Shaw sets the bar lower.

Shaw Cable, western Canada’s largest cable company, has quietly lowered usage caps on virtually all of their broadband plans, while “forgetting” to change the date on their Terms of Service:

• Lite was 13GB, now increased to 15GB ($2/GB overages)
• High Speed was 75GB, now decreased to 60GB ($2/GB overages)
• Xtreme was 125GB, now decreased to 100GB ($1/GB overages)
• Warp was 250GB, now decreased to 175GB ($1/GB overages)
• Nitro was 500GB, now decreased to 350GB ($1/GB overages)

Shaw’s terms of service page documents changes implemented by the cable company and includes the revision date, changed whenever the terms change.  Not this time.  Blogger “Thewunderbar” documented Shaw left the revision date on the document unchanged, suggesting the cable company hadn’t made any adjustments to their service since July, 2010.  After publishing his piece, Shaw quietly updated their website to reflect the correct date.

Cable and phone companies in Canada have established a unique, unchecked duopoly.  They are systematically increasing prices while decreasing the amount of service provided to Canadian consumers.  Shaw’s decrease in usage limits comes with no corresponding price cut for Internet service.

At a time when Netflix streaming is attempting to make inroads into Canadian homes, broadband providers who also have interests in pay television (cable, phone or satellite) are working overtime to make sure no consumer believes they can safely cancel their cable-TV service and watch everything online.

Over the past four years, Canadian ISPs have embarked on a wide range of Internet Overcharging schemes:

• The elimination of flat rate, unlimited broadband service;
• The introduction of low usage allowances designed to trip up an increasing number of consumers leading to,
• The introduction of stinging overlimit fees for customers exceeding usage limits, at prices marked up from 500-5000 percent above wholesale;
• The introduction of speed throttles which artificially slow your broadband experience to speeds sometimes just above dial-up;
• The ongoing limbo dance of usage caps that decrease in size over time, exposing more consumers to overlimit fees, making them think twice about everything they do online.

Nobody has successfully monetized the broadband experience like Canadian ISPs have.  Even as their costs to deliver the service continue to rocket downwards, companies keep on increasing prices, exposing Canadian consumers to unwarranted bill shock from unjustified overlimit fees.  What does it cost Shaw per gigabyte?  An estimated 1-3 cents.  What do they charge you?  Up to $2.

It’s nothing short of a rip-off, and Stop the Cap! urges Canadian consumers to contact their member of Parliament and demand immediate action to ban these innovation-killing, job-retarding, unjustified overcharging schemes.

Unless you own Sprint’s premiere smartphones — the Evo 4G and the Epic, get out your wallet — Sprint is increasing the price on its unlimited data plan by $10, effective later this month.

Evo and Epic owners already pay the $10 “premium data” fee that will be extended to all smartphone customers Jan. 30 (customers on existing contracts will not be affected).

The reason for the price increase?  Heavy usage on its wireless network, which partly includes Virgin Mobile (ending its unlimited service Feb. 14) and Clearwire, which heavily throttles speeds of customers deemed to be “using too much.”

Chief executive Dan Hesse says Sprint will retain its unlimited service plans, which the company calls the best value in the wireless industry.  But the pricing change will present minor challenges as Sprint markets themselves as the least costly.

Sprint's marketing focuses on its unlimited use offers, some of which are about to get more expensive.

Sprint’s “Everything Data” plan, which also includes unlimited cell-to-cell calls will now cost $79.99 per month.  Comparable plans from T-Mobile are priced at $99.99 for that company’s 4G network and $119.98 on Verizon Wireless’ slower, but more ubiquitous 3G network.

“Sprint has been the price leader in the market,” said Jennifer Fritzsche, a Wells Fargo & Co. analyst in Chicago who has an “outperform” rating on the stock. “Sprint may be more confident in the pricing power it has with customers.”

The Wall Street Journal also shares positive views of the price increase from Wall Street:

Wall Street applauded the move, with many seeing it as a sign of pricing power returning to the wireless industry. “It is more likely that Sprint believes that consumers value unlimited and that they can get away with higher pricing,” said Jonathan Chaplin, an analyst at Credit Suisse.

The price hike also suggests that Sprint has seen stronger smartphone growth over the past three months, he added, noting that the carrier likely wouldn’t have made the change if it were still concerned about stabilizing its base on contract customers.

But some other analysts are less impressed with Sprint, especially because of challenges the company faces with its Clearwire partnership.

Patrick Comack from Zachary Investment Research has downgraded Sprint stock, particularly because of technology issues Clearwire faces.

Comack told CNBC Clearwire is stuck with defective spectrum for much of its wireless broadband service.

“It can’t penetrate walls,” Comack said, noting most Clearwire customers are trying to use wireless broadband in the 2GHz range, which presents plenty of problems from obstacles between the tower and the customer.

Comack also believes Sprint’s network simply cannot compete with Verizon Wireless, which he suspects could pick up a number of Sprint customers once it fully activates its 4G network nationwide.

Verizon Wireless network delivers significantly better coverage than Sprint, which focuses on urban and suburban markets, and the major highways that connect them.

[flv]http://www.phillipdampier.com/video/CNBC Sprint 1-12-11.flv[/flv]

CNBC: Debating Sprint and Clearwire, with Todd Rethemeier, Hudson Square Research and Patrick Comack Zachary Investment Research.  (6 minutes)

(Thanks to Stop the Cap! reader PreventCAPS for sharing the news.)

AT&T Mobility thinks it has a winning strategy when it took away unlimited data plans, forcing new customers to choose high-priced, usage-limited alternatives.  But a new survey from Wall Street research firm Sanford Bernstein found AT&T customers will grab, claw, and scream to keep the peace of mind that comes from having the choice of an unlimited use plan.

Sanford Bernstein’s study found a large number of customers willing to abandon any carrier that takes unlimited data away from them.  About a third of the more than 800 people responding said AT&T’s move toward usage-based billing left them with a bad impression of the wireless carrier.  That’s particularly bad for AT&T, which already scores as America’s lowest-rated wireless company according to Consumer Reports.

AT&T mitigated some of the potential damage by letting existing customers keep their unlimited data plans when they ceased selling the unlimited option this past June.  New customers are forced to choose between two limited-use plans — $15 for 200MB or $25 for 2GB of usage (a tethering option is also available.)  Existing customers will only face that hard choice if or when they change phones, presumably in the next year or two.

Had they not grandfathered in existing customers, Sanford Bernstein’s research suggests a large proportion of customers forced to give up unlimited data would quit AT&T even if it meant buying a new phone and paying a higher bill just to get the unlimited data option back.  When AT&T eventually forces these customers’ hands, Sanford Bernstein predicts trouble.

According to the study, more than 58 percent of the lowest data users said they would dump AT&T overboard and switch to another provider with an unlimited plan. For heavier users, more than two-thirds are prepared to take their business elsewhere.

But even with overwhelming evidence like that, AT&T and some Wall Street analysts think Internet Overcharging schemes do customers a favor.

AT&T's mandatory data plans

“Customers generally have strongly negative perceptions about Usage-Based Pricing, and these are often not correlated with self-interest,” Bernstein analyst Craig Moffett said in a research note analyzing the findings of the survey conducted this past summer. “It is fashionable to argue that loyalty to carriers is dead (except perhaps to Verizon Wireless, whose service level is perceived to be markedly higher than that of its competitors). The new conventional wisdom is that carrier loyalty has been replaced with loyalty to the device. But high inclination to switch carriers and phones to maintain an unlimited plan suggest that perhaps the plan itself is more important than either one.”

The Wall Street firm’s research is hardly news to consumers, who have repeatedly expressed loathing contempt for Internet Overcharging schemes like so-called “usage-based billing,” “data caps,” and speed throttles that kick in when carriers decide customers have used the service enough.

Consumers are willing to pay a higher price just knowing they will never face dreaded “bill shock” — a wireless company bill filled with hefty overlimit fees charged for excessive data usage.  They also have no interest in being penalized by arbitrary usage limits that punish offenders with speed throttles that reduce wireless speeds to dial-up or lower.

AT&T was the first major carrier to throw down the gauntlet and force customers into choosing between a “budget plan” that is easy to exceed at just 200MB of usage per month or an inadequate, overpriced 2GB tier that costs just five dollars less than the now-abandoned unlimited use plan.

Wall Street firms like Sanford Bernstein worry their investor clients may be exposed to a revenue massacre when competing carriers like Verizon Wireless, which retains an unlimited plan for now, unveils its own version of the popular Apple iPhone.  The result could be a massive stampede of departing customers headed for top-rated Verizon Wireless, even if it means paying early termination fees.

AT&T spokesman Mark Siegel sees things very differently however, telling CNET News AT&T’s new limited option plans deliver more choice and flexibility for data-hungry users.

Julius Genachowski

Federal Communications Chairman Julius Genachowski signaled recognition he was outmaneuvered by some of America’s largest broadband companies when he told attendees at the Web 2.0 Summit last week that a Verizon-Google compromise on Net Neutrality did serious harm to the Commission’s own plans on the subject of a free and open Internet.

“I would have preferred if they didn’t do exactly what they did when they did. It slowed down some processes that were leading to a resolution,” Genachowski said.

Genachowski was referring to last summer’s sudden agreement between the two tech giants — former opposites on Net Neutrality — regarding a proposed compromise.  Under its terms, Verizon would guarantee free speech rights on the Internet, but Google would concede Verizon’s rights to use limits, throttles, and other “network management” techniques on its wireless networks, which are critically important to Verizon’s bottom line.  Genachowski had been advocating broad-based Net Neutrality protections for all technologies, including wireless.

When word of Verizon and Google’s proposal hit the New York Times, it caused a series of confidential talks among industry players and FCC staffers to collapse.  That wasn’t bad news for consumer groups, who were locked out of the discussions from the start.  But it also may have also taken the wind out of the sails of the regulatory body’s urgency to implement broadband reform policies, as members of Congress opposed to the concept used news of the voluntary agreement as cannon fodder against “unnecessary and intrusive” government regulations.

It also embarrassed the FCC, which Daily Finance calls the most ineffectual regulatory agency in Washington.

Ever since the talks collapsed, all sides have been frustrated by the Commission’s apparent ongoing inaction on Internet policy.  Genachowski had made speeches earlier this year that left many with the impression Net Neutrality was a front burner issue at the Commission.  But as 2010 draws nearer to a close, the Commission has made no progress on the issue.  The incoming Republican Congress will not make it any easier, and consumer groups continue to call on the Commission to act before the end of the year.

Free Press President and CEO Josh Silver issued this statement:

“We are heartened to hear Chairman Genachowski finally express his disappointment with the Verizon-Google proposal. The loud public backlash made it evident that consumers would not accept a deal that would have divided the Internet into fast and slow lanes and allowed Internet service providers to block and prioritize content accessed through wireless devices. Clearly, relying on backroom deals cut between giant industry players is not the way to make policies that protect the public interest.

“The American people are still waiting for the chairman to deliver on his promise to establish real Net Neutrality rules that would prevent AT&T, Comcast and Verizon from creating toll roads on the Web. There is only one Internet, and consumers need clear rules to ensure that they are protected from Internet service providers who are seeking to monetize and monopolize the Web to pad their bottom lines.”

A Facebook group has been established to oppose Clear's Internet Overcharging schemes

The clock may be running out on Clearwire, America’s “4G-WiMax” wireless broadband provider controlled by Sprint, with close investment ties to Comcast and Time Warner Cable, who both resell Clear wireless broadband under their own brands.

At issue is money — the lack of it, and the wireless company’s cash on hand has grown so perilously low, Clearwire was forced to admit to its investors it may not survive beyond the first half of next year:

Based on our current projections, we do not expect our available cash and short-term investments as of September 30, 2010 to be sufficient to cover our estimated liquidity needs for the next 12 months. We also do not expect our operations to generate positive cash flows during the next 12 months. Without additional financing sources, we forecast that our cash and short-term investments would be depleted as early as the middle of 2011.

The Securities and Exchange Commission rules governing public companies represent a public relations nightmare for anyone trying to put a positive spin on bad news, and Sprint chief Dan Hesse desperately tried to make lemonade out of the financial lemon Clearwire increasingly represents for the wireless company.

“If you get to the point where you don’t have 12 months of cash in the till, even if you’ve got negotiations going on, or what have you, you have to, from an accounting perspective, say you have a going-concern issue,” Hesse said. “That doesn’t mean that Sprint and other partners won’t continue to fund Clearwire.”

With Sprint’s 54 percent stake in Clearwire defining the entity as a subsidiary of Sprint, its demise could risk Sprint’s own financial well-being, something Sprint plans to address in 2011, potentially ending its majority stake in the company.

For Hesse and his cable partners, Clearwire’s financial problems are being spun as a result of the venture’s success.  The company says it cannot afford the rapid expansion it has undertaken to expand its WiMax network into additional cities across the country, and faces serious financial challenges from the subsidies consumers demand when buying smartphones.

Hesse particularly complains about the latest whiz-bang smartphones consumers demand, many costing upwards of $600.  Consumers in the United States don’t pay full retail price.  In return for two year contracts carrying steep cancellation penalties, carriers cut the price of most high end phones to $200 or less.

“Subsidies are going through the roof in our industry,” Hesse said. Nearly 40 percent of Sprint customers use the company’s 4G network, and that number is rising.

Revenues are up 114 percent from a year earlier to US$147 million. But Clearwire’s losses for the last quarter alone amounted to $139 million, or $0.58 per share.

As a result, Clearwire slashed 15 percent of its staff, laying off nearly 600 employees and has indefinitely suspended its expansion plans to bring the network to additional cities.  Clearwire will also shutter many of its planned retail outlets — some already built — and delay the introduction of its own branded smartphone.

But even that may not be enough.

Although Clearwire’s growth has been double the level anticipated, achieving a net gain of 1.23 million subscribers in the third quarter — reaching 2.84 million total subscribers, not all of those customers are sticking around once they begin using the service.

Complaints about the company’s poorly disclosed speed throttling continue to be a regular topic on Clear’s support forums.  At least 1,000 complaints have been logged on Clear’s own support forums and elsewhere online about the speed traps.  A Facebook group opposing the schemes has also been established.

Stop the Cap! filed a formal complaint with the New York Attorney General’s office accusing the company of false and misleading advertising and fraud for claiming customers would enjoy “blazing fast speeds” with no limits or speed throttling, despite the fact company officials later admitted they were throttling customers deemed to be “using the service excessively.”  Dozens of additional complaints from Clearwire customers have been filed with state Attorneys General across the country, as well as with the Federal Trade Commission in Washington.

Just how much is too much has never been made clear by the company, but many users report the speed throttle reduces speeds to 250kbps, often for hours at a time.

Clearwire told Electronista:

Throtting is based on the current utilization for each cell tower, and many low-use towers do not throttle speeds at all. For high-use towers, throttling occurs during peak-use times.

A customer’s maximum speed is based on the number of gigabytes of data transferred in the past seven days and the download speeds for the past 15 minutes. Speeds are recalculated every 15 minutes, at which point a throttled customer will be bumped up to a higher speed. Rather than implementing one speed for throttling, the calculations will move customers between 48 different speed brackets.

The worst offenders using peer-to-peer software on Clearwire’s network may face repeated throttling.

Clearwire advertises a faster Internet experience for their 4G service, but many report they receive speeds far slower, even if they have engaged in very little usage.

Many consumers are also unknowingly finding themselves back on Clear’s network even though they signed up with a third party provider.  Clear resells access to its network under a variety of different brands not limited to Sprint, Road Runner Mobile, Comcast Internet2Go, and Best Buy Mobile/Wireless.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Clear Speed Woes 11-10-10.flv[/flv]

This Clearwire customer visits a Clear hotspot location and discovers even on a Wi-Fi network, Clear’s speeds don’t match their advertising claims.  Then, he discovers just how sneaky Clearwire gets in disclosing important information about the company’s wireless speeds customers might want to know before signing up.  (5 minutes)