Comcast has changed its explanation why the company’s XFINITY TV service, streamed over Xbox 360 has been made exempt from the company’s 250GB usage cap.

Last week, the company claimed the service traveled over the company’s “private IP” network, exempting it from usage restrictions.  That created a small furor among public interest groups and Net Neutrality supporters because of the apparent discrimination against streamed video content not partnered with the country’s biggest cable operator.

Stop the Cap! argued what we’ve always argued — usage caps and speed throttles are simply an end run around Net Neutrality — getting one-up on your competition without appearing to openly discriminate.

Now Comcast hopes to make its own end run around the topic by changing the language in its FAQ:

Before:

After:

Although the words have changed, the story stays the same.

The key principle to remember:

Data = Data

Comcast suggests its Xbox XFINITY TV service turns your game console into a set top box, receiving the same type of video stream its conventional cable boxes receive.  The cable company is attempting to conflate traditional video one would watch from an on-demand movie channel as equivalent to XFINITY TV over the Xbox.  Since the video is stored on Comcast’s own IP network, the company originally argued, it creates less of a strain on Comcast’s cable system.

AT&T's U-verse is an example of an IP-based distribution network.

But the cable industry’s inevitable march to IP-based delivery of all of their content may also bring a convenient excuse to proclaim that data does not always equal data.  They have the phone companies to thank for it.

Take AT&T’s U-verse or Bell’s Fibe.  Both use a more advanced form of DSL to deliver a single digital data pipeline to their respective customers.  Although both companies try to make these “advanced networks” sound sexy, in fact they are both just dumb data pipes, divided into segments to support different services.  The largest segment of that pipe is reserved for video cable TV channels, which take up the most bandwidth. A smaller slice is reserved for broadband, and a much smaller segment is set aside for telephone service.

AT&T and Bell’s pipes don’t know the difference between video, audio, or web content because they are all digital data delivered to customers on an IP-based network.  Yet both AT&T and Bell only slap usage caps on their broadband service, claiming it somehow eases congestion, even though video content always uses the most bandwidth. (They have not yet figured out a way to limit your television viewing to “maintain a good experience for all of their customers,” but we wouldn’t put it past them to try one day.)

What last mile congestion problem?

Comcast’s argument for usage limiting one type of data while exempting other data falls into the same logical black hole.  Comcast’s basic argument for usage caps has always been it protects a shared network experience for customers.  Since cable broadband resources are shared within a neighborhood, the company argues, it must impose limits on “heavy users” who might slow down service for others.

We've heard this all before. Former AT&T CEO Dan Somers: "AT&T didn’t spend $56 billion to get into the cable business to have the blood sucked out of (its) veins."

But in a world where DOCSIS 3 technology and a march to digital video distribution is well underway or near completion at many of the nation’s cable operators, the “last mile” bandwidth shortage problem of the early 2000s has largely disappeared.  In fact, Comcast itself recognized that, throwing the usage door wide open distributing bandwidth heavy XFINITY TV over the Xbox console cap-free.

As broadband advocates and industry insiders continue the debate about whether this constitutes a Net Neutrality violation or not, a greater truth should be considered.  Stop the Cap! believes providers have more than one way to exercise their control over broadband.

Naked discrimination against web content from the competition is a messy, ham-handed way to deal with pesky competitors.  Putting up a content wall around Netflix or Amazon is a concept easy to grasp (and get upset about), even by those who may not understand all of the issues.

Internet Overcharging schemes like usage caps and speed throttles can win providers the same level of control without the political backlash.  Careful modification of consumer behavior can draw customers to company-owned or partnered content without using a heavy hammer.

Simply slap a usage limit on customers, but exempt partnered content from the limit.  Now customers have a choice: use up their precious usage allowance with Netflix or watch some of the same content on the cable company’s own unlimited-use service.

Nobody is “blocking” Netflix, but the end result will likely be the same:

• Comcast wins all the advantages for itself and its “preferred partners”;
• Customers find themselves avoiding the competition to save their usage allowance;
• Competitors struggle selling to consumers squeezed by inflexible usage caps.

It is all a matter of control, and that is nothing new for large telecom companies.

Back in 1999, AT&T Broadband owned a substantial amount of what is today Comcast Cable.  Then-CEO Dan Somers made it clear AT&T’s investment would be protected.

“AT&T didn’t spend $56 billion to get into the cable business to have the blood sucked out of [its] veins,” Somers said, referring to streamed video.

Obviously Comcast agrees.

“Disruptive” is perhaps too timid a word to use for Skype co-founder Niklas Zennstrom, the man who brought Excedrin-strength headaches to the music industry with file-swapping software Kazaa and streamed video across the net for free with Joost.  Now he wants to blow up America’s business model for expensive wireless data by literally giving it away to wireless phone users.

FreedomPop has a “freemium” business model of its very own — give away 1GB of 4G data through Clearwire to iPhone owners willing to use FreedomPop’s WiMAX-fitted phone case with the hope users will throw more business their way for around $10/GB after the first gigabyte is gone.

Zennstrom

Clearwire has been in the mood to make deals with all-comers to leverage its WiMAX network that carriers like Sprint plan to abandon for LTE 4G service in the not-too-distant future.  By giving away 1GB of free usage (and it remains unclear whether this is a “one-off” deal or if the meter resets to zero every month), the company is set to draw plenty of free press.

FreedomPop is likely to appeal to price-sensitive customers who don’t want to pay providers $30 a month for 2-3GB of usage when a much smaller, cheaper data plan combined with the free service will do.

The WiMAX case, which will fit over Apple’s iPhone, also acts as a mobile hotspot, supporting up to eight concurrently-connected devices.  No change of phone is required as users can connect to the service through Wi-Fi.

Customers will have to place a deposit on the case, likely less than $100, refundable when returned in good condition.

With most people not exceeding 1GB of usage per month, the only cost will be the “bare minimum” data plan customers are required to take with AT&T, Verizon Wireless, or Sprint, which currently runs $15-20 for a few hundred megabytes.

Clearwire’s WiMAX doesn’t deliver coverage to all points in the United States, and its speeds are considerably lower than 4G LTE service.  But free is free – a concept NetZero hopes to use to pitch a similar free 4G Clearwire WiMAX service.  The primary difference is your granted usage allowance.  FreedomPop will provide 1GB — NetZero 200MB.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ How Skype Co-Founder Hopes to Make Money Giving Away Mobile Broadband on FreedomPop 3-23-12.flv[/flv]

The Wall Street Journal explores the business model of FreedomPop.  How can giving away 4G data succeed financially?  (4 minutes)

Maybe this explains why Frontier’s customers in West Virginia and beyond are still waiting for the promised DSL service that actually delivers better than 1Mbps speed at peak usage times.  Who knew it had to be this complicated?

If you want better Canadian broadband with fewer tricks and traps and live in Ontario or Quebec: put the house up for sale, pack up your things, and head west.

Canada’s heavily metered and capped broadband is ubiquitous in the country’s two most-populated provinces where a convenient duopoly of Bell and Rogers in Ontario and Bell and Videotron in Quebec control the vast majority of the broadband market.  But cross west into Saskatchewan and things start to look a lot better.

Canadians telecommunications consultancy The Seaboard Group praised SaskTel, the provincial phone company, for refusing to slap usage caps on its customers.  SaskTel does not deliver the cheapest Internet access by any means, but the company is investing heavily in fiber optic upgrades to turn the page on aging copper wire infrastructure.  Stringing fiber through Regina, Saskatoon and beyond may seem counterintuitive to other providers.  Saskatchewan, one of Canada’s “prairie provinces,” is hardly packed with people.  With more than 20 million Canadians living in Ontario and Quebec, Saskatchewan gives its 1 million residents a lot of open space.  Sparser populations usually translate into higher costs per customer for upgrades, but SaskTel persists.

SaskTel has historically relied on traditional DSL and has competition in larger communities from Shaw Cable, western Canada’s largest cable operator.  Although SaskTel’s DSL delivers lower speeds than Shaw can provide, it does so with no usage limits.

Shaw’s decision to provide considerably more generous usage allowances has kept the pressure on SaskTel to upgrade its infrastructure to compete.

SaskTel CEO Ron Styles told the Leader-Post its fiber optic network will give cable a run for its money, and until then, it is satisfied undercutting cable pricing for broadband, delivering a far better experience than either Rogers or Bell provides eastern Canadians, Styles says.

Seaboard president Iain Grant found that what customers are willing to pay for service can also influence what prices providers charge.

“The price is more based on what you’re prepared to pay,” Grant said.

People in western Canada evidently are not willing to hand over as much money as their friends in Ontario and Quebec.

West of Saskatchewan lies Alberta and British Columbia — Telus territory.  Telus is western Canada’s largest phone company and also principally competes with Shaw Cable.

Shaw has forced Telus to back down on fueling enhanced revenue with usage caps of its own, and has been aggressively upgrading its network with additional fiber optics and DOCSIS 3 technology, forcing Telus to embark on its own upgrade effort.

Macleans reports western Canada’s more-competitive broadband market has been good for consumers, but has also exposed a difference in priorities for providers.

With Shaw breathing down its neck, Telus has committed to a $3 billion fiber optic network expansion in B.C., improved wireless coverage, and more IPTV service.  Macleans notes Telus is the only major telecom or cable company in Canada that hasn’t purchased a television asset, focusing instead on its core businesses of connecting customers.

In eastern Canada, Bell faces Rogers and Videotron.  Critics contend Bell sees no imminent threats there, and the phone giant is spending its money elsewhere, announcing a $3.4 billion acquisition of Astral Media — an entertainment company owning 24 specialty cable channels and pay-TV networks, including the Movie Network and HBO Canada.

Bell’s latest “investment” follows its 2010 $1.3 billion buyout of CTV and last year’s $1.32 billion co-purchase of Maple Leafs Sports and Entertainment (the other buyer was their ‘arch-competitor’ Rogers Communications).

While Telus spends money on upgrading its broadband and video services to customers, Bell is positioning itself to control 34% of Canada’s TV universe.  Bell is also the same company that advocated slapping nationwide usage-based pricing on Canadian broadband consumers to pay for the “network upgrades” it contends were needed to handle increasing demand.

Our good friends at Broadband Reports reported they discovered a new usage meter for Cox Cable customers that implied overlimit fees were on the way for those who exceeded the company’s arbitrary usage caps.

Now Cox Cable’s director of media relations is calling the appearance of the new glitzy usage gauge, and references to “overages” all a ‘big mistake‘:

“Thanks for bringing this to our attention,” Cox Director of Media Relations Todd Smith tells Broadband Reports. “This is an error and the language is being removed from the site. Our policy remains the same, we do not currently charge customers for exceeding bandwidth allowances.”

Cox did not make it clear how exactly the language was included in the meter by accident, and their statement does not preclude the possibility that they’re interested in moving this direction eventually.

Cox's New Meter (Courtesy: Broadband Reports)

Cox Cable customers upset the cable company has a usage meter and caps should first thank them for backing down on charging broadband users overlimit fees for “excessive use.”

After that, it is time to take Cox on and tell them you don’t want your broadband usage metered at all, especially at the prices they are charging for broadband service.

Just last June, Cox Communications President Pat Esser told an audience at the National Cable & Telecommunications Association Cable Show that the industry must keep asking customers what they want and find ways to satisfy those demands.

‘Cable must accept that fact that a robust broadband platform means the ‘industry won’t control everything,’ Esser told fellow cable executives.

Stop the Cap! thinks Esser needs help understanding Cox Cable customers do not want their Internet access limited with caps and additional fees.

You don’t want to check a usage meter and cannot understand why a company that earns incredible profits from broadband that costs less and less to deliver needs to cap your access.

Cable operators don’t unveil new usage meters and mentions of overlimit fees by mistake. It is likely their new usage meter “jumped the gun” and the company temporarily withdrew it.

This is your opportunity to deliver a death blow to Cox Cable’s Internet Overcharging.

Get Involved and Send Cox Executives the Message!

Call Cox Corporate Relations at (888) 566-7751 or e-mail them at [email protected]

Better yet, you can write directly to Cox’s top executive.  We have provided a sample, but you can be most effective writing it in your own words:

Mr. Pat Esser
President, Cox Communications
1400 Lake Hearn Drive
Atlanta, GA 30319

Dear Mr. Esser,

Last June, you told attendees at the National Cable & Telecommunications Association annual meeting that the cable industry needs to keep asking customers what they want and then find ways to satisfy those demands.  As a loyal Cox customer, I am taking advantage of that opportunity to write and express my profound concern Cox Cable has started to limit my Internet usage.  I cannot understand why Cox needs usage caps at a time when broadband revenue is skyrocketing and the costs to deliver the service are actually in decline. There is simply no justification for these limits, particularly after Cox upgraded its network to DOCSIS 3, which supports a considerably larger data pipeline.

Cox and other cable operators are introducing new, faster speeds for customers to earn more revenue.  But with usage caps, there is little incentive to pay more for faster service that remains constrained with a usage limit.  Would you buy a race car you could only drive around the block?

As competition for my telecommunications dollar continues to increase, I am willing to cancel my Cox service over this issue and take my business to another provider.  Some have shown a willingness to waive usage caps in order to win my  business, and I am happy to oblige. I’d prefer to stay with Cox, but not if your company keeps refusing to listen to its customers on this issue.

If you were serious in your remarks last summer in Chicago, then you should follow the lead of companies like Verizon, Cablevision, and Time Warner Cable which have all avoided imposing usage limits on customers. Time Warner Cable believes unlimited broadband should always be available to customers. Cox has imposed limits on everyone, and that has to change.

Very truly yours,

// Your signature here