Dear Content Producer:

Your money train is leaving the station.

Customers are about to start making some very important choices about what they do on the Internet. AT&T announced this month they are going to start capping their DSL customers at 150GB per month and their fiber-to-the-neighborhood U-verse customers at 250GB per month, with overlimit fees for those who exceed them.

Comcast already has a 250GB per month cap, currently loosely enforced. Time Warner Cable has strongly advocated usage-based billing for years. Other telecommunications companies are all either supporting or considering these Internet Overcharging schemes for one reason, and one reason only:

It makes them absolute boatloads of cash.

Canada already lives with this reality. So does Australia, although they’re backing away from it. South Korea? Japan? Europe? Nope. Flat-rate Internet service is the norm there.  In Europe, mobile customers are demanding the removal of bandwidth caps American providers are still trying to attach to customers’ bills.

So how does this impact you? 250GB a month is a lot, and you’ll be fine? Sure. For now.

But what happens when Sony introduces the Playstation 4, or Microsoft announces the Xbox Next? Games aren’t exactly going to get smaller, and online distribution is far and away the future of games and software in general. Right now a game for the 360 or PS3 can be as large as 20GB. PC game enthusiasts routinely cope with 10-12GB game upgrades, and woe be unto you if you have to reinstall your Steam library and have 20-30 (or more) games to restore.

Internet Overcharging schemes make providers, and the lobbyists who do their bidding, very wealthy.

For the “Massively Multiplayer Online” game universe, incremental software updates and upgrades often come through BitTorrent, which exposes users to peer-to-peer traffic well beyond the size of the update itself.  In fact, as games increasingly turn towards Cloud storage and distribution, the traffic adds up.

For online video companies, your very business model could be at risk.  Netflix? Hulu? People are no longer satisfied with grainy, compressed video.  They want HD content, and you’ve answered the call.  But as consumers increasingly face 8-10GB per movie (at 720p, 15GB+ for 1080p), the usage racked up is going to blow past all of these caps.

Who knows what happens in the next five years, or ten.  Considering Canada, where a similar duopoly of broadband providers have lowered usage allowances, do you really expect anything different down here?  The only thing likely to be raised is the monthly price, which remains higher here than in most places around the world.

Google has the right idea with their experimental 1Gbps fiber-to-the-home network. The problem is, that’s only going to serve one (or perhaps a few) communities in the U.S.  The rest of the country will have to survive with ‘Ultra’ cable broadband packages serving up 10-20Mbps service or DSL that barely manages 6Mbps.  If you don’t live in an urban area, tough luck.  You will be lucky to get 3Mbps service.

Broadband service upgrades come painfully slow in the absence of robust competition.  Time Warner Cable and other providers are slowly starting to roll out DOCSIS 3, which allows speeds up to 100Mbps, assuming the average consumer can afford the Cadillac price that comes with it.  Many phone companies continue to bet the farm on their DSL service, which can also be expensive when it’s the only broadband service in town.

Against this backdrop, the rest of the world marches on, and beyond, North America.

South Korea? They’re promising national speeds of 1Gbps by 2013 — for $27 a month!

How has this happened?  Where have we gone wrong?

For starters, the broadband providers have very powerful lobbyists — quite a few of which are ex-legislators. Together, they wage their public policy battles on both the state and federal level, often writing the bills a compliant legislator is willing to introduce as their own.

Washington regulators take a "see no evil, hear no evil" approach to regulating super-sized corporations who can cause them trouble.

The Federal Communications Commission has adopted a “see no evil, hear no evil” approach to broadband, capitulating when a chairman occasionally strays too far into the industry minefield laid to protect their business agenda.  As a result, the agency is a toothless dog.  It recently adopted a “Net Neutrality” policy all but written by Verizon, who ironically is now spending money to fight the rules they helped write.  As a backup, virtually every Republican and several Democrats have teamed up to pass a Resolution of Disapproval seeking to overturn the weak-kneed Net Neutrality rules the FCC adopted.  Lobbyists are well paid to cover every contingency.

Consumers — your customers — can’t do much about this beyond writing their members of Congress and complaining.  But because they did not enclose a check or money order made payable to the respective politician’s campaign fund, the result will be a form letter response weeks, if not months later… after the corporate agenda is enacted into law.

We just cannot fight this battle all by ourselves.  Recognizing the realities of today’s politics, we need your help to fight money and power with money and power.

The video game industry earns billions yearly. You have already faced battles in Washington, so you know how this works. You can fight for your interests while protecting ours by ensuring broadband service is cheap, plentiful, and unlimited. The same story applies to other content producers, such as online video, software, and any other company that wants to move to online distribution to power their business. You cannot succeed if customers are too afraid of using your service because of a bandwidth cap.

The remarkable thing is that countries many Americans cannot find on a map are now beating the United States with better and cheaper broadband while we hand over our digital economic future to a duopoly. That will not buy us better service, just bigger bills for “fast enough for you” Internet access.

So that’s it. Act now. Act strongly. If you cannot stand up for your customers, you may not have any.

Signed: A gamer. A movie watcher. A music listener. An enjoyer of entertainment. A lover of the Internet.

Broadband consumer and reader Jason Ballew penned this guest editorial, with some editing and additions from Stop the Cap! editor Phillip M. Dampier.

“Anything that would embarrass the corporation is – is a privacy interest?” Justice Antonin Scalia asked. “You talk about personal characteristics. That doesn’t mean the characteristics of General Motors. You talk about personal qualities. It doesn’t mean the qualities of General Motors. [The ‘personal privacy’ of a corporation] is a very strange phrase to me.”

Chief Justice John Roberts was also skeptical of AT&T “adjective”-shopping, noting several examples of adjectives with different meanings from their root nouns: “craft and crafty; squirrel and squirrely; pastor and pastoral.”

AT&T is no stranger to the federal court system, pouring millions of dollars into a range of legal actions that suggest the company takes its “Rethink Possible” slogan to literal extremes in some business-friendly legal venues.  [Stop the Cap! covered an earlier California case where AT&T argued consumers do not have the right to file class action lawsuits against the company.]

At Issue: Earlier AT&T Wrongdoing

In 2004, SBC Communications (which now owns AT&T) overcharged the government to provide technology services to several Connecticut schools, under the government’s E-Rate program (funded by telephone ratepayers).  After earlier abuses in the program were exposed and the federal government was threatening to expand investigations, SBC turned themselves in and handed over documents demanded by the Federal Communications Commission.  In return for its cooperation, AT&T got to admit no wrongdoing, but did pay a half-million dollar fine.

That didn’t sit well with CompTel, a Washington-based phone company trade association.  In 2005, Mary Albert, the group’s assistant general counsel e-mailed a request for copies of the documents collected by the FCC in the case.

“I made the request because I was very surprised to see the FCC enter into a consent decree in a case like this,” Albert said. “There has been a serious problem with E-Rate fraud over the years. I don’t mean to accuse AT&T of fraud, but there were clearly [enough] problems with its billing [to the program] that it reimbursed the government.”

Klineberg

Under federal law, documents collected by the government have to be made public under the Freedom of Information Act (FOIA), so long as those documents do not violate national security or expose certain personal, private information (typically home addresses, phone numbers, Social Security numbers, etc.)  Companies also have long-standing, existing exemptions protecting confidential trade secrets and other proprietary business information.

Albert expected to receive documents with “blacked-out” information protecting AT&T’s trade secrets, but instead she ended up with nothing.

AT&T argues the release of -any- of the documents would embarrass the company and violate its personal privacy.  It demanded, and got the FCC to withhold release of the documents and the dispute has been working its way through the court system.

The FCC argues corporations can’t sue over invasion of privacy.  Why?  Because they are an entity, not a person.

How does someone violate the privacy of a corporate entity that doesn’t live, breathe, or even blush?

Legal observers say the case isn’t really about protecting AT&T from potential embarrassment — it’s about curtailing the government’s right to request and receive documents from companies as part of its oversight process and to investigate potential wrongdoing.

On cue, Lawrence J. Spiwak, president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies (which receives substantial funding from AT&T), argues AT&T’s arguments have merit because if corporations are not protected under FOIA’s law-enforcement exemption, they will be less forthcoming to the government.

In other words, if you don’t give AT&T what it wants, it will bury, shred or hide important documents when regulators come looking.