.95CDN – 50/1Mbps) will be doubled from 1Mbps to 2Mbps with no price increase.  Considering that plan limits consumption to 125GB per month, the faster speeds mean unlimited overlimit fees of $1.50 per month will add up even faster.

Delivering high speed broadband at premium prices with usage limits and speed throttles is a business plan disaster.  Customers willing to pay the highest prices for fast broadband don’t seek those Cadillac plans to browse web pages.  They want to leverage the fastest possible speeds to make high bandwidth applications work better and faster.  In a business environment, those faster speeds save time, which saves money.  But broadband providers who engage in Internet Overcharging schemes that limit use and charge confiscatory overlimit fees destroy demand for their own products, because few customers are willing to pay the premium prices these plans charge -and- expose themselves to overlimit fees if they happen to exceed an arbitrary usage limit.

Further south in the United States, Americans are still rejecting overpriced DOCSIS 3-premium speed broadband plans, and they come with no usage caps.  Time Warner Cable’s DOCSIS 3 expansion delivers a premium price on the resulting faster speed tiers, and the company managed to sign up fewer than 2,000 customers as of January.

Now imagine a plan that commanded a premium price -and- slapped a limit on usage.

As they say in Québec: c’est ridicule!

Back in July, Stop the Cap! shared the story of Mark Williams, an eager new customer for Time Warner Cable in Lee, Massachusetts.  The only thing getting in the way of Williams’ desire to shower the cable company with money for its triple-play Internet, cable, and phone service was the $12,000 fee the cable company sought to install it.

That sparked a major incident with Lee’s Board of Selectmen, who called the installation fee “ridiculous.”  It warned the cable company they were prepared to vote Tuesday night to sanction the company, taking money from the $10,000 Time Warner posted with the town as part of its local license agreement, if it didn’t relent.

At issue was Time Warner’s reasoning for the high installation fee, invoking a “long driveway clause” Malcolm Chisholm Jr., of Lee’s Cable Advisory Committee argued was an incorrect interpretation of the town’s license agreement.  Chisholm told The Berkshire Eagle the contract entitles all homes to cable service if electric and telephone service already are available.

Before the board voted, Williams reported the cable company verbally agreed to reduce the installation fee to $4,000.

“They’ve given me a price, but it’s still not cheap,” Williams said. “I’m looking to find an independent contractor who will do the job cheaper.”

Williams acknowledged the cost would be even lower, but he wants the cable buried between his home and the nearest utility pole, which is 500 to 600 feet away. He has his electricity service underground to his home on Fernside Road, near the Tyringham town line.

Time Warner’s typical installation fee of $35 covers up to 200 feet — above ground — with the rest of any necessary cost borne by the subscriber. Williams said he didn’t seek a cost estimate from Time Warner for an above-ground installation.

[…]In a similar case three years ago, Time Warner agreed to drop its claim that a homeowner on Antelope Drive in Lee pay $1,102 for cable installation. The company’s decision followed the town also threatening the company with financial penalties. However, Time Warner officials said the reversal was based on the individual case, rather than agreeing to the town’s interpretation of the contract regarding installation.

What is the last technology product you purchased that never declined in price after you bought it?  If you answered your broadband service, a new study proves you right.

Since there are no public data on what has happened to broadband prices over the last decade, Shane Greenstein, a professor of management and strategy at the Kellogg School of Management, and his co-author Ryan McDevitt, an assistant professor of economics and management at the University of Rochester and a graduate of Northwestern University, analyzed the contracts of 1,500 DSL and cable service providers from 2004 to 2009.

The results every broadband user already knows.

At best, prices have declined only slightly — typically between 3-10 percent, partly from a “quality adjustment” the authors included to account for gradually increased broadband speeds when measuring prices.

Greenstein blames a broadband duopoly for the stagnation in broadband pricing.

Greenstein

“So if you were in such a market as a supplier, why would you initiate a price war?” Greenstein asks. With no new entries on the market, suppliers can compete by slowly increasing quality but keeping prices the same. According to Greenstein, quality is where providers channel their competitive urges.

Meanwhile, once companies have installed the lines, their costs are far below prices. “At that point, it becomes pure profit,” Greenstein says. A company might spend around $100 per year to “maintain and service” the connection, but people are paying nearly that amount every other month. Greenstein says that it is not surprising that prices were high during the buildout phase in the early and mid-2000s, since the firms were trying to recover their costs. “However, we are approaching the end of the first buildout, so competitive pressures should have led to price drops by now, if there are any. Like many observers, I expected to see prices drop by now, and I am surprised they have not.”

The authors also confirm Stop the Cap!‘s long-standing contention that providers are enjoying dramatically reduced costs to deliver broadband to customers, yet are not spending some of those profits on important network upgrades.  That could lead to a broadband bottleneck, Greenstein contends, especially with the growth of online video.  We argue it is a recipe for Internet Overcharging — triggering increased pricing to “pay for upgrades” while limiting usage of broadband service, despite the mountain of profits available today to cope with usage growth.

McDevitt

Greenstein and McDevitt pored over 1,500 broadband contracts over several years, tracking pricing, service bundling, and speed improvements.  Pricing, adjusted for speed improvements, was generally flat.  Because the cable industry has delivered most of the speed growth Americans enjoy, the “quality adjustment” the authors used credited most of the modest price declines to the cable industry, especially for customers moving to bundled packages of services.  The authors found DSL and its providers almost completely stagnant — both in pricing and speed.

The most surprising discovery, Greenstein says, is that national decisions are being made without the type of data that he created in the consumer price index. “As an observer of communications policy in the U.S., I find it shocking sometimes how often government makes decisions by the seat of their pants,” he says. Without real data and statistics, decisions are based solely on who has better arguments—in essence, a debate. A better consumer price index will help produce better decisions for the future of the Internet and its users.

It may also serve as an effective challenge to telecommunications industry lobbyists who engineer their own statistics and claims about the performance of the nation’s phone and cable companies.

Thanks to Stop the Cap! readers Bones and Michael for sending along the story.