[Editor’s Note: The fast-changing news on the Time Warner metered usage plan and its temporary demise did not allow sufficient time to present a full history of media coverage of this issue across all of the affected areas. For historical documentation, and in case of any potential resumption of this type of plan, I feel it is important to have this material archived here for future reference. Some of the information in this news report may no longer be applicable.]

Although Time Warner has temporarily shelved the caps they were intending to dump on us this summer, there is every indication the caps will be back by the fall, if company officials have any say in the matter.  But usage caps to solve network bandwidth issues have plenty of unintended consequences.  In Rochester, the enormous deaf community is at significant risk of losing access to a vital, affordable way of communicating.  What the hearing community may take for granted as a convenient extra is, for those who need to communicate in other ways, a fundamental rights issue.

Sometimes the unintended consequences of a public us vs. them campaign, pitting active vs. casual broadband users, have unintended casualties.

WHAM-TV in Rochester picked up this important story before the cap plan was shelved, for now.

A very important angle to this story, particularly for the enormous deaf community in Rochester.  It sheds light on videophone technology, which allows members of the deaf population to sign, using a broadband connection.

The Rochester Business Journal polled its subscribers about Time Warner’s plan to create tiered pricing for broadband with usage caps.  Predictably, the results were largely the same as other polls taken on this question.  The majority of people asked do not want metered broadband.  The one option company officials refused to entertain was leaving the existing service plans in place, until heavy protests about the metered tiers forced them to withdraw.

Roughly 860 readers participated in this week’s poll, which was conducted April 13 and 14. Here are the questions asked:

In general, which approach to broadband Internet service billing do you favor?

Flat-fee billing for unlimited: 78%
Tiered usage-based billing: 22%

Do you think legislation is needed to regulate or prohibit tiered pricing for broadband Internet service?

Yes: 62%
No: 38%

Comments generally expressed skepticism about the prospect of their broadband bills declining.  Most expected they’d be forced to pay more for a reduced level of service. [Thanks to Colin for bringing the poll results to our attention.]

Despite the propaganda campaign underway in the domestic broadband marketplace, especially among cable operators, the NY Times reported today that profits remain high for broadband service while costs for bandwidth, and the level of investment by those companies to provide it, is on the decline.

This comes in marked contrast to the public relations campaigns underway at some broadband companies, which seek to impose punitive caps, limited tiers, steep overlimit fees, and increase prices on residential broadband service.  As late as last week, Time Warner Cable sought to effectively triple the rate for their broadband customers in five cities for an equivalent level of service.  Road Runner subscribers paying $39.95 per month for service would now, under last week’s proposal, have to pay $150 a month for the same service.

The resulting firestorm of customer protest, and the involvement by Congress, temporarily sidelined Time Warner’s tiered pricing scheme, but company officials in the Triad region of North Carolina hinted strongly tiered pricing was coming back after a “customer education campaign” had been completed.

These plans to charge for above-average Internet use “are unjustifiable for almost everywhere in the country except for rural America,” Richard F. Doherty, the research director of the Envisioneering Group, a consulting firm that studies cable technology.

The Times report by Saul Hansell found that network engineers plan their networks based on peak potential traffic loads.

“All of our economics are based on engineering for the peak hour,” said Tony Werner, the chief technical officer of Comcast. “Just because someone consumes more data doesn’t mean they drive more cost.”

This belies Time Warner’s claims that light use customers might be effectively subsidizing heavier users.  In fact, the Times reports that the actual costs for Time Warner are identical whether a consumer watches 50 movies or doesn’t even use their connection that day.

The costs for upgrading networks is declining at an even steeper rate than StoptheCap! realized.  Comcast’s own reports to its shareholders now reveals the upgrade cost to manage the Internet growth Time Warner officials have been worrying about is an average of $6.85 per home to provide double the speed of existing service.  That’s a far cry from a 300% rate increase, per month, that Time Warner was seeking in lieu of punitive caps with substantial overlimit fees.

Costs are dropping even more rapidly with the implementation of DOCSIS 3, a new technology that increases capacity, dramatically raises speeds, and actually reduces expenses for cable systems, who currently have to face sub-dividing traffic congested neighborhoods.  In fact, Comcast told investors it will actually cost them less to provide 50 megabits per second connections than to continue the current level of service, at around 6 megabits per second.

This raises an even larger number of questions about why Time Warner, among other providers, needs to overcharge customers and penalize them for using their Internet connections with enormous overlimit fees that are possible with a tiered rate system, when their own bottom line would benefit from completing the upgrades without making any changes to customer’s bills or level of service.

Hansell also hints domestic broadband providers may be charging too much now.

Comcast has introduced a new 50-megabit-per-second service at $139 a month, compared with its existing service that costs about $45 a month for 8 megabits per second. Time Warner just announced it will charge $99 for 50 megabits per second [Editor’s Note: This service was to be capped at 150GB per month minimum, as per TWAlex].  By contrast, JCom, the largest cable company in Japan, sells service as fast as 160 megabits per second for $60 a month, only $5 a month more than its slower service.

[Editor’s Note: The fast-changing news on the Time Warner metered usage plan and its temporary demise did not allow sufficient time to present a full history of media coverage of this issue across all of the affected areas. For historical documentation, and in case of any potential resumption of this type of plan, I feel it is important to have this material archived here for future reference. Some of the information in this news report may no longer be applicable.]

“Sorry to burst people’s bubble.”

Five words I’ll bet Time Warner’s Regional Communications Vice President Jim Gordon wished he could take back.  Before the eventual “shelving” of the rationing plan (temporarily in our view), you could really begin to sense the growing frustration from the company about the fact they had created a public relations nightmare for themselves with a tiering system that no customer clamored for, and most adamantly opposed.  But those five words, which seemed to dismiss concerns of customers, was actually a major turning point in this battle.  That evening’s news report on Rochester’s most popular newscast caused a mad dash as constituents called and e-mailed the area’s congressional delegation, as well as state and local officials, complaining about the “dismissive attitude” many came away with from Time Warner.  It also brought an avalanche of e-mails here from customers claiming that was the last straw and they were switching providers.

The anchor found the use of the gas gauge concept interesting.  So do we.  It’s a great reminder of what people in this country went through last year when insufficient competition and the quest for extreme profits sent pricing into the stratosphere.  The OPEC of the Internet is an apt term to describe operators trying to meter their way to even fatter profits.

Rachel Barnhart did a fine job here, presenting very detailed information about the Time Warner proposal, especially about the speeds on lower tiers.  There wasn’t much from the other side in this report, but it didn’t stand alone.  The station also did a package on the response of the deaf community to the cap proposal.  WHAM also was the only station in town that put up an extended interview with Jim Gordon, with more Q&A.  Barnhart has a unique perspective on this issue, having dropped her own Road Runner service (for unrelated reasons) in favor of a local cellular carrier’s data service.  She wrote about her experience in her blog.

Not rated. This was not aired. It’s an extended interview for the web. It does offer some excellent insight into the talking points and philosophy the company was using locally to push this plan on consumers. “Why Rochester… the great news is” turned out not to be the sort of framing most people here were impressed with. The speed issue for lower usage customers is not that important. It is for the “power users” who are punitively capped at ludicrously low proposed tiers. The answers don’t get any better beyond that, especially the nonsense about companies “failing” when not preparing for the future.  This from a company with a broadband product that is highly profitable, added 11% more customers in 2008 and decreased investment in its network infrastructure by the same percentage to serve those customers.  You can rebut them yourself in the comments section. The plan that Rochester overwhelmingly thought was right for us is the one we have right now.

The sun is shining, small furry animals are scurrying about the yard, and overpaid lobbying shills for the cable industry are pretending to be “consumer interest groups” to convince Congress that tiered broadband rationing plans are good for everyone.

As part of the promised “education campaign” from Time Warner, Alex from Time Warner tweeted that he found this great article from a ‘consumer organization’ that thinks that tiered broadband and rationing your Internet connection is a grand idea for consumers.

The American Consumer Institute Center for Citizen Research (you gotta love the name — it’s a delicious consumery-sounding word salad… with special interest croutons sprinkled all over the top), conveniently pops up to challenge the Free Press campaign to ban usage caps.

You and your colleagues will very likely soon receive a petition from members of Free Press urging you to launch “an investigation of Time Warner Cable’s plans to impose an unfair penalty against Internet users.” The correspondence will be motivated in substantial part by a recent solicitation to its members containing misstatement of facts, by Free Press, regarding causes and effects of “metered” billing trials.

The occasion for the controversy follows: Time Warner Cable recently announced its intention to expand its (Beaumont, Texas, metered billing trial) to four more markets later this year. The company will restructure its rates into tiers each of which reflects a different usage level by a subscriber. There will be seven rate/service tiers (1, 10, 20, 30, 40, 60 and 100 gigabits with different speeds). The slowest, least bandwidth intensive tier (one gigabit per month with 768 kbps upstream and 128 kbps downstream) is likely to apply to about a third of TWC users and will be priced at $15 per month. The top end tier for “power users” (100 gigabits per month at 10 mbps downstream and one mbps upstream) would be priced at $75 per month. The incremental usage charge for all tiers would be $1 per gigabit over the tier limit.

The proposal and the reaction of Free Press and others have motivated substantial controversy, one result of which was the announcement by Time Warner Cable to postpone the trials pending continuation of its customer education process designed to provide better information to consumers about the details and implications of the plan. According to a company release yesterday, it is developing measurement tools that will permit consumers to monitor their use, thereby eliminating concerns that consumers will be billed for bandwidth usage of which they were unaware.

Ironically, the group’s open letter channels almost the precise position Time Warner has on this issue.  Coincidental? Or do we need to call A&E’s Paranormal State?

The American Consumer Institute’s mission, and this comes right off their website: “consumers’ interests are not satisfactorily represented the wide variety of advocacy and consumer organizations that often represent small subsets of consumers and special interests; ignore distant, collateral and unintended consequences of importance to consumers; and too often mirror advocates’ political views rather than an empirical analysis of consumers’ economic welfare.”  It’s a rhetorical frenzy, and someone is paying for it.

Time Warner's "Customer Education" Campaign Begins

Astroturfing refers to apparently grassroots-based citizen group or coalition campaigns that are primarily conceived, created and/or funded by corporations, industry trade associations, political interests or public relations firms. ACI is rolling out the grass now.  The group has a notorious past, opposing consumer-friendly legislation that would stop anti-competitive practices in the marketplace.

ACI masquerades as a pro-consumer group, but in fact is loaded with folks that have a long history of ties to special interests and lobbyists, though those details are often missing from the online “bios.”  ACI also links to minor consumer groups, pro-industry websites, another well-known astroturfer — the Discovery Institute which helped promote the exaflood nonsense (the Internet is getting too full, log off), and even an insurance industry blog.  Consumer Reports this isn’t.

Back during the net neutrality debate, this same group came out of nowhere with a suspiciously well-funded opposition campaign.  That caused whiplash over at Consumers Union, the publisher of Consumer Reports:

We had no idea that net neutrality — the concept of preventing Internet providers from speeding up or slowing down Web content based on its source, ownership or destination — would be so devastating to consumers. Like nearly every other major consumer group, we here at Consumers Union have been under the impression that net neutrality would actually benefit consumers.

But there it was in black and white, based on a research report by a group called the American Consumer Institute.

Could all of us consumer advocates have been so wrong about this?

Turns out, not so much.

The contact name on the American Consumer Institute press release was Stephen Pociask. The name rang a bell with us, but we weren’t sure why.

But a quick Google search jogged our memory. Pociask is a telecommunications industry consultant and a former chief economist for Bell Atlantic, which these days is known as Verizon.

When Consumer’s Union went and looked up Pociask’s bio on the website, they found it quite impressive, but surprisingly there was no mention of his work as chief economist for Bell Atlantic. Go figure.

Our readers were all over it at the same time we were.

Brion pounced all over this “consumer alert” and actually tried to reason with the author, Larry F. Darby.

I request that you publish the raw data used in the studies to which you refer so they may be reviewed publicly as a scientific paper would be reviewed by others in the field before it is accepted and credible and realistic.

Brion, I wouldn’t wait by your inbox too long for that.  That’s because we’ve dealt with this group before.   Lee Drake, who has also been involved in fighting Time Warner usage caps, did what everyone in this fight needs to do — he checked it out.

Darby Consultants has been the mouthpiece for cable companies and telecommunications firms since 1988, testifying in anti-consumer, pro-telecom positions before Congress multiple times. In addition, he used to be VP of Telecommunications, Investment Banking Group to Lehman Brothers.  Now he’s is a paid gun for the telecom firms, and their main mouthpiece at congressional hearings. You wouldn’t know that based on the name of his not for profit. Interesting how it purports to represent the consumer.

After I suggested Brion take an even deeper look, he found lots more.

But it’s just not Lee and Brion saying it.  Savetheinternet.com, a pro-net-neutrality group, didn’t take long to dredge up:

I went to the ACI site to confirm. Pociask’s bio was posted by ACI, but surpisingly mention of his work as a telco’s chief economist was nowhere to be found.

How can that be? The American Consumer Institute claims that they do not accept any financial support from corporations. “We only accept assistance from individual consumers and consumer groups,” they claim. “The Institute depends on volunteers, particularly those with significant public policy expertise.”

I’m curious. Who might these contributing “consumer groups” be? And do THEY accept money from corporations. Also, if ACI isn’t paying their “volunteers,” who is?

A quick online check reveals that ACI’s Web site is actually registered to the same “volunteer,” Stephen Pociask, who still works in the telecom industry as a paid consultant.

ACI describes itself as “an independent consumer organization dedicated to improving the lives of American consumers.” But its list of experts includes people with deep ties to phone and cable companies.

Broadband Reports, which covers the broadband industry, was also able to effectively label this group, with its “absurdly misleading name,” as a classic example of a astroturfing in action.

The Re-Education Campaign Time Warner promised has begun.