Thanks for the tremendous support from folks not just here in Rochester, but also in the other cities dealing with this. I am overwhelmed with the excellent ideas, suggestions, and responses and am going to begin bringing them together so we can begin work on several different fronts. I will be personally getting back to many of you asking if you can help head up some of these efforts. This absolutely will need to be a group endeavor, and I’d also like to have others writing articles here and helping to keep each other up to date.

I have a major article to write next about alternatives people in Rochester at least can find, but I’m hunting around for options in other affected cities as well. We’ll begin a mass exodus from Road Runner well before there are any usage caps, if only to let them know as customers we feel abused, taken for granted, and outraged over this naked attempt to profiteer. And we’ll be coordinating a public list of those specifically leaving for this reason.

Then, we’re going to get involved in two additional fronts:

– Public policy initiatives to start looking at legislative or regulatory approaches to market abuse;
– Sending gifts and flowers to Verizon corporate begging them to either invade Rochester or write a check from petty cash and buy out Frontier if they are incapable of competing on a level comparable to what Verizon is providing across the rest of the state.

And we’ll be partnering with other websites that are also working on this issue, particularly in places like Austin where the outrage over this action is growing with the same intensity it is here in upstate New York. Stay tuned!

[Update 1:30pm: Kate Perry, the story’s author has responded:

I’m the reporter who wrote the TWC story for the D&C. First, I didnt rewrite a press release (ouch!). They didn’t even issue one. They broke the story to BusinessWeek and never contacted ayone else.
Today’s story obviously left a lot of unanswered questions (I had 45 minutes ’til deadline to write the piece by the time I finally heard back from Time Warner at 9:45 pm Wednesday) but I thought it was important to get the basic info out there for our readers. I have already posted another story on the website to answer some more questions and I am in the process of writing other follow-ups. Just thought I’d let you know I’m not napping on the job.

I appreciate the clarifying information and the fact this story is not at all the last word the D&C intends to print.  The story we referenced came from the D&C site as of mid-morning today.  It was entirely lacking of any contrary perspective, which was why this article was written.  Should you have any questions from our end, or our readers, send them this way and we’ll get you answers. — Phil]

Why subscribe to a newspaper like the Rochester Democrat & Chronicle that can only be bothered to essentially reprint a press release from Time-Warner?

The D&C’s article telling Rochesterians about Road Runner’s new Internet rationing plan never bothered to say a word about the other side, much less do any independent investigation of the facts.  I guess we’re the media now.  Let’s break it down.

The days of flat-fee Internet charges are dwindling if your provider is Time Warner Cable. Prepare to pay by the gig.

Starting this summer, the company will ask customers to review their usage and pick a plan from 5 gigabytes to 100 gigabytes. If customers use more gigs than their plan allows, they’ll have to pay overages. The new billing system will roll out this fall.

First, this Internet rationing plan is only being imposed on customers in a handful of cities, not across all of Time-Warner’s service areas.  And the company has yet to announce any pricing for their 100GB plan, which we predict will be astoundingly pricey and is frankly still woefully inadequate for consumers who have families that utilize broadband video streaming and other bandwidth intense services.  Comcast doesn’t penalize their customers with higher priced tiers with draconian limits.  They simply tell residential customers to keep it under 250GB per month.

The 5-gigabyte plan will start at about $29.95 a month, Time Warner spokesman Alex Dudley said Wednesday.

And that is about the first and last time you will really see much about this plan.  Time-Warner already offers a lower tier of service for light users, yet almost never promotes it.  Is the company truly on an altruistic bent to save light users money with a plan that you have to peel out of them to discover?

A majority of Time Warner’s customers currently have the standard tier plan, which costs about $49.99. The soon-to-come 20-gigabyte plan will cost about the same and allow customers similar Internet usage.

Similar to what?  The standard tier plan is priced at $39.95 a month for most customers in this area, not $49.99 (unless you do not have a cable TV package.)  It’s hardly “similar” to anyone who uses over 20GB a month, and that is going to be a lot of folks in this area, either currently or in the near future, if they’ve discovered many of the Internet’s broadband-leveraged features, many of which Time-Warner heavily promoted to sign customers up in the first place.  They giveth, and now taketh away, unless you cough up $1/GB more. But how would Mr. Dudley know? He’s not from Rochester. He’s a corporate spokesperson in New York City. When he goes home tonight, his Road Runner will not be rationed.

The new payment plan will be more equitable, Dudley said. Now, a small portion of customers use a massive amount of the company’s bandwidth;  the 25 percent who use the most bandwidth consume 100 times more than the 25 percent who use the least. With the current flat-rate plan, everyone pays for the upgrades to Time Warner’s system that the heavy users’ habits require.

Last summer Frontier tried the same argument.  But when StoptheCap! asked to see their data or independent verification of their claims, we were denied because the data “was proprietary.”  So we take their word for it?  I have no doubt there are extraordinarily heavy users on every ISP’s network.  Those running illegitimate servers, keep peer to peer file swapping applications running 24/7, and those with unsecured wi-fi in their homes can rack up some serious bandwidth usage.  Of course, under their existing subscriber agreements, ISPs have the right to warn and discontinue service for these individuals, many of whom may not even realize what is going on in their own homes.

But independent analysts have no way to verify whether Time-Warner’s claims are inflated puffery, like the “national bandwidth shortage” scare we were hearing about last summer, or represent the dire need to make an immediate change.

All of the warning signs point to a naked cash grab, because of the number of inconsistencies in Time-Warner’s arguments that the D&C can’t be bothered to explore.

With the new plan in place, those who want to use a lot of bandwidth will have to pay for it.

Dudley said increased Internet usage across the board, especially video downloading, has required the company to constantly improve its broadband infrastructure, something that will continue in the future.

“Our customers used 50 percent more this year than they did last year, and we expect them to use 50 percent more next year and the year after that,” he said.

The good news is, most customers won’t pay more, Dudley said. The plan is already in place in Beaumont, Texas, and 86 percent of the customers there pay the same as they did with the flat rate. Of those who pay more, the average monthly overages are about $19, he said.

Beaumont, San Antonio and Austin, Texas, Greensboro, N.C., and Rochester were selected to be part of the usage-based payment trial because they represent a diverse collection of Time Warner users, Dudley said. The results of the trial will determine if or when the company rolls out the payment restructuring nationwide.

You bet they’ll have to pay a lot for it.  Let’s break down how much, for the average users that other cable companies are considering realistic when they develop usage caps:

A 50GB household formerly paid $39.95. They will now pay $64.95.
A 75GB household formerly paid $39.95. They will now pay $74.95.
A 100GB household formerly paid $39.95. They will now pay $114.95.

(based on Time-Warner’s proposed $54.95/40GB tier + overage charges)

And Time-Warner’s argument falls apart on several other levels the D&C account doesn’t consider or question.

If the majority of subscribers are on the lower end of bandwidth growth, where is the urgency to move their rationing plan into place with such draconian caps?  AT&T’s u-Verse sees their average customer usage potentially warranting a usage cap at the 100GB level, something we’re not convinced about either.  Comcast, the nation’s largest cable operator, has a simple limit of 250GB per month on residential customers.  No massive rate increase for customers using the Internet for media streaming who have to find a higher tier.  No draconion limit before subjecting them to outrageous overage charges.  Verizon FIOS has zero usage caps.  It’s a sales point for them, to give customers a reason to switch and to give them the comfort they deserve in using the Internet without having to watch some “gas gauge.”  Is Verizon nearing bankruptcy and crisis with their non-capped service, which runs faster than Road Runner and is provided on an all-fiber network?  Of course not.

And the dirty little secret is, despite Dudley’s claims, this Internet rationing plan is not being “tested” anywhere where they face competition from Verizon FIOS.  It’s a diverse collection of Time Warner customers who all just magically happen to live in areas where competing ISPs either offer significantly poorer service or have plans to institute their own caps or have considered doing so.

But there’s more.  Beaumont, Texas is not Rochester, or Austin, or San Antonio, or Greensboro.  StoptheCap! looked at the Beaumont trial last summer and found it to be hardly representative of what Internet customers would find acceptable.  The Beaumont trial only applied to new customers, not to existing ones.  That skewed the results to show favorable acceptance only by those who signed up for new service figuring they would never exceed the caps.  Yet 14% did so anyway, and many of those were likely first time broadband customers.  And an average monthly overage of $19, half the price of the original monthly subscription, is nothing to sneeze at.

Indeed, we also do not know for certain what happened to those customers who received overage charges.  Did they cancel service and head for a competitor?  Did they succumb to Time Warner’s rationing plan and simply force themselves away from the computer?  Did they force themselves to pay more for a higher tier, or simply discover they maxed out at the highest tier then available (40GB) and will forever more be paying those overage charges on an Internet that is always growing and expanding.

As a customer, do you feel it was “good news” if you didn’t see any price change if you manage to stay within your tier or were you simply relieved?  Are you upset that you now have to be ever watchful of some Road Runner “gas gauge” that ticks ever downwards towards empty everytime you receive spam, everytime some hacker tries to break into your home network, and everytime you do anything on an Internet that is becoming more and more a multimedia bazaar.  Oops, that web ad just cost you a nickle. If Time Warner’s own numbers are right, you can do your own math.  Every year, under threat of overage fees, your consumption is going to increase by 50%.  How long before you find an ever growing Internet bill in your mailbox, with sky high increases coming month after month with no end in sight?

When Road Runner was introduced in Rochester in 1998, I among a handful of others were the first consumer beta-testers of the service.  It’s been a great experience and an excellent service. That’s all about to end because the company has decided to abandon its current business model, which afforded enough revenue to make a handsome profit and still invest money to grow their network and provide support. It’s more profitable to adopt a rationing plan to artificially reduce demand, which then requires fewer investments in network growth to support. It also has the side benefit of stopping the growth of video streaming online, which cable industry analysts ponder might one day threaten the cable TV package. If enough content can be streamed through Road Runner, why have a cable TV package at all? Slam a cap on customers to make that prohibitively expensive, and they can stop pondering.

And the irony is, the same company that tells its customers it cannot afford to give you a-la carte access to limit your video channel package to just those channels you want to watch at a lower monthly price, is the same one telling you that they must drop the unlimited plan they’ve provided for more than a decade because it “cannot afford” to give it you any longer.  Unless, of course, you live in an area where a competitor has no trouble doing that.  No Time Warner usage cap there.

It’s a shame the D&C couldn’t spend a few minutes exploring this themselves.

Time-Warner Road Runner customers face staggering increases in their monthly Internet access bills, according to a report published yesterday in The Business Insider.

Reporter Dan Frommer analyzed the impact of Road Runner’s new usage caps on customers who use their connection for streaming video or other data intensive applications like online backup and file downloads.

What does this mean for you? If you watch about 7 hours a week of standard-def video, or 2.5 hours a week of hi-def Web video, you could easily pass even the 40 GB/$54 a month plan cap. After that, each iTunes movie rental — or Netflix (NFLX) stream, or whatever — could cost $1 to $4 more. Or Hulu episodes could cost $0.30 to $0.50. That doesn’t even include your other Web usage, such as downloading music, using the Web, etc.

Although some Internet users spend their time doing little more than casual web browsing and checking electronic mail, an increasing number of users have found catching up with TV shows online to be easy and convenient, and soon to be potentially very expensive under Road Runner’s new rationed Internet plans.  Customers used to flat rate service will now be forced to contemplate the impact of everything from spam in their e-mail to bug fixes from Microsoft to online file backup, downloading software, and even using the Internet to make and receive telephone calls.  And with usage caps as low as 5GB per month on the economy plan, that’s less data than can be stored on the average portable memory stick.  Just one high definition movie easily will exceed that cap.

We’ll see if Time Warner Cable is able to expand this into more, bigger markets. If it works — and Web video fanatics don’t mind spending $200 per month on Internet service — that’s good news for Internet providers.

But if subscribers bolt in big numbers for competitors like Verizon (VZ), which doesn’t currently cap bandwidth, it could be a disaster. (More likely: It will have to bump caps up to a more reasonable 150 GB or more when customers revolt at $100-plus cable modem bills.)

Rochester residents learned about Time-Warner’s new Road Runner usage caps on this evening’s newscasts.  WHAM-TV covered the story from the angle of the typical 20-something who uses the Internet like many do these days, fully leveraging streaming video and audio services, downloading music, and participating in social networks.  Of all of the groups to be most impacted by the draconian usage cap Road Runner will impose, it will be the under-30 crowd that will never make it with just 20GB per month.  Many won’t even be able to keep within 40GB.  Parents, in particular, will soon face some major problems with how much their kids are using online.

WHEC-TV examined the story from the typical middle class, middle aged customer who is now faced with the prospect of having to monitor virtually everything they do online to make sure their cap isn’t exceeded.  At a time when financial pressures are at the worst for residents of the Flower City, leave it to Time-Warner to stick it to their most loyal customers with what amounts to a huge rate increase when customers are stuck paying overage fees.  Get less service for more money.

WROC-TV recognizes what Time-Warner’s executives don’t.  The Internet is no longer just a convenience.  It’s part of our daily lives, from the time we get up in the morning to the time we retire for the evening.  For many people, a paradigm shift is about to take place as they realize online rationing is here.  And pay particular note to the fact the primary reason this cap has landed on residents of the Flower City comes from the fact there is no competition from Verizon FIOS, the direct fiber-to-home broadband and video service network being constructed in Buffalo, Syracuse, Binghamton, Albany, and New York City.  Instead, we remain saddled with the uninspired and insufficiently resourced Frontier Communications, which saw fit to announce its DSL service would introduce a 5GB usage cap on its customers last summer.

StoptheCap! was integrally involved in fighting that ridiculous usage cap, and its implementation was indefinitely postponed.  But Time-Warner can safely assume that Rochester is a safe place to slam a usage cap on customers, because Frontier would likely follow with its own.  If that happens, there is nowhere else Rochester residents can turn for unmetered Internet access, something that isn’t true throughout the rest of the state.  That simple fact belies the propaganda from Time-Warner’s corporate spokesperson complaining that Road Runner has somehow become “unprofitable.”  Apparently that’s true only here.  Elsewhere in New York, where Verizon is ready and willing to welcome fleeing Road Runner customers, with no usage cap of any kind, it’s apparently profitable enough.

For many, this is well beyond simply a question of cost — it’s also emoti0nal for many now faced with having to literally ration their online usage, just to help fill Time-Warner’s coffers.

Count Your Gigabytes Time Warner Customers

WROC-TV Wednesday, Apr 1, 2009 @10:03pm EST

Time Warner is changing the way you pay for internet. They’re doing away with unlimited internet at a flat rate. As News 8’s Matt Molloy reports – the bigger the user, the bigger the bill.

For Christan Vosburgh the internet is part of the daily routine.

“I use it to check facebook, myspace I would say I use it about an hour and a half, two hours every night,” said Vosburgh.

Vosburgh like other Time Warner customers pays a flat monthly fee for internet. But that will soon change, the company is introducing a new plan – the more you download the more you pay up.

“The average consumer who does some email and downloads some music they won’t need to know too much,” said Ross Aronson of the Computer Doctor in Henrietta.

But Aronson says if you do more, listen up.

“Every single household that has someone that’s 12 or 13 they are not going to be able to get by on the small plan, it’s going to cost everybody more money,” he said.

Think of it like your cell phone plan, say you have a plan right now with 400 minutes. If you go over that limit you get charged for each additional minute. With the internet instead of minutes it will be gigabytes so if you have a plan with 40 gigabytes a month and you go over you’ll pay more.

Plans range from 5 gigabytes a month to 40. Say you download a 2 hour movie from I-tunes, Aronson says that could take about 1 gigabyte. Time Warner will introduce an online gauge that allows you to track your usage.

“You’re going to have to watch that gas gauge and everyone’s gotta know on a constant basis am I downloading something that’s going to cost me extra money,” said Aronson.

For Vosburgh it means keeping tabs on how much she’s doing online.

“I probably won’t be doing as much on the internet because of it unfortunately,” she said.

The new billing will start later this summer in the Rochester area. Plans will range from $29.95 a month to $54.90. For each gigabyte you go over you’ll pay an additional dollar.

I’m still getting over the shock of learning this morning that once again, Rochester NY is going to be ground zero over a major broadband usage cap nightmare. After spending a large part of last summer battling Frontier’s ludicrous 5GB usage cap, which they have suspended implementing, at least temporarily, I get the news that Time Warner is about to devastate this, and three other communities, with the same kind of outrageous bandwidth capping they’ve dropped onto the good people of Beaumont, Texas.

Coming later this summer, according to an article in Business Week magazine, Time Warner will introduce usage caps similar to what is in place in Beaumont. For the average Time Warner customer in Rochester, Greensboro, North Carolina, and Austin and San Antonio, Texas, this means standard service customers paying $40 a month will be limited to 20GB per month, those paying $54.95 a month are limited to 40GB per month. Exceed that at your financial peril – overage fees are $1 per gigabyte.

You don’t need this, and I sure don’t need this. If you review this site, you’ll read the whole sordid history of just how outrageous of a gouge on customers this represents. It’s rank profiteering, not “cost sharing” as their marketing people like to put it. For my western New York city and hometown of Rochester, this is absolutely devastating to our competitiveness and image as a high tech city in the ever-struggling western half of this state.

While upstate and downstate cities from Buffalo to the suburbs of Long Island will escape cap free (for now) because of the aggressive development of Verizon’s FIOS network, Rochester is stuck with the dreary and uninspired Frontier Communications with a DSL product that can never come close to hoping to compete on an even keel with Road Runner, yet had the nerve to try cell-phone like usage caps on their customers last year.

With competitors like that, Time Warner can do whatever they please in Rochester. Frontier again has an opening for marketing gold to drop the idea of usage caps and run an ad blitz telling Road Runner customers they’ll never have to worry whether they can watch Hulu, or play someone else online, or download something from iTunes, because they are not going to throw a draconian cap in your face. The stampede exiting Time Warner would be a sight to see. Frontier can bring themselves a massive new customer base. Alas, I have little confidence Frontier is that inspired. Perhaps they can prove me wrong.

Barring that, Frontier will foolishly bring back their own crazy cap and stick Rochester in the broadband doghouse for years and years. When Penn Yan has unlimited FIOS and Pittsford has a father yelling at his son his five minutes of Internet time is up because of the cap and the cost for exceeding it, we’ll all be down the rabbit hole.

One thing is certain, I cannot fight this battle alone. I am going to need article writers, folks to help organize people not only in Rochester but in the other affected cities, as well as outside help from those who may not have the cap today, but soon might tomorrow.

Broadband policy in this country cannot be allowed to deteriorate into de facto duopolies which ration access at ridiculous prices. Consumption based Internet access only works and is justified when the mark-up is nowhere close to the prices Time Warner and other companies want to charge. A better policy recognizes that no cable company or telephone company has gone broke with their current pricing model. To the contrary. Investments bring profits. Enhancing your existing service with add-ons like Road Runner Turbo is a quick and easy way to bring an extra $10 a month and make everyone happy. Heck, I’d suggest a whole lot of moderate users of Road Runner would rather see an across the board $5 rate increase than these kinds of caps. Or at least the potential of a rationally priced unlimited plan offering, which is simply not available with these kinds of usage caps.

Today’s announcement from Time Warner is a broadband game changer akin to a category five hurricane for many online users. It’s literally the end of things like Apple TV, Slingbox, Netflix’s set top box, and even frequent viewings from Hulu and other future video providers. The bandwidth allowances just make using those products and services untenable. And it only gets worse if you’ve got a family with computers around the house. Those are just more chances you’ll exceed the cap.

The Pearl Harbor moment from this company today brings a day of shock, surprise, and contemplating your options, if any. Tomorrow it brings anger, conviction, and organization to make a difference and send a message that no company can be allowed to get away with this sort of thing. I hope you’ll join the fight.