One of the conditions Comcast had to agree to as part of its multi-billion dollar deal to acquire NBC-Universal was to throw a bone to some of America’s poorest households by offering discount Internet access for three years.  Comcast agreed and is rolling out low-speed Internet at a discount in time for the upcoming school year.

“Comcast Internet Essentials,” is the ultimate in bare-bones Internet.  For $9.95 a month, customers in Comcast service areas will get 1.5Mbps download speed and 384kbps upstream, with the usual 250GB usage limit Comcast applies to everyone.  But not just anyone can qualify.  Comcast has limited the program only to households with at least one child qualified to receive free (not discounted) school lunches under the National School Lunch Program.  So if your income-challenged household doesn’t include children, or you pay for your own school lunches, you are out of luck.

Comcast is also denying access to anyone who has had any level of Comcast Internet service within the last 90 days.  So if you’ve scraped enough money together to pay Comcast’s regular prices, the cable company is not going to give you a break.

If your kids graduate or are removed from the school lunch program, your inexpensive Internet service goes with it.

If you have been late on a Comcast bill, or owe the company for unreturned cable equipment, you also cannot receive the service.

The company will also provide vouchers for a “discounted laptop” for $150 — a computer that turns out to be a netbook.  At least it comes with Windows 7 (Starter Edition).

Comcast requires would-be customers to start with an application, available by phone, at 1-855-8-INTERNET (1-855-846-8376).  The merger approval agreement required Comcast to provide the service for three years.  Guess what happens to it when the requirement ends.  No matter — Comcast is turning the entire affair to its public relations advantage, showing up on various media outlets promoting the program as if Comcast thought it up on its own.  Not quite.  We have three questions:

1. How many consumers would sign up for the service if Comcast offered $9.95 1.5Mbps to anyone who wanted it?
2. How many might consider downgrading their current service for something less expensive, especially if they are only interested in occasional web browsing?
3. Will the “digital divide” Comcast decries today be magically gone at the end of three years, when they quietly drop the program?

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KRIV Houston Comcast Internet Essentials 8-8-11.mp4[/flv]

KRIV-TV in Houston explores the various conditions Comcast places on its Internet Essentials program.  (2 minutes)

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/CNN Low Cost Internet 8-10-11.flv[/flv]

Comcast’s David Cohen appeared on CNN promoting Comcast’s Internet Essentials as a way to “bridge the digital divide” — a disparity of access American ISP’s originally created with their excessively high-priced Internet services. (3 minutes)

TDS Telecom, the Madison, Wisc. independent telephone company serving about 1 million landline customers in rural and suburban communities in 30 states, is losing 5.5 percent of those customers every year, as consumers increasingly drop their landline telephone service.

In second quarter financial results reported to investors this week, TDS noted it is increasingly dependent on selling DSL broadband and managed data services to stabilize long term revenues and minimize line losses.  Like many independent phone companies, TDS’ largely rural service areas offer the opportunity of delivering broadband service to areas unserved by cable broadband, and unlikely to find robust cell phone or wireless data coverage.

Vicki Villacrez, TDS’ chief financial officer, reports the phone company now has a 60 percent penetration rate for residential landline customers taking DSL service.

TDS is losing more than 5% of their landline customers a year, which limits potential growth.

“High speed data subscribers grew 6% year-on-year.” Villacrez said. “We continue to attract healthy levels of new customers and they are taking higher speed. Over 80% of our data subscribers are taking speeds of three megabits or greater and 16% are taking greater than 10 megabit speeds.”

Because TDS customers are migrating to faster speeds, where available, the company’s average revenue per subscriber has remained stable at $37 per month.  That comes from a combination of the higher prices some customers pay for better service minus line losses, customer defections and retention offers delivering discounts to those threatening to switch providers.

TDS is also adopting similar strategies other phone companies are trying to hang onto customers: marketing their own triple play package of voice, broadband, and television service.  Like most smaller phone companies, TDS delivers voice and data over their existing copper wire network and relies on a resale arrangement with DISH Network to provide satellite television.

About 26 percent of TDS customers are enrolled in the company’s triple play package, up 2,700 customers in the quarter.

But the company’s cost control measures also signal TDS’ unwillingness to invest noticeably in expanding their DSL footprint to additional customers, or dramatically improve their existing network.  The company admits it plans to limit investment in new residential customers, and consolidated cash expenses were down 2.1% for the period, reflecting reduced spending.

Where is TDS willing to invest?  In data center assets and future acquisition opportunities.  TDS intends to broaden its presence in managed hosting and will continue to explore mergers and acquisition opportunities with other small, independent phone companies.

Customers who flee Bell Canada’s products and services for lower prices and less abusive Internet Overcharging are being encouraged to visit what Bell internally calls its “customer winback” website.  It’s Bell Canada’s place to extend special pricing and promotional offers to those considering a return to the telephone company.  But Stop the Cap! found the offers less than compelling and some of the company’s claims a real stretch:

There are many reasons to switch to Bell.

Switch to Bell for the most reliable home phone service¹. We’ve made many enhancements and are so confident you’ll enjoy our services, they come with a complete 30-day satisfaction guarantee, or your money back².  Switching is easy.  You can keep your existing home phone number³ and we’ll take care of the details with your current service provider.

With Bell Home phone you’ll enjoy:

• The most reliable service
• No reconnection fees

Plus, take advantage of savings on more great Bell services for your home.

Bell Internet – Perfect for sharing

• The largest fibre optic network in Canada
• Upload speeds up to 3x faster than cable⁴
• Free Wireless Home Network

Bell Satellite TV- Over 100 HD channels

• Stunning HD picture quality – 10x better than regular cable
• Canada’s best HD PVR⁵ – set and manage recordings from anywhere
• On Demand movies in 1080p HD – the highest quality of any provider

With Bell Install, you get a complete and customized installation at no charge⁶. Sit back, relax and we’ll set everything up for you.

Join the thousands of customers switching to Bell every week and start saving.

With six footnotes to the fine print in as many paragraphs, warning bells begin to ring almost immediately.  Those footnotes can cost customers some real money:

1. Applies to traditional copper-based (excluding fibre-based) wireline telephony; compared to cable telephony and based on continued service during extended power outages at customer’s home.

In other words, Bell phone service is more reliable because it works when the power goes out, unless it’s from Bell’s Fibe TV.  When power drops, your Bell Fibe phone line goes with it.  But if your phone lines are rotten, nothing will save you from a phone service outage, whether you are a wireline or “fibre-based” customer.  By the way, although Fibe is fibre part of the way, it ultimately arrives for most customers on the same copper wire phone line technology you’ve had for decades.

2. Credit offered on service fees for TV, Internet, Home phone (excluding Mobility), and applicable installation, activation or equipment fees; does not apply to usage fees (such as long distance, additional Internet usage capacity, On Demand TV programming). Client must call within 30 days of activation. Conditions apply, see bell.ca/satisfaction.

Among the other terms and conditions not immediately disclosed:

• No refunds will be issued to customers modifying or upgrading any existing Eligible Services;
• Prior to issuing a refund for equipment purchased directly from Bell, the equipment must be returned to Bell in the same condition as when it was purchased, with all original packing materials, manuals, accessories and associated equipment, along with proof of purchase;
• You may claim no more than one (1) refund under the Bell Satisfaction Guarantee in any 12 month period;
• You must be fully compliant with the terms and conditions applicable to your Eligible Services, and
• All accounts for Bell services must be in good standing.

3. Within same local calling area

A no-brainer.

4. Current as of May 1, 2011. Comparison between Bell Fibe Internet 25 (upload up to 7 Mbps) and Rogers Ultimate Internet (upload up to 2 Mbps).

Bell apparently doesn’t think Quebec’s Videotron is worth mentioning.  They upgraded to 3Mbps upload speeds for their highest tiers last February.  Like AT&T’s U-verse, “fiber to the neighborhood” networks simply cannot deliver the fastest download Internet experience that fiber to the home or cable DOCSIS 3 providers can deliver, although the upload speed for Fibe (when you actually achieve 7Mbps) is a nice change from the neutered speeds cable companies provide for “the up side.”  But Bell counts your upload traffic against the usage allowance.

5. Based on a combination of 30-second skip function, 9-day programming guide, expandable recording capacity and remote PVR feature. Additional equipment required.

Additional equipment costs additional money.

6. Conditions apply; see bell.ca/fullinstall for Bell Internet and bell.ca/installationincluded for Bell TV. For Home Phone, available to customers with Home Phone Choice or Complete, or with Unlimited Canada/US long distance plan, or the Bell Bundle; one-time activation fee (up to $55/line) applies, credited on the account before taxes, and additional charges may apply for installation of a new phone jack.

A complete and customized installation “at no charge,” except for that pesky $55 “activation fee” eventually credited on the account (but you still pay GST/PST on the ‘rebated’ amount).  Some of our readers have complained to us that they’ve had to call Bell, sometimes repeatedly, to get that activation fee credited back.  Bell sometimes forgets.

Unfortunately, for too many in suburban and rural Canada, it’s Bell telephone infrastructure or nothing — no cable provider exists to offer a competitive alternative.  They are the company that charges more for less.

Considering Bell is Canada’s number one advocate for Internet Overcharging, you can do better with almost any other provider.  Let Bell know they can “win you back” when they deliver scheme-free service at a fair and reasonable price.  Until then, tell them they can swing alone.

Sprint’s 4G experience has been nothing to write home about for a number of their customers, who are increasingly disabling the service to save on battery life.

Speed tests of Sprint’s 4G WiMAX experience show increasingly unimpressive results, as the network grows exponentially more crowded with customers trying to capitalize on the higher speeds 4G is supposed to deliver.  The result?  BTIG Research in April found, after exhaustive testing, the average Sprint 4G customer was now getting around 1/1Mbps service from a network that promised to deliver speeds many times that.

This isn't even a contest. (Source: BTIG Research)

Now an increasing number of customers are simply switching the 4G service off completely to extend battery life.

Doug Mahoney, a contributing editor for TechZone360, says he has about given up on WiMAX:

WiMAX tends to stay turned off so I run 3G and there’s no big differences in the convenience of reading email or using simple apps like Twitter and Foursquare.  With more public places starting to offer free WiFi, the case for WiMAX — or LTE — on a smart phone starts to grow weaker between the extra cost and the battery life issue.

Mahoney complains Sprint’s 4G network is simply not robust enough to support consistent speeds and access.  In suburban Washington, he compares Sprint’s 4G coverage to an open air tree, with spotty service scattered across the region.  As a result, his 4G phone spends a lot of time desperately-seeking-signal — a process that accelerates battery depletion.

Given Sprint’s WiMAX “tax” of an additional $10 a month for the service, Mahoney isn’t so certain he’d pay it again on a future Sprint phone.

Are the same speed reductions in store on Verizon’s currently-lightning-fast LTE 4G network few customers use right now?  Perhaps, but Verizon’s brand may force the company to make sure coverage is much stronger than what Sprint customers currently tolerate:

LTE has the same power consumption issues as WiMAX. I suspect Verizon will have better, more ubiquitous LTE coverage just due to the characteristics of the 700 MHz spectrum and physics involved, so I should have faster broadband available in more places rather than the abstract green tree coverage map.

Leap Wireless is trying to save face on less-than-impressive second quarter financial results showing the company is losing its mobile broadband customers who are increasingly weary of Cricket’s price increases and speed throttles.

The company lost at least 132,000 broadband customers since the first quarter, mostly due to price increases, reduced usage allowances and “network management” practices, which reduce speeds to near dial-up for customers who are deemed to be “using too much.”

“On broadband, we tightened our focus to more profitable customers while shedding less profitable ones,” said Leap Wireless CEO Douglas Hutcheson.

Internet Overcharging Facts of Life: What 'Network Management' tools are really used for. (Courtesy: Cricket's Second Quarter Results Investor Presentation)

Cricket recently announced increased pricing on their usage limited plans: $45/month for 2.5GB, $55/month for 5GB, or $65/month for 7.5GB.

With a less-than-robust regional 3G network and higher pricing, broadband customers have decided to take their business elsewhere, despite the company’s recently announced expanded data roaming agreement with Sprint.

Cricket acknowledges their “increased network management initiatives” are partly to blame for the loss, but the company also says increased prices for mobile broadband devices, which used to be available for free after rebate, are also responsible.  Cricket’s least expensive mobile broadband modem now runs just under $90.

Company officials told investors the losses “were expected,” and that the company has been trying to make up the difference with higher value smartphone data plans.  Mobile broadband customers tend to consume more data than smartphone users, so the company’s emphasis on smartphone data users, who use less, will deliver increased revenue at a reduced cost.

Cricket’s CEO explains the company’s renewed focus on keeping highly-profitable mobile broadband customers while effectively getting rid of “heavy users” who have been targeted with aggressive speed throttling over the past year, and now face higher prices for lower usage allowances. Also explored: Cricket’s future 4G LTE network buildout.  August 3, 2011.  (4 minutes)
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Cricket's declining mobile broadband business

In fact, the company’s presentation to investors credits network management tools for driving away “higher usage customers,” allowing Cricket to reap the benefit of “improved revenue yield per gigabyte.”  In short, that means Cricket profits handsomely from data plans they hope customers will only occasionally use.

One of Cricket’s biggest product priorities this year is pitching its Muve Music service, bundled into an all-inclusive $55 wireless prepaid phone plan.  It gives Muve phone customers unlimited access to an enormous downloadable music library accessed on the phone.  Since the service does not allow customers to transfer the music to other devices, record companies are happy to participate.

The biggest downside for some is that the Muve phone becomes your music player — a phone many customers consider a work in progress.  Some critics have labeled the service a “total fail” because of sound quality and DRM restrictions. But since the service is already bundled into the wireless plan at no additional cost, more than 100,000 customers are using it, downloading at least 130 million songs since it was first introduced in January.

Muve Music is another way Cricket is trying to differentiate itself from other wireless providers, and the company may try to expand the Muve Music service to much-more-profitable smartphones in the near future. Cricket hopes to begin selling no-contract smartphones at prices below $100 by Christmas.

Cricket executives answer questions from Wall Street about how the company intends to deal with a decline in mobile broadband customers, and explains their use of network speed throttles. Cricket plans to “follow industry trends” and experiment with “session-based” throttles sometime next year. These allow customers to pay an extra charge to temporarily remove the speed throttle when they need additional bandwidth. It’s just one more source of lucrative revenue from conjured up network management schemes.  August 3, 2011.  (4 minutes)
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Cricket is also planning further expansion of its ‘welfare wireless’ plan — a Universal Service Fund-backed home phone replacement for customers receiving public assistance.  The Lifeline USF subsidy is designed to provide affordable home telephone service to the most income-challenged among us.  Many landline providers charge around $1 a month for the service (before fees), and then charge for every call made.

Cricket’s implementation of this subsidy could draw some controversy because it delivers a $13.50 monthly discount off -any- of their rate plans.  That means qualified customers could pay just over $40 a month for a high end smartphone service plan, subsidized by every telephone ratepayer in the country.

Cricket also plans to launch LTE 4G service starting in early 2012.

Cricket plans to introduce 4G LTE service in 2012.