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Telecom New Zealand Fined For Misleading Customers With “Unlimited” Broadband Offer That Heavily Throttled Speeds

Phillip Dampier December 8, 2009 Broadband Speed, Data Caps, Telecom New Zealand, Video 2 Comments
New Zealand Telecom

Telecom New Zealand

Telecom New Zealand, Ltd. (TNZ) has been fined $352,600US for claiming one of their broadband plans offered “unlimited data usage and all the internet you can handle,” and then promptly throttled speeds to just above dial-up for some users.  The company pled guilty in Auckland District Court to 17 charges brought against it for misleading customers. Under the New Zealand Fair Trading Act, companies must be honest with customers about what their products and services deliver, and may not engage in “gotcha” fine print that radically departs from the marketing campaign for the service on offer.

The case stems from claims made in 2006 that TNZ’s Go Large broadband plan included “unlimited data usage and all the internet you can handle.”  Customers who flocked to the Go Large plan soon discovered “unlimited” meant “limited.”  Customer complaints rolled in when subscribers discovered the plan’s broadband speed was heavily throttled by “traffic management” which dramatically reduced speeds for file sharing networks and other downloading during peak usage times.  Many complained Go Large’s throttled speeds were slower than those on their usage-capped former Telecom plans.

Customers wading through the fine print finally discovered the reason for the terrible speeds.  The company disclosed it used “traffic management” technology to artificially lower speeds during peak usage times and for certain applications that used a lot of bandwidth.  In December 2006 the company quietly expanded that fine-print to broaden the use of traffic management on certain Internet applications to lower speeds at all times of the day and night for every customer.  This for a plan that promised unconstrained speeds.

New Zealand’s Commerce Commission was not impressed and accused the company of not disclosing relevant information to customers, and failed to make sure their service lived up to its marketing hype.

Telecom stopped offering the now-infamous Go Large plan in February 2007, and rebranded it Big Time.  The latter plan continues to offer “unlimited usage” but more clearly discloses the traffic management policies that limit customer speeds.

The company has already paid $8.4 million in refunds to nearly 97,000 customers, and has agreed to an additional $44,000 in reparations to nearly 2,000 additional customers.

Company officials apologized for the misleading advertising, stating “we failed to adequately disclose various qualifications for our plans and we apologize for this.”

[flv width=”480″ height=”292″]http://www.phillipdampier.com/video/nzbroadband.flv[/flv]

Telecom New Zealand’s Big Time plan ($43US per month – add $7US per month if you do not use TNZ for home phone service) doesn’t promise any particular speed, just unlimited use. New Zealand gets two choices: usage capped or speed throttled broadband.  Watch this video and ponder what it would be like to get stuck with this kind of service from your broadband provider. (3 minutes)

A Challenge Providers Will Never Accept: Turn Over Usage Data to Justify Usage Cap Schemes

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

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

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?”

Time Warner Cable Jacking Up Rates in North Carolina; Up to 15% More For the Same Service

Phillip Dampier November 12, 2009 Issues 5 Comments

greedOnce a year, many Time Warner Cable subscribers receive a glossy mailer-newsletter combination telling you how wonderful Time Warner Cable is, and all of the exciting services and values they have to offer.  Somewhere towards the end of their mini-magazine, you learn that comes at a cost… an increasing one at that.  Yes, it’s annual rate hike time for North Carolina, and Triad area residents are receiving notification this week that Time Warner Cable is back for more of your money.

Regular Stop the Cap! reader Fish writes to inform us of the news, posted this evening on WXII-TV’s website.

“It’s lovely how they keep raising everybody’s rates and yet they’re making a crap load of money as it is and refuse to upgrade their services.  If only North State Communications would bring their fiber out to High Point residents faster, I’d tell Time Warner Cable to go screw themselves as fast as [Jamaican sprinter and a three-time Olympic gold medalist] Usain Bolt,” Fish writes.

WXII shares the details:

Customers who bundle Roadrunner high speed Internet, TV and phone services will see a 4.6 percent increase.

Those who purchase those services separately will see the cost go up 15 percent.

Roadrunner Lite service will increase by 12 percent and the cost for customers who have digital video recorders on additional televisions will increase 33 percent.

The company said the cost of programming — especially sports and network shows — is going up and it’s passing that cost along to customers.

Time Warner customers are not happy about the rate hike.

“It’s ridiculous,” Iris Womack said.

Womack said she has TV, Internet and phone bundled together.

Within hours of the news, comments flooded into WXII condemning the rate hike.

  • “How can you tell the company cares nothing about customers? There is no option to pick and choose channels.”
  • “Yes, I got my TWC bill yesterday and extra $5.00 was added to my Road Runner bill. Thanks for the notice TWC. We see how you do your business.”
  • “We have enhanced basic cable, just the 72 channels, and were paying $63 a month. We fall in the 15% increase – that’s almost $10 a month more and we only watch maybe six of all these channels.”
  • “The worst that our economy has been in years, TWC decides it’s time to gouge us?”
  • “It is just pure GREED.”

HissyFitWatch: Rupert Murdoch Declares War on Freeloading Internet Users & Google: Pay Us Or Go Away

Phillip Dampier November 10, 2009 Data Caps, HissyFitWatch, Video 5 Comments
News Corporation chairman Rupert Murdoch

News Corporation chairman Rupert Murdoch

The days of finding free access to News Corporation’s online content, from Fox News to the New York Post to Sky News are numbered, according to chairman Rupert Murdoch.

Murdoch spent several minutes with Sky News Australia political editor David Speers lamenting the mistake News Corporation made in providing free access to its news stories and content websites, declaring the free ride is about to end with the near-universal introduction of “paywalls” requiring Internet users to open their wallets to read or watch their content.

Murdoch says he wouldn’t mind a substantial decline in web traffic from visitors who currently find his companies’ content through Google news and content searches, claiming advertisers don’t place much value on one-time visits.  He prefers customers willing to pay.

Murdoch suggested most of News Corporation’s content will end up looking similar to today’s Wall Street Journal — a few sentences for free and then an invitation to subscribe to read more.  Videos could cost more.

Murdoch accused Google and other indexing services of “stealing” content, and when asked if he would be willing to request that Google stop indexing his websites, Murdoch replied, “I think we will.”

MSNBC’s Rachel Maddow had fun with that answer last night, pondering how Murdoch will attract audiences to his content when the company refuses to allow search engines to index it.

[flv width=”536″ height=”316″]http://www.phillipdampier.com/video/MSNBC Rachel Maddow on Murdoch 11-09-09.flv[/flv]

Rachel Maddow comments on Rupert Murdoch’s apparent plan to ban indexing of his websites’ content by Google. (11/9/09 – 1 minute)

Sky News Australia was in no position to seriously object, as they are partly owned by News Corporation themselves, and Murdoch had little to fear from Speers’ gentle treatment of the media icon.

Among the company’s global media properties:

Beliefnet
Channel V Philippines
Fox Business Network
Fox Kids Europe
Fox News Channel
Fox Sports Net
Fox Television Network
FX
My Network TV
MySpace
News Limited News
Phoenix InfoNews Channel
Phoenix Movies Channel
Speed Channel
STAR TV India
STAR TV Taiwan
STAR World
Times Higher Education Supplement Magazine
Times Literary Supplement Magazine
Times of London

Local Media Properties

Massachusetts: New Bedford Standard-Times
New York: Brooklyn Paper
New York Post
Italy: SKY
United Kingdom: News of the World
Sun
Sunday Times
Times of London
Australia: Australian
Sydney Daily Telegraph
Sydney Sunday Telegraph
Northern Territory News
Brisbane Courier-Mail
Adelaide Advertiser
Adelaide Sunday Mail
Mercury
Melbourne Herald Sun
Sunday Herald Sun
Perth Sunday Times
China: STAR TV Hong Kong
Georgia: Imedi TV
Philippines: Channel V Philippines
Thailand: Star TV Thailand

Other News Corporation Properties

20th Century Fox Home Entertainment
20th Century Fox International
20th Century Fox Studios
20th Century Fox Television
BSkyB
DIRECTV
Festival Mushroom Records
Fox Broadcasting Company
Fox Interactive Media
FOXTEL
HarperCollins Publishers
MySpace.com
National Rugby League
News Interactive
News Outdoor
Radio Veronica
ReganBooks
Sky Italia
Sky Radio Denmark
Sky Radio Germany
Sky Radio Netherlands
STAR
Zondervan

Murdoch also got time to plug his son’s pet political project — getting Great Britain to do away with the television license fee, which creates the necessary financial support to run and maintain the BBC.  James Murdoch said such mandated government support stifled independent journalism.

“Most importantly, in this all-media marketplace, the expansion of state-sponsored journalism is a threat to the plurality and independence of news provision, which are so important for our democracy,” James Murdoch said.

Critics fired back that James’ statements were incredibly self-serving, considering the Murdoch family’s long history of “trash journalism” and agenda-based reporting in the British newspaper industry, and their business history has never shown a regard for preserving institutions of democracy, pointing out many Murdoch operations are politically positioned to the right of center and are not well known for airing every point of view.

Murdoch also directly competes with the BBC through its part ownership of a satellite television company. The BBC, as a public broadcaster, has a strict firewall prohibiting government interference in its content or newsgathering operations, a wall critics accuse News Corporation lacks.

Rupert went further in his Sky News Australia interview, claiming the BBC’s newsgathering operations were partly based on poaching content from his operations.  The BBC is an undisputed world leader in independent global newsgathering, while News Corporation is not.

Murdoch also spent time in the interview defending America’s Fox News from accusations it is partisan, said President Barack Obama was performing his duties “badly,” and answered questions on Australian and American domestic political matters.

Sky News Australia’s full 37-minute interview with News Corporation’s chairman Rupert Murdoch (11/9/09)

Hong Kong Broadband Network Cuts Price in Half – 100Mbps Service for $13 A Month

Phillip Dampier November 2, 2009 Broadband Speed, Competition, Video 9 Comments

Hong Kong Broadband Network, the wholly owned subsidiary of City Telecom, has just slashed the price for its 100Mbps “bb100” fiber optic broadband service.  When a customer finds a friend willing to sign up, both will receive the broadband service for $13 US per month for 24 months, which represents a 50% discount for each customer.

At this price, Hong Kong residents pay just $0.06/megabit-per-second, which includes a speed guarantee that customers will receive at least 80% of advertised speed when surfing domestic websites.

William Yeung, Chief Executive Officer of HKBN noted that at least 32% of Internet users in Hong Kong suffer from broadband speeds below 10Mbps, and the Hong Kong special administrative region of the People’s Republic of China lags behind Korea and Japan in terms of fiber to the home service, something Yeung would like to see changed.

He considers Hong Kong’s broadband development rating “comfortably enjoying today’s applications” to be inadequate, and wants to see Hong Kong have universal access to 100Mbps or greater speed broadband.

“Being the second largest broadband service provider, we have a duty to improve Hong Kong’s global standings,” Yeung said.

HKBN provides speeds up to 1Gbps in Hong Kong over its fiber optic network.  Hong Kong’s broadband ranking is important to the region for economic reasons, attracting new industry and high paying technology jobs with fast, affordable broadband service.

What Hong Kong considers inadequate is still well ahead of the United States, which continues to lag behind several Asian nations in constructing advanced high speed broadband platforms.

Hong Kong’s population density, which poses a challenge for some services, is actually a benefit for telecommunications, because construction costs are lower when wiring densely populated multi-dwelling units and apartments.

The company currently has 391,000 broadband customers, attracted to the company in part by their creative advertising campaigns.

[flv]http://www.phillipdampier.com/video/HKBN Member Get Member Promotion.flv[/flv]

HKBN makes Hong Kong’s population density a net plus for fast, affordable broadband.  William Yeung announces “Member Get Member Promotion” from HKBN and unveils new advertising campaign. (3 minutes)

Several weeks ago, Stop the Cap! included several HKBN ads for your review.  We’ve now obtained English subtitled copies to share, below the jump.

… Continue Reading

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