Stop the Cap! reader Davey in Arizona was displeased to receive notification his Internet Service Provider, CommSpeed, suddenly announced an Internet Overcharging scheme that limits customers to two levels of service: a basic $40 plan with a ridiculously stingy 10GB monthly usage allowance, or a more generous (and double the price) $60 plan that comes with a 200GB usage cap.

Davey is particularly upset the company plans to punish customers who exceed the allowance with a stinging $2/GB overlimit fee.  It will not be difficult for customers to blow past  CommSpeed’s standard 10GB plan limit if they discover file backup, online video, or downloading.  If they do, CommSpeed’s overlimit fee will be coming soon to a bill in their mailbox. For those who use the Internet to watch television and movies, the only real options are to watch less or upgrade to a more expensive plan with a more realistic usage allowance that can accommodate high bandwidth applications.

CommSpeed claims their “advanced 4G network combines the best features of cellular, cable modem & DSL, and Wi-Fi networks, without the inherent limitations associated with these legacy systems.”  The company brands itself as “Tomorrow’s Internet Today.”

What they don’t mention is today’s wireless ISP’s are increasingly challenged by the growing usage demands consumers place on providers.  CommSpeed’s claim that their network “was designed and built, from inception, to deliver a full range of broadband content and applications” flies in the face of their 10GB usage limit. Fiber, cable broadband and even telephone company DSL has a better track record handling increasing usage demands, as long as providers maintain investments in their respective networks.

CommSpeed’s usage cap tells the real story — their network may not be able to handle the growing traffic from customers in their northern Arizona service area.

“The Internet has seen tremendous growth in total usage over the last year. New applications are being developed everyday and these applications are causing an ever increasing demand for bandwidth. Quite simply, the content of the Internet has evolved,” CommSpeed explains on a page dedicated to explaining their new caps.

Unfortunately for wireless, until more spectrum and better technology is available, usage limitations are an increasing reality for customers stuck using these networks. It’s why Stop the Cap! rarely recommends wireless broadband as a primary Internet service except as a last resort, when other choices simply are not available.

Still, we’ve seen much worse from other Wireless ISPs.  CommSpeed’s 200GB limit on their $60 tier is more generous than average.  Plus, the company takes the limits off during the overnight hours of midnight to 6AM.

We also think the company’s usage guestimates are a more honest approximation of real-world usage, not the ridiculous “send 10,000,000 e-mails and download 500,000 songs” reassurances we usually see from Internet Overcharging ISPs:

CommSpeed’s old plans ranged in price from $34.95 for basic 768kbps-1.5Mbps service to $54.90 for 1.5-6Mbps service, depending on the technology in use in the area. The new plans bring a $5 rate hike and usage caps — just two reasons why customers like Davey are so upset. They’ll be even more upset if their bill also include overlimit fees. Stay tuned.

[flv width=”608″ height=”380″]http://www.phillipdampier.com/video/CommSpeed 4G – Tomorrow’s Internet Today.flv[/flv]

CommSpeed heavily promotes its newer 4G wireless broadband service, claiming its great for online video, downloading, gaming, and more, as long as you don’t use it too much.  In 2012, CommSpeed throws up limits on their wireless experience.  (3 minutes)

Consumer Reports has unveiled its second annual Naughty & Nice Holiday List, a compilation of companies who deliver more than they promise, or stick their customers with a lump of customer service coal.

Among telecommunications providers, the consumer magazine is slamming Verizon Wireless for its gouge-you-now, tell-you-about-it-later “early warning system” that is supposed to notify customers before they exceed their arbitrary data plan limits.  Verizon can’t let a little customer service get in the way of making a ton of money on extortionist overlimit fees for customers who dare to use too much:

The company tells the Federal Communications Commission that it voluntarily provides ample warning to customers who seem about to exceed their monthly allotment of minutes, messages, or data, so a mandatory rule that would make it issue such alerts isn’t necessary. But we caught Verizon doing — and admitting to — something else. Two staffers who are Verizon customers recently were notified only after they went over their allotment, at which time the company tried to upsell them to a pricier plan. When contacted by our reporter, a company spokesman acknowledged that its voluntary alert system isn’t always reliable. But it now looks like better protection from “bill shock” is on its way. Under a mid-October deal with the FCC, members of CTIA – The Wireless Association, a trade group representing 97 percent of wireless carriers, agreed to begin issuing alerts of impending overages. Full implementation of the alert system could take until April 2013.

That represents at least a year-long Money Party for Big Red, which began enforcing its idea of an “appropriate amount” of usage earlier this year.  Green, silver and gold are not just for the holidays at VZW.

SiriusXM‘s customer service don’t-care-bears also come in for a spanking. On top of hold times that can rival a typical workday, customers who don’t trust the satellite radio company with their credit card number pay a price for their wariness – a $2 monthly bill fee:

If a subscriber wants to receive a bill in the mail and pay by check (the old-fashioned way), he or she will get socked with a $2 surcharge every month. The penalty can be avoided if the customer gives Sirius credit-card information and elects to be billed electronically on a recurring basis.

While AT&T breathes a sigh of relief they are not on the naughty list this year, Cablevision is pleasantly surprised to find themselves with a nice stocking stuffer courtesy of CR.

Telecom companies are a frequent target of consumer displeasure, but this industry giant offers more to subscribers who sign up for its Optimum Triple Play – Internet, phone, and TV service – free movie tickets on Tuesdays and deeply discounted tickets on other days. Customers who sign up for Cablevision’s Optimum Rewards program (it’s free) also get perks like discounted popcorn and soda at participating theaters.

Considering popcorn and soda purchases at most theaters now warrant an accompanying easy financing credit application, that’s no snowjob.

[flv width=”476″ height=”288″]http://www.phillipdampier.com/video/Consumer Reports American Apparel is naughty American Express is nice in latest Consumer Reports list 11-21-11.flv[/flv]

Watch Consumer Reports’ 2011 Naughty & Nice Holiday List of the good, bad, indifferent, and just plain lousy companies that want a piece of your holiday action.  (2 minutes)

CenturyLink announces their own Internet Overcharging scheme; customers call to cancel their service.

CenturyLink is quietly introducing usage caps for its broadband customers that will limit residential customers to between 150-250GB of usage per month.

The Internet Overcharging scheme was inserted into the company’s High Speed Internet Service Management disclosure page, and suggests heavy users are using an inappropriate amount of data, slowing down the network for other users:

The majority of CenturyLink High-Speed Internet customers make great use of their service and comply with the CenturyLink High-Speed Internet Subscriber Agreement. An extremely small percentage use their service excessively, or at such extreme high volumes, that they violate the terms of their CenturyLink High-Speed Internet Subscriber Agreement. While this high volume use is very rare, CenturyLink is committed to helping these customers find a high-speed Internet solution to better meet their needs.

CenturyLink is announcing the following Excessive Usage Policy (EUP), which will become effective in February 2012:

CenturyLink’s EUP applies to all residential high speed Internet customers and is only enforced in the downstream (from Internet to customer) direction. Video services provided by CenturyLink PRISM™ TV are not subject to the usage limits. The policy has the following usage limits per calendar month:

• Customers purchasing service at speeds of 1.5Mbps and below, have a usage limit of 150 Gigabytes (GB) of download volume per month.
• Customers purchasing service at speeds greater than 1.5Mbps, have a limit of 250GB in download volume per month.

There are no overage charges or metering fees for usage as part of the Policy.

The company exempts their own video service PRISM TV from the scheme.

“It’s another CenturyLink ripoff in action, and despite their claims that they treat all data the same, they certainly do not,” says CenturyLink customer Rob Cabella. “Their video programming is sent from local facilities, as data, down the same pipe as their broadband service, yet they conveniently leave their TV product out of the usage cap equation.”

Prism customers can watch unlimited TV, but face limited broadband usage over the exact same pipeline.

Cabella says PRISM operates much like AT&T’s U-verse.  Fiber provides service into individual neighborhoods and then standard copper phone lines deliver service the rest of the way to customer homes.

“It’s one pipe they divide up for video, phone, and Internet, but they are protecting their video service by limiting broadband use while leaving their television and phone service completely unlimited,” Cabella says.  “Video is the biggest bandwidth hog of all, and CenturyLink invites you to watch as much as you want, as long as it comes from them.”

Cabella thinks the very fact CenturyLink is offering unlimited video disproves their argument about ensuring appropriate levels of broadband usage.

“Their local facilities get overloaded to the point where they temporarily stop signing up customers, yet it’s a video free-for-all, as long as you get your video from ‘the right place’ and that sure isn’t Netflix or Hulu,” Cabella notes.

CenturyLink’s limits will apply to broadband customers signed up for PRISM or the company’s traditional DSL service.  Uploads will not count against the cap.

For the moment, overlimit fees will not be charged and the company will send warning letters to offenders that invite customers to migrate “to a higher speed if available or to a business grade data service that better fits their bandwidth usage.”

Customers who repeatedly exceed their usage limits after being notified may have their service discontinued.

Cabella isn’t waiting.

“I called my local cable company which still offers unlimited service and signed up this morning,” Cabella says. “CenturyLink didn’t even know what I was talking about when I called and said their website must have been hacked or in error.  Why would I want to do business with a company that doesn’t even have a clue what their own business is doing?  Goodbye CenturyLink.”

A class action lawsuit accusing AT&T of methodically over-measuring wireless customers’ usage and subjecting them to overlimit fees has been re-assigned to arbitration because AT&T wrote terms into contracts denying customers the right to pursue grievances any other way.

Plaintiff Patrick Hendricks claimed AT&T was systematically overstating customer usage by 7-14 percent with a rigged usage meter.  Hendricks claims some customers were overbilled by as much as 300 percent for phantom data usage that he claims never took place.  The measuring errors found in a two-month study cited by Hendricks were in AT&T’s favor, potentially exposing customers to surprise overlimit fees or, more recently, speed throttles.

But U.S. District Judge Charles Breyer shut down the court case, heard in a San Francisco federal courtroom.  Breyer ruled that since AT&T’s contracts bar lawsuits by customers, Hendricks must pursue his case in the venue required by AT&T — arbitration.

“[AT&T’s contract] requires the use of arbitration on an individual basis to resolve disputes, rather than jury trials or class actions, and also limits the remedies available … in the event of a suit,” Breyer ruled.

Ironically, Breyer is the same judge that dissented from an earlier case — AT&T v. Concepcion, that ultimately set the stage allowing AT&T to force consumers to pursue arbitration and practically speaking, remove their right to pursue class action relief.

“What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?,” Breyer wrote. “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30’.”

Brandi M. Bennett, a California attorney who specializes in intellectual property law, considers arbitration clauses to be a major threat to class action cases:

“Class actions make it possible to find recourse for individuals with damages that make traditional litigation impractical. AT&T Mobility v. Concepcion appears to leave the average consumer at risk of being defrauded by corporations for $10, $20, $50 without any practical remedy. If one million customers are damaged for $20 each, a corporation can improperly realize a $20 million gain. Class actions serve to prevent that.”

Arbitration can offer a poor substitute, because most arbitration firms are beholden to their corporate clients for repeat business.  An arbitrator perceived to be exceptionally pro-consumer stands little chance of being retained when corporate defendants pay the arbitration firm for its services.  Some arbitration policies require consumers and the company to split the costs of arbitration, but those costs often easily exceed the value of the original claim, discouraging customers from pursuing a refund settlement.

Companies understand that reality, which is why clauses requiring arbitration to settle disputes are increasingly common in service contracts.

Hendricks’ original suit sought restitution for the entire class of consumers and damages for breach of contract, unjust enrichment, unfair and fraudulent business practices, unfair competition, and violations of the federal Communications Act.  Most arbitration clauses require consumers to file individual complaints, which few may ultimately do considering arbitration proceedings may occur in another city and often requires the complainant to appear in person to provide testimony.

One of the principal components of Internet Overcharging is the so-called “usage meter,” a measurement tool designed to help customers keep track of their usage so they don’t exceed arbitrary usage allowances and face overlimit penalties or speed throttles.

But with no government agency or independent watchdog monitoring the accuracy of the meter, providers can claim any amount of usage they wish, and stick customers with the bill.

Telecom New Zealand is the latest ISP forced to admit its usage meter was wildly inaccurate, with nearly 100,000 accounts impacted by faulty meter measurements between November 2010 and June 2011.  At least 47,000 faced punitive measures including substantial overlimit fees or throttled speeds for exceeding usage limits, even though they actually didn’t.  Now Telecom has admitted the meter was wrong, it violated the Fair Trading Act in the process, and is refunding $2.7NZ million dollars in overcharges. It was either that or face substantial fines from the Commerce Commission.

Telecom called the error that forced some customers into more expensive plans to avoid additional overlimit fees “an incorrect perception about […] data usage.”

“We’re pleased to have reached a settlement with Telecom and that they have made prompt refunds directly back to the customers who have lost out,” said Stuart Wallace, Commerce Commission Competition Manager. “Telecom brought this issue to our attention as soon as they were made aware by their customers and have co-operated fully with the Commission. Due to Telecom’s immediate admission of a breach of the Fair Trading Act, followed by appropriate compensation to customers, the settlement is the best possible outcome for those customers and avoids potentially lengthy and costly court hearings paid for by taxpayers.”

It’s the second usage measurement failure announced by the company this month.  In a separate move, Telecom agreed to pay $31.6 million to five of its competitors overcharged for wholesale broadband service.

When technically-savvy customers realize they are being billed for non-existent usage and the media takes an interest, providers eventually disclose their mistaken measurement tools.

“Customers are expected to keep these ISP’s honest,” says Stuart Littlejohn, a Stop the Cap! reader in Wellington. “ISP’s never suggest their meters are anything except accurate until they are caught with their fingers on the scale, and always in their favor.”

Littlejohn has already received a refund from Telecom for illegitimate overcharges he incurred earlier this year.

“It was an absolute nightmare,” he shares. “We thought someone hacked our wireless network or someone in the home was lying about their usage, all theories encouraged by Telecom employees who pointed the finger at everyone but themselves.”

Littlejohn says after Telecom granted one credit as a “goodwill gesture,” subsequent overcharges that went unexplained were his problem, not theirs.

“After the first credit, everything else is your fault,” he says.

Littlejohn caught the company red-handed when storm damage disrupted his service for nearly a week, and Telecom’s usage meter recorded 22GB of usage on his down-and-out service anyway.

“They ultimately couldn’t argue with themselves, but they tried at first,” he says. “Then I told them to call the department responsible for repairing my service and they quickly learned the line they said used 22GB was out of service at the time the usage was supposed to occur.”

“Without that, they would have probably insisted I still owed them for that ‘usage.'”

Littlejohn wasn’t alone.  Other overbilled customers appealed their case to the New Zealand Herald last June, and two weeks later, Telecom admitted their usage measurement tool was faulty.  But by then, customers were already paying for the erroneous charges:

The Herald has received detailed internet usage logs from two Telecom customers – one in Dunedin and the other in New Plymouth – which show over-counting broadband downloads, in one period by as much as 139 per cent. Both have raised the matter repeatedly with Telecom, but have yet to get an explanation.

“We showed Telecom five days of data as early as February 14,” says director Mark Peisker of Dunedin’s CueClub. “There was massive variance between our data and that reported by the Telecom usage meter. I said to them: ‘Your counting has very little to do with what comes down my line to me’.”

CueClub’s data taken from its two internet routers shows an average of 62 per cent over-counting during a three month period – the worst month being May when Telecom counted an extra 118.24 gigabytes (GB) of usage amounting to $203.97 in overcharging.

“They’re crooks, plain and simple, and only when they were caught did they admit their mistakes, and the only ‘penalty’ they are paying is refunding their ill-gotten gains,” Littlejohn says. “Where is the substantial fine to send a message stealing from your customers is wrong?  A strong fine would tell Telecom they made a costly mistake not worth repeating.”