Phillip “What’s $520 a month between friends” Dampier

The average Ohio household consumes 52 gigabytes of data per month — the equivalent of more than five million emails or surfing the Internet for about 100 hours monthly — up from 28GB in 2012.

Demand for broadband and mobile communications continues to skyrocket as consumers in urban Ohio dump traditional landline phone service at an accelerating rate.

Since 2000, the industry group Ohio Telecom Association reports 64 percent of landlines have disappeared in the state since peaking in 2000. An additional 6-10 percent continue to cut the cord every year, either when elderly customers pass away or when consumers decide to switch to a wireless, cable telephone, or a broadband Voice over IP alternative like Vonage.

Some telephone companies, particularly AT&T and Verizon, argue the ongoing loss of landlines means the service is becoming technically obsolete — a justification to drop old copper phone networks in rural areas in favor of wireless and switching to fiber-fed IP networks like U-verse in urban and suburban areas. But copper landlines do more than just connect telephone calls.

Broadband usage statistics suggest rural customers in Ohio could find their Internet bills exploding if AT&T succeeds in forcing those customers, least likely to face competition from cable providers, to the company’s highly profitable wireless network.

AT&T currently sells rural landline customers DSL service starting at $14.95 a month. A usage cap of 150GB per month technically applies, but remains unenforced.

Customers switched to AT&T wireless service will pay much more for much less.

AT&T’s DataConnect plan, suitable for fixed wireless home use, starts at $50 a month and includes a usage allowance of 5GB per month. With the average Ohio resident now consuming 52GB a month, switching to wireless broadband is a real budget-buster. AT&T’s overlimit fee is $10/GB, so the average resident would face a monthly Internet bill of $520 a month this year. Assuming usage growth continues at the same pace, in 2014, AT&T customers will need to write a check for around $780 a month.

Ohio’s broadband and wireless usage statistics are familiar because they echo the rest of the country. According to Connect Ohio, wireless-only residents are 81 percent urban or suburban, where cell networks provide the best reception; 84 percent are under age 44; 58 percent have a college education; and 63 percent earn more than $25,000 annually.

Those affected by a forced transition to a wireless-only solution are least financially equipped to handle it.

“The least likely to convert to a wireless-only solution would be an older, rural, less educated, lower-income individual,” said Stu Johnson, executive director of Connect Ohio. “Those are probably also the most expensive copper customers.”

The general counsel of the Federal Communications Commission predicts your landline will stop working within the next ten years, abandoned by companies like AT&T and Verizon in favor of wireless service in rural America or fiber (if you are lucky) in the cities.

Phillip “Did you know your landline will be dead within ten years?” Dampier

Sean Lev, the FCC’s general counsel, said in a blog post that “we should do everything we can to speed the way while protecting consumers, competition, and public safety.”

But the FCC seems to be abdicating its responsibility to do exactly that by singing the same song some of America’s largest phone companies have hummed since they decided to get out of the copper landline business for fun and profit.

Traditional boring telephone service is regulated as a utility — a guaranteed-to-be-available service for any American who wants it. Hundreds of millions of Americans do, especially in rural areas where America’s cell phone love affair is tempered by dreadful reception, especially in mountainous areas. Oh, and the nearest cable company is ten miles away.

AT&T and Verizon — two of America’s direct descendants of the Bell System, just don’t want to pay to keep up a network most of urban America doesn’t seem to want or need anymore. In addition to a dwindling customer base, providing a regulated legacy service means having to answer to unions and government-types who make sure employees are fairly compensated and customers are given reasonable service at a fair price. The alternatives on offer from AT&T and Verizon carry no such regulatory (or union) baggage. Prices can change at will and customers have no guarantee they will receive service or have someone to complain to if that service is sub-standard.

While in the past regulators have taken the lead to make sure telephone companies meet their obligations, the new FCC seems to spend most of its time observing the business agendas of the companies themselves.

Lev implied to the Associated Press the FCC is not exactly leading the parade on the future of landlines. He seems more comfortable trying to analyze the intentions of AT&T and Verizon’s executives:

Most phone companies aren’t set to retire their landline equipment immediately. The equipment has been bought and paid for, and there’s no real incentive to shut down a working network. He thinks phone companies will continue to use landlines for five to 10 years, suggesting that regulators have some time to figure out how to tackle the issue.

Lev

AT&T is more direct: It wants to switch off all of its landline service, everywhere, by 2020. Customers will be given a choice of wireless or U-verse in urban areas and only wireless in rural ones. Where U-verse doesn’t serve, AT&T DSL customers will be in the same boat as Verizon customers on Fire Island: pick an expensive wireless data plan, satellite fraudband, or go without.

Verizon prefers a “gradual phase-out” according to Tom Maguire, Verizon’s senior vice president of operations support.

Verizon claims it has no plans to shut down working service for customers, but it does not want to spend millions to continue to support infrastructure fewer customers actually use. That means watching the gradual deterioration of Verizon’s copper-based facilities, kept in service until they inevitably fail, at which point Verizon will offer to “restore service” with its Voice Link wireless product instead.

For voice calls, that may suffice for some, especially those comfortable relying on cell technology already. But at a time when the United States is already struggling with a rural broadband problem, abandoning millions of rural DSL customers only makes rural broadband an even bigger challenge. The wireless alternative is too variable in reception quality, too expensive, and too usage capped.

Moffett

A consolidated cable industry envisioned by Dr. John Malone, currently bidding for a merger between Charter Communications and Time Warner Cable, would feature widespread usage caps and usage billing and could obliterate competition from over-the-top online video providers, predicts a cable industry analyst.

Craig Moffett, now out on his own as co-head of independent Wall Street research firm MoffettNathanson, says broadband usage pricing is the sleeper issue of the last five years.

“I’ve written for years that [usage based pricing] is the single most important issue in all [the telecom sector],” Moffett said in an interview last week. “I’ve always been amazed by how little attention people have always paid to the issue.”

The Street reports that a unified cable cartel limiting consumer access to the Internet or more importantly monetizing that access would immediately devastate streaming video competitors including Netflix, Amazon, YouTube and Hulu.

If usage based pricing were implemented across the cable industry tomorrow, Moffett believes Netflix’s subscriber base would immediately fall from 30 million to 10 million. Nascent video players like Intel and Apple would likely find their business plans untenable, and some analysts believe the sweeping price changes would probably end the shift towards integrating streaming technology into large flat panel television sets.

Consumer backlash

Moffett says the impact would be broadly felt. Other analysts predict it could cause a national consumer uprising, especially at a time when other countries are swiftly moving to get rid of usage limits and consumption-based billing that have never been popular with customers.

“I think it will become clear that over the summer the window may have already closed for the cable operators to move to a usage based pricing theme,” Moffett said.

The Federal Communications Commission has done almost nothing about the issue of usage caps and usage pricing. Former FCC chairman Julius Genachowski even applauded the unpopular price scheme, calling it an important innovation.

Customers call it something else, and an uproar from consumers and competitors alike could overshadow the broadband successes of the Obama Administration. It would represent “a laughable setback for the nation’s communications infrastructure,” predict increasingly pessimistic Wall Street analysts concerned about the inevitable backlash.

The Street:

In a new broadband pricing regime, regulators would have to condone what consumers and competitors would immediately recognize as anti-competitive. Meanwhile, immensely popular content providers such as Netflix, Amazon Prime, Hulu, YouTube and the like would have to lose a Washington lobbying battle to the interests of cable monopolies, their arcane billing and off shored customer service.

Hollywood and broadcast networks would lose marginal new content buyers such as Netflix. Tablet makers such as Apple, Google, Samsung and Amazon would see the value of their fastest growing products put at risk.

Most importantly, it would be an affront to one of the few clear consumer victories for the Department of Justice in the Obama administration.

Cox Communications has found a new way to target cord-cutters and sell television service to its broadband-only customers reluctant to sign up for traditional cable television.

flareWatch is a new IPTV service delivered over Cox’s broadband service. For $34.99 a month, customers participating in a market trial in Orange County, Calif. receive 97 channels.  About one-third are local over the air stations from the Los Angeles area, one-third top cable networks, and the rest a mixture of ethnic, home shopping, and public service networks. Expensive sports channels like ESPN are included, but most secondary cable networks typically found only on digital tiers are not. Premium movie channels like HBO are also not available.

The service is powered by Fanhattan’s IPTV set-top box. Cox offers up to three “Fan TV” devices to customers for $99.99 each.

flareWatch’s channel lineup in Orange County, Calif.

The service is only sold to customers with Preferred tier (or higher) broadband service and is being marketed to customers who have already turned down Cox cable television.

What Cox reserves for the fine print is an admission the use of the service counts against your monthly broadband usage allowance. Preferred customers are now capped at 250GB of usage per month. While occasional viewing may not put many customers over Cox’s usage caps, forgetting to switch off the Fan TV set-top box(es) when done watching certainly might. flareWatch also includes another usage eater — a cloud-based DVR service. Cox does not strictly enforce its usage caps and does not currently impose any overlimit fees, but could do so in the future.

[flv width=”480″ height=”292″]http://www.phillipdampier.com/video/Cox FlareWatch 7-13.mp4[/flv]

Cox’s brief promotional video introducing flareWatch. (1 minute)

Cool… usage capped.

Cox spokesman Todd Smith described the introduction of flareWatch as a “small trial,” and that “customer feedback will determine if we proceed with future plans.”

The service is clearly intended to target young adults that are turning down traditional cable television packages. Most of those are avid broadband subscribers, so introducing a “lite” cable television package could be a way Cox can boost the average revenue received from this type of customer. It may also serve as a retention tool when customers call to disconnect cable television service.

The MSO is selling flareWatch at five Cox Solutions stores in Irvine, Lake Forest, Rancho Santa Margarita, and Laguna Niguel.

Customers (and those who might be) can share their thoughts with Cox about flareWatch by e-mailing [email protected] and/or [email protected]. Stop the Cap! encourages readers to tell Cox to ditch its usage cap, and point out the current cap on your Cox broadband usage is a great reason not to even consider the service.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/The Verge Fan TV revealed is this the set-top box weve been waiting for 5-30-13.flv[/flv]

The Verge got a closer look at the technology powering flareWatch back in May. Fan TV could be among the first set-top boxes to achieve “cool” status. Unfortunately, technical innovation collides with old school cable company usage caps, which might deter a lot of Cox’s broadband customers from using the service.  (4 minutes)

AT&T U-verse broadband has not kept up with the times, limiting speed-craving customers to a comparatively slow 18-24Mbps that hasn’t changed much in a few years. But an AT&T employee claims in the company forums that is all about to change, with new broadband speeds up to 48-60Mbps downstream and up to 10Mbps upstream on the way.

The improvements will not just mean faster Internet speeds, but also better television service. U-verse is an IP-based network using a DSL variant to deliver a broadband pipe into customer homes. That pipe is divided up between television, broadband, and phone service. Previously, U-verse limited television viewing to a handful of concurrent television streams — a problem in large households with heavy TV and DVR usage. The network upgrade won’t eliminate that problem, but it will make it more rare with up to six channels viewed simultaneously.

AT&T customers will also eventually benefit from a switch to “cloud storage” DVR equipment, which will record and store TV shows remotely and stream them back to your television on-demand. This will allow AT&T to sell customers different levels of storage capacity and reduce customer inconvenience should they lose all of their recordings if a hard drive happens to fail.

The employee predicts the speed increases will begin rolling out in July, beginning in Texas.

Not all markets or customers will be able to get the fastest speeds offered by AT&T because U-verse is still dependent on copper wire between a customer’s home or business and the nearest fiber optic link. AT&T intends to boost speeds for some customers using pair bonding to eke more performance from their aging wiring. Customers already buying U-verse’s top 24Mbps tier will receive a free upgrade to 30Mbps when the new speeds are introduced.

Some leaked pricing for the new speeds (discounts may apply in bundled packages):

• 3/1Mbps — $41
• 12/1.5Mbps — $51
• 18/1.5Mbps — $56
• 30/3Mbps — $66
• 45/6Mbps — $86
• 60/6Mbps — $106
• 75/10Mbps — $121

No word on if AT&T plans adjust its barely enforced U-verse usage cap (250GB).