Phillip "Try the Gouda" Dampier

Welcome to the Broadband Usage Whine & Cheese Festival

Midcontinent Communications earlier this month announced a big boost in broadband speeds for more than 250,000 customers in the Dakotas and Minnesota, bringing up to 100/15Mbps service to customers who wanted or needed that speed.

MidcoNet Xstream Wideband, made possible with a DOCSIS 3 upgrade, delivers 1/1Mbps ($30.95), 30/5Mbps ($44.95), 50/10Mbps ($64.95), or 100/15Mbps ($104.95) service.  Those are mighty fast speeds for an upper midwestern cable company, especially in states where 1-3Mbps DSL is much more common.

The cable provider was excited to introduce the speed upgrades earlier this month, telling customers:

At up to 100 Mbps, MidcoNet Xstream^® Wideband is fast. But today’s online experience is about more than speed. It’s about the power and capacity to run every streaming, blogging, downloading, surfing, gaming, chatting, working, playing, connected device in the house. All at the same time. MidcoNet Xstream Wideband delivers…it’s everyone in your entire family online at once, doing the most intense online activities, no problem.

But now there is a problem.  Customers spending upwards of $105 a month for the fastest Internet speeds are actually using them to leverage the Internet’s most bandwidth-intensive services, and evidently Midco isn’t too happy about that.  Todd Spangler, a columnist for cable industry trade magazine Multichannel News, was given a usage chart by Midco, and used it to lecture readers about the need for usage caps: “One thing is clear: Broadband service providers will all need to do something to contain the rapidly rising flood of Internet data.”  The implication left with readers is that limiting broadband usage is the only way to stem the tide.

Midco's not-so-useful chart looks mighty scary, showing usage growth on their 100Gbps backbone network, but leaves an enormous amount of information out of the equation. (Source: Midcontinent Communications via Multichannel News)

Spangler quotes Midco’s vice president of technology Jon Pederson: “Like most network providers we have evaluated this possibility, but have no immediate plans to implement bandwidth-usage caps,” he said.

So Midco is more than happy to pocket up to $105 a month from their customers, so long as they don’t actually use the broadband service they are paying top dollar to receive.  It’s an ironic case of a provider desiring to improve service, but then getting upset when customers actually use it.

We say ironic because, from all outward appearances, Midco is well-aware of the transformational usage of broadband service in the United States these days:

If you have ever once said “my Internet is too slow,” then you need MidcoNet Xstream Wideband. With it, you can do all the cool things you’ve heard people are doing online. Explore all the great stuff your online world has to offer. Play the most intense games. Try things you could never do before, from entertainment to finance, video chat or video streaming. Like we said, MidcoNet Xstream Wideband is all about speed, capacity, choice and control.

What this means for you is that you’ll be able to do things like:

• Download and start enjoying entire HD movies in seconds, not minutes.
• Stream video and music without a hitch while you simultaneously perform other intense online tasks.
• Choose from three different pipelines, from 3.0 to 1.0, for the capacity and price your family needs.
• Monitor your bandwidth use to determine if you need more capacity or can do what you want with less.
• Upload files or signals, such as webcam footage, faster than ever before possible for a better online experience.
• Watch ESPN3.com. Your Favorite Sports. Live. Online.

Just don’t do any of these things too much.  Indeed, when providers start toying with usage caps, it’s clear they want you to use your service the same way you did in 2004 — reading your e-mail and browsing web pages.  Real Audio stream anyone?

Let’s ponder the facts Mr. Spangler didn’t entertain in his piece.

Midco upgraded their network to DOCSIS 3 technology to deliver faster speeds and provide more broadband capacity to customers who are using the Internet much differently than a decade ago, when cable modems first became common.  Some providers and their trade press friends seem to think it’s perfectly reasonable to collect the proceeds of premium-priced broadband service while claiming shock over the reality that someone prepared to spend $100 a month for that product will use it far more than the average user.

Part of the price premium charged for faster service is supposed to cover whatever broadband usage growth comes as a result.  That’s why Comcast’s 250GB usage cap never made any sense.  Why would someone pay the company a premium for 50Mbps service that has precisely the same limit someone paying for standard service has to endure?

Cringely

Midcontinent Communications is a private company so we do not have access to their financial reports, but among larger providers the trend is quite clear: revenues from premium speed accounts are being pocketed without a corresponding increase in investment to upgrade their networks to meet demand.  Inevitably that brings the kind of complaining about usage that leads to calls for usage caps or speed throttles to control the growth.

We’re uncertain if Midco is making the case for usage caps, or simply Mr. Spangler.  We’ll explain that in a moment.  But if we are to fully grasp Midco’s broadband challenges, we need much more than a single usage growth chart.  A “shocking” usage graph is no more impressive than those showing an exponential increase in hard drive capacity over the same period.  The only difference is consumers are paying about the same for hard drives today and getting a lot more capacity, while broadband users are paying much more and now being told to use less.  Here is what we’d like to see to assemble a true picture of Midco’s usage “dilemma:”

1. How much average revenue per customer does Midco collect from broadband customers.  Traditional evidence shows ARPU for broadband is growing at a rapid rate, as consumers upgrade to faster speeds at higher prices.  We’d like to compare numbers over the last five years;
2. How much does Midco spend on capital improvements to their network, and plot that spending over the last 10 years to see whether it has increased, remained level, or decreased.  The latter is most common for cable operators, as the percentage spent in relation to revenue is dropping fast;
3. How many subscribers have adopted broadband service over the period their usage chart illustrates, and at what rate of growth?
4. What does Midco pay for upstream connectivity and has that amount gone up, down, or stayed the same over the past few years.  Traditionally, those costs are plummeting.
5. If the expenses for broadband upgrades and connectivity have decreased, what has Midco done with the savings and why are they not prepared to spend that money now to improve their network?

While Midco expresses concern about the costs of connectivity and ponders usage caps, there was plenty of money available for their recent purchase of U.S. Cable, a state-of-the-art fiber system serving 33,000 customers — a significant addition for a cable company that serves around 250,000 customers.

A journey through Midco’s own website seems to tell a very different story from the one Mr. Spangler is promoting.  The aforementioned Mr. Pederson is all over the website with YouTube videos which cast doubt on all of Spangler’s arguments.  Midco has plentiful bandwidth, Mr. Pederson declares — both to neighborhoods and to the Internet backbone.  Their network upgrades were designed precisely to handle today’s realistic use of the Internet.  They are marketing content add-ons that include bandwidth-heavy multimedia.  Why would a provider sell customers on using their broadband service for high-bandwidth applications and then ponder limiting their use?  Mr. Pederson seems well-aware of the implications of an increasingly connected world, and higher usage comes along with that.

That’s why we’d prefer to attack Mr. Spangler’s “evidence” used to favor usage caps instead of simply vilifying Midco — they have so far rejected usage limits for their customers, and should be applauded for that.

Robert X. Cringely approached Midco’s usage chart from a different angle on his blog, delivering facts our readers already know: Americans are overpaying for their broadband service, and the threat of usage caps simply disguises a big fat rate hike.  He found Midco’s chart the same place we did — on Multichannel News’ website.  He dismisses its relevance in the usage cap debate.  Cringley’s article explores the costs of broadband connectivity, which we have repeatedly documented are dropping, and he has several charts to illustrate that fact.

You’ll notice for example that backbone costs in Tokyo, where broadband connections typically run at 100 megabits-per-second, are about four times higher than they are in New York or London. Yet broadband connections in Tokyo cost halfwhat they do in New York, and that’s for a connection at least four times a fast!

So Softbank BB in Tokyo pays four times as much per megabit for backbone capacity and offers four times the speed for half the price of Verizon in New York. Yet Softbank BB is profitable.

No matter what your ISP says, their backbone costs are inconsequential and to argue otherwise is probably a lie.

Cue up Time Warner Cable CEO Glenn Britt, who said precisely as much Thursday morning when he admitted bandwidth costs are not terribly relevant to broadband pricing.

We knew that, but it’s great to hear him say it.

Cringely’s excellent analysis puts a price tag on what ISP’s want to cap for their own benefit — their maximum cost to deliver the service:

That 250 gigabytes-per-month works out to about one megabit-per-second, which costs $8 in New York. So your American ISP, who has been spending $0.40 per month to buy the bandwidth they’ve been selling to you for $30, wants to cap their maximum backbone cost per-subscriber at $8.

[…] IP Transit costs will continue to drop. That $8 price will most likely continue to fall at the historical annual rate of 22 percent. So what’s presented as an ISP insurance policy is really a guaranteed profit increase of 22 percent that will be compounded over time because consumption will continue to rise and customers will be for the first time charged for that increased consumption.

This isn’t about capping ISP losses, but are about increasing ISP profits. The caps are a built-in revenue bump that will kick-in 2-3 years from now, circumventing any existing regulatory structure for setting rates. The regulators just haven’t realized it yet. By the time they do it may be too late.

Unfortunately, even if they knew, we have legislators in Washington who are well-paid in campaign money to look the other way unless consumers launch a revolution against duopoly broadband pricing.

Cringely believes usage caps will be the form of your provider’s next rate increase for broadband, but he need not wait that long.  As the aforementioned CEO of Time Warner Cable has already admitted, the pricing power of broadband is such that the cable and phone companies are already increasing rates — repeatedly — for a service many still want to cap.  Why?  Because they can.

Consumers who have educated themselves with actual facts instead of succumbing to ISP “re-education” efforts designed to sell usage limits under the guise of “fairness” are well-equipped to answer Mr. Spangler’s question about whether bandwidth caps are necessary.

The answer was no, is no, and will always be no.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Midco D3 Upgrade Promo 7-11.flv[/flv]

Jon Pederson’s comments on Midcontinent’s own website promoting its new faster broadband speeds can’t be missed.  He counts the number of devices in his own home that connect to the Internet, explains how our use of the Internet has been transformed in the past several years, and declares Midco well-prepared to deliver customers the capacity they need.  Perhaps Mr. Spangler used the wrong company to promote his desire for Internet usage caps.  Pederson handily, albeit indirectly, obliterates Spangler’s own talking points, which makes us wonder why this company even pondered Internet Overcharging schemes like usage caps in the first place.  (10 minutes)

While Netflix has grown like wildfire across Canada, providing unlimited streamed video entertainment for $8 a month, a few cable operators at risk of premium channel cord-cutting have responded with their own movie streaming services, at least one that temporarily found itself the subject of controversy when it was introduced a few weeks ago.

Shaw Communications’ Movie Club is that cable company’s answer to Netflix — offering a flat rate streaming service available over broadband or through your Shaw set top cable box for $17 a month ($12 if you forgo HD movies).  For that, Shaw promises unlimited viewing, without any usage caps so long as you stream movies from your cable box and not from your home computer.

But is it worth it?

With the assistance of one of our readers in Calgary, we were able to give Shaw’s Movie Club a trial run.

Availability

Evidently, Shaw Movie Club works best if you live in Calgary or Edmonton, where Shaw has been testing their new “Gateway” system, which is a combination home video terminal/DVR designed to compete with phone company DVR boxes which can record 4-6 shows simultaneously and deliver recordings to multiple sets in the home.  A number of Shaw customers on less-advanced, older cable systems may find the service a lot less convenient to use.  Outside of urban Alberta and in British Columbia, we found instances where customers could request to view Shaw Movie Club titles, but they had to be watched on your cable set top box.  For now, the most aggressive marketing for the service seems to be in Calgary and Edmonton, perhaps for this reason.

The Selection

When we sampled the service, we found about 150 titles available for viewing — hardly a wide selection.  Although many popular, semi-recent movies were available for viewing, the selection was comparable to what one would find from one or two premium movie channels.  Existing premium subscribers may find more than enough to watch from Super Channel or Movie Central On Demand, which are included with your subscription to one or both networks.  In the States, HBO, Cinemax, and Showtime all offer their own virtual “on-demand” channels that let viewers select most of the titles shown on each respective network for instant, on-demand viewing.  Shaw Movie Club felt very much like one of these channels, based on the limited selection.

In comparison, Netflix does not make it easy to count the actual number of streamed movies they have on offer at any one time, but the selection was clearly more substantial on Netflix, with a much deeper catalog.  But Canadians are also punished by Netflix because the service does not yet have agreements in place with studios to stream the same titles to both American and Canadian audiences.  Americans have a much larger selection of titles to stream.  Shaw’s agreements with studios clearly emphasize more current titles, and there are titles available on Shaw’s service that are not available from Netflix.

Winner: Netflix – You have a better chance of finding something to watch on Netflix.

Loser: Shaw Movie Club – But the service may have access to movies you wish Netflix provided.

Shaw's biggest competitor

The Value

At up to $17 a month, Shaw Movie Club is expensive.  In fact, it’s a lot more expensive if you do not subscribe to Shaw’s cable television.  It’s required to sign up for the streaming service.  That seems counter-intuitive to provide video streaming but deny broadband-only customers the opportunity to buy, but not when you consider such services are designed to prevent cable-TV cord cutting, not enable it.  Shaw charges nearly $40 in Alberta for basic cable service, so that’s a steep entry fee to pay before handing over another $12-17 just to stream movies.

For those uncomfortable video streaming on home computers, Shaw’s set top box solution lets you watch shows on-demand directly on your television.

Shaw initially found itself mired in controversy when it appeared they would exempt their video streaming service from their own usage caps — a clear anti-competitive move against Netflix, which does count against your cap.  But Shaw quickly clarified their position to state only set top box viewing was exempt from their caps.  We’re not certain exactly what distinction Shaw is trying to make beyond the political, because data is data — it all arrives on the same cable.  Shaw would argue their video may travel over their “television” bandwidth when delivered to set top boxes and their broadband network when delivered over the Internet.  But Time Warner Cable has shown it can deliver video over its Apple iPad app to cable subscribers over Time Warner’s internal network, which means it costs next to nothing to provide.  We suspect there is nothing technically precluding Shaw from exempting all of its Movie Club viewing from usage caps, beyond the political implications of doing so.

Winner: Netflix – $7.99 a month is an afterthought when you consider how much you can watch.

Loser: Shaw Movie Club – Up to $17 a month is a very steep price to pay for fewer than 200 movie titles to watch.

Video Quality

Both services delivered high quality video, even over a remote connection we used to sample Shaw Movie Club.  Shaw’s HD streaming performed with absolutely no technical flaws, evidence they are paying careful attention to deliver video from networks as close to their customers as possible.  Shaw’s HD streaming was often better than Netflix’s online streaming, but Netflix’s network consumes a lot less bandwidth, an important distinction if you have a large family piling on your broadband connection at the same time.  Shaw’s video is a bandwidth piggy, and will eat into your usage allowance fast if you use it over the Internet.

We recommend watching Shaw’s service over your existing set top box whenever possible.  It’s convenient and won’t count against your usage allowance.

A Tie: Netflix and Shaw Movie Club both deliver excellent quality video with no technical flaws experienced.  Shaw Movie Club has a larger selection of HD movies, but that is tempered by the fact watching them will rapidly erode your usage allowance if watching online.

Rogers Communications has announced usage cap and speed adjustments for many of its Internet service plans — changes that will bring increased allowances for some of the company’s most premium customers.

Rogers has modestly adjusted usage caps on its popular Extreme Internet Plan a year after slashing them, and brings dramatic increases for the company’s most expensive service tiers, even as it leaves usage caps unchanged for the bulk of their customers subscribed to the basic Express service plan:

A Rogers spokesman explained the changes.

The bar gets raised only for those who agree to spend more.

“With the rapid rise of online video, social media and online gaming, the way Canadians use the Internet is changing dramatically. We’re always reviewing our plans to ensure they meet your changing needs so starting later this month, our Hi-Speed Internet tiers are being upgraded with faster download speeds and higher data allowances for customers on Rogers DOCSIS 3.0, our best and fastest wireline network,” wrote RogersMarina on the company’s RedBoard blog.

Apparently the way Canadians use the Internet with Rogers’ most-popular Express plan hasn’t changed much, because Rogers leaves that cap unchanged at 60GB of usage per month.  Rogers previously reduced its usage cap for its Extreme level of service from 95 to 80GB, days after Netflix announced it was bringing its streamed video service to Canada.  Rogers’ latest increase amounts to just 5GB more usage than customers had during the spring of 2010.

The increased speeds that some usage tiers are gaining with the introduction of DOCSIS 3 technology come “at no additional cost” according to Rogers, but the company also mentions it charges higher prices — $1.50-$3 more per month — for the required DOCSIS 3 modem.

For customers certain to exceed their allowance, Rogers will sell you an insurance plan to protect your wallet from their $0.50-5.00/GB overlimit fees:

“Also starting later this month, you’ll be able to add a data assurance option if you’re currently using the Express and Extreme tiers. For an extra $20 per month, you’ll receive an extra 80 GB of data on top of your existing allowances. If you don’t need quite as much data, you can also get an additional 20 GB for an extra $5 per month.”

Most customers were not impressed.  Take Matt, for example:

“Speed increases are great but all they allow us to do is to get to our low data caps faster. These days with YouTube, Netflix, VOIP, and work VPN (heavy work from home user) $60 for 100 GB of data is pretty expensive, especially when a GB of data probably costs Rogers pennies per user. Competitors are starting to offer higher data caps for a similar price. In Toronto you can get a plan for same or slightly cheaper starting with 200GB.  In Vancouver you can get 50Mbps for $29 a month with a 400 GB data cap!”

Cambo notes the usage upgrades come easy for higher-priced tiers, but customers on the most popular Express tier have no increase in their usage allowance at all.

“You guys just don’t get it,” he writes on RedBoard.  “Speed isn’t the issue. Usage is. Why is it every tier gets a usage bump except the most popular Express? What is the point of bumping the speeds up and not significantly increasing usage, so we can get to the caps even faster I suppose. Sounds like a ploy to get people to spend more, to me.”

Andrew agreed:

“I also agree with this. I would rather get a larger usage bump than a speed bump — I don’t see a point in raising speeds when the data cap is still extremely restrictive. After all, I’d want to enjoy using the Internet, rather than monitoring my usage restrictions every day. If Rogers really listened to the customers, they’d know that most of us are more critical of their plans’ usage restrictions than their speeds.”

AT&T warns DSL customers they can watch 10 High Definition movies per month... and use their Internet connection for absolutely nothing else, unless they want to incur an overlimit fee of $10.

AT&T has released a phoney baloney video for their customers purporting to “explain” broadband usage and the company’s completely arbitrary usage limits on DSL and U-verse customers: “A single high-traffic user can utilize the same amount of data capacity as 19 typical households. Lopsided usage patterns can cause congestion at certain points in the network, which can slow Internet speeds and interfere with other customers’ access to and use of the network.”

Too bad these claims are not verified with actual facts.

Meaningless statistics

AT&T’s claim that less than two percent of their customers use 20 percent of available bandwidth is frankly meaningless to the company’s DSL and U-verse hybrid fiber-copper networks.  For years, phone companies made a marketing point that unlike cable broadband’s shared network, their DSL service was never shared with anyone else in a neighborhood.  Therefore, running it at a trickle or full speed ahead should have no impact on any other customer.  The only exception to this rule comes from phone companies that under-invest in their middle mile and backbone networks.  For AT&T, that means trying to serve too many customers on inadequate equipment ranging from a poorly planned network of D-SLAMs, which connect individual customers with a fatter pipeline back to the central office, or an inadequate network between the central office and AT&T’s regional backbones.  Fiber, such as that used by AT&T’s more modern U-verse system, completely solves any capacity issues.  Broadband traffic is only a tiny percentage of the bandwidth consumed by AT&T’s IPTV video service — the one that delivers U-verse TV to your home.  AT&T imposes no viewing limits on customers, of course.

Any actual capacity crunch would only show up during peak usage periods — when AT&T customers of all kinds pile on their broadband connection at the same time. AT&T’s usage cap regime does next to nothing to mitigate that kind of congestion.  Here’s why:

Since AT&T and other broadband companies routinely claim the average use per customer is well under 20GB per month, and only 2 percent of customers are currently deemed “heavy users” by AT&T, that tiny percentage of customers cannot create sufficient drag on AT&T’s DSL network even if they opened up their connections to full speed traffic.  In reality, the 98 percent of “average” users piling on the network during prime time would be the only thing capable of the kind of critical mass needed to create visible congestion.  What uses more capacity?  Two customers using their 7Mbps DSL lines to stream online videos concurrently or 98 customers all using their 7Mbps DSL lines at the same time for virtually any online activity?

The math simply doesn’t add up.

The Congestion Myth

AT&T targets their broadband customers with an unwarranted, arbitrary Internet Overcharging scheme they cannot effectively explain to customers.

As two week’s of hearings this month have demonstrated, Bell Canada’s similar arguments for its usage caps simply come without any evidence of actual congestion.  In fact, company officials modified their position to talk more about peak usage congestion, a problem that cannot be controlled with a usage cap well in excess of the average consumer’s usage.  In fact, only a speed throttle could control network congestion at the times it actually occurred.  AT&T also ignores when its customers are using its network.  Is a heavy user downloading files at 3 in the morning creating a problem for other users?  No.  Are the majority of their average-usage customers all jumping online after school or work creating a problem?  Perhaps, if you believed AT&T even had a congestion problem.

Industry maven Dave Burstein does not, and Burstein talked to two chief technology officers at AT&T who told him wired broadband congestion is a “minimal” problem for the phone company.

Upgrades and Cord-Cutting, Delayed

Two things usage caps can do is help your company delay necessary upgrades to meet customers’ broadband needs, whether they are “heavy users” or not.  AT&T has shown itself historically to be slow to invest, and cheap when it does.  AT&T’s wireless network is bottom-rated by consumers thanks to inadequate network capacity.  The company elected to upgrade on-the-cheap to an IPTV platform that still relies on copper phone lines to deliver service that simply cannot compete in quality and capacity with Verizon’s FiOS fiber to the home network.  But investors love the fact the company counts every penny, even if it means inconveniencing and overcharging customers for their services, usually offered in duopoly or monopoly markets.

AT&T’s usage caps on U-verse are even less credible than those imposed on their DSL service.  U-verse is a fiber to the neighborhood network with near limitless capacity for broadband and video.  In fact, the only “congestion” comes from the copper phone lines that limit how much bandwidth can be supplied to your individual home.  But no matter how much you use, you will not affect your neighbors because your copper phone line is shared with nobody else.  In fact, the biggest chunk of U-verse’s bandwidth is reserved for their video services, which makes arguments about excessive Internet usage on that pipeline un-credible.

What AT&T’s usage cap does assure is that you will not drop that video package from your U-verse service anytime soon.  That lucrative revenue from expensive video packages cannot be forfeit without a fight, and a nice deterrent in the form of an arbitrary usage cap does wonders to keep that cord cutting to a minimum.

Meters That Don’t Measure

One of the worst ongoing problems with Internet Overcharging schemes like AT&T’s is the broken usage meter.  Stop the Cap! has received hundreds of e-mails from AT&T DSL and U-verse customers who report AT&T’s usage meter is either unavailable, broken, or is wildly inaccurate.  With absolutely no independent oversight, and no consistently accurate usage measurement, charging anyone overlimit fees with a broken meter doing the counting is unconscionable.  Yet AT&T may well try.  The company has already been sued by one law firm for what it alleges is an unfair usage meter on the company’s wireless service — a meter that consistently overcounts usage in AT&T’s favor.

AT&T admits they cannot even accurately measure their own customers' usage.

Once getting over the broken meter, customers are directed to a pointless usage-estimator — the ones that tell you about how many tens of thousands of e-mails you can send and receive under AT&T’s cap regime.  In fact, these statistics are irrelevant for the vast majority of customers who never think of sending 10,000 e-mails or exchanging 2,000 pictures or songs.  That’s because customers do not use the Internet to exclusively do those things.  Even with the guestimator, they are left checking a broken usage meter to ponder whether or not they can watch one more show or download another file without incurring a $10 overlimit penalty (or more).  That “generous” limit AT&T touts suddenly doesn’t look so ample when the company gets to the wildly popular activity of streamed video.  AT&T’s own video warns you can only watch 10HD movies a month over your broadband connection — and absolutely nothing else.  No web browsing, e-mail, or photos or music.  Ten movies a month.  Still thinking of dropping your U-verse video subscription now?

Yet AT&T has the nerve to claim, “Our goal is to provide you with the best Internet service possible.”  Really?

Thankfully, not every member of the investor class is thrilled with nickle-and-diming broadband consumers for usage that costs the providing company next to nothing.

The Economist excoriated AT&T for its unwarranted usage limits on its blog earlier this year:

The use of caps allows providers to dish out bandwidth with one hand and take it away with the other. The companies have vastly increased the capacity of various copper, coaxial and fibre lines, but artificially separate out a portion—at least half and often much more—for video which a set-top box or a broadband modem spits out as an apparently distinct service. Cable firms simultaneously push out hundreds of digital channels, while telecoms firms rely on multiple digital streams from live broadcast or cable TV or on-demand pay-per-view. It is as though the water main were divided as it entered the home and a steady, modest stream was made available for showers and at the tap, while most of it was always at the ready for a coin-operated washing machine.

Increasing speed on the internet portion, which would allow consumers to give up on TV subscriptions, is balanced by capping volume. If a consumer does not monitor usage, his internet access can be withdrawn or, in AT&T’s case, overage fees of $10 charged for every additional 50 GB of usage. […] [That] $10 charge applies whether the limit was breached by 1 MB or a smidgen under 50 GB.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT Usage.flv[/flv]

AT&T’s new video on broadband usage is based on facts not in evidence and only adds to consumer confusion about arbitrary Internet Overcharging schemes.  (4 minutes)

Phillip "No Data Tsunami Over Here" Dampier

As the Canadian Radio-television and Telecommunications Commission enters into the second week of hearings on Internet Overcharging, there have really only been a few minor surprises.

First, and most importantly, when voting consumers pay attention, regulators start asking questions and get aggressive.  This is the same commission that only a year ago gave the green light to wholesale usage-based billing (UBB) — a practice that would guarantee every ISP in Canada dropped flat rate Internet service.  After a half-million Canadians signed Openmedia.ca’s petition opposing UBB, the Harper government (and the opposition parties) got interested, and the Commission got an earful from Industry Minister Tony Clement, who was simply appalled at this kind of Internet pricing.

Second, this round of CRTC hearings has found Bell — UBB’s biggest proponent — largely unrepentant.  It still supports charging people for their usage, even as the company’s foundation for that premise — bandwidth congestion — erodes away.  Providers can claim anything they like, but they cannot invent facts.  By Friday, most of the commissioners realized what consumer advocates had been saying all along — there is no great bandwidth crisis in Canada.  No data tsunami. No exaflood in the zettabyte era.  Growth is exponential to be sure, and Canadians have a passionate affair with their Internet connectivity, but one that remains easily managed when providers make regular, affordable investments in upgrading their networks.

Bell’s week-long contention that congestion pricing was paramount to managing Canada’s bandwidth finally fell apart when CRTC Chair Konrad von Finckenstein noted Bell’s trinity of regional entities managed Internet usage completely differently, even though the traffic passed through the exact same network:

• 1) Bell Aliant, which provides service in the Atlantic provinces, has no usage caps at all.
• 2) Bell Quebec provides service with a considerably more generous usage allowance than given to those customers in Ontario, even those just on the other side of the border.
• 3) Bell Ontario’s usage cap is downright stingy compared with Quebec, most likely because it competes in Ontario with an equally stingy provider — Rogers Cable.

With these facts in evidence, Bell was finally forced to concede it was “competition” not “congestion” that brought three different treatments of Internet usage.  So much for “network congestion.”

Bell’s competitors also hung the telecom giant out to dry when it was their turn to testify.  Each in turn would claim that congestion presented no problems for their respective networks.  Telus, Rogers and Shaw all denied they shared Bell’s usage problems.  That is not to say any of them were in favor of restoring flat-rate Internet access.

Instead, they argued, UBB represented a combination of “stimulating investment” in broadband networks (already insanely profitable for all-comers) and “peak usage pricing,” a hybridized argument about congestion during peak usage periods.  Since some wholesale broadband services are priced at peak capacity requirements, some argue UBB helps keep that peak usage manageable during prime time.

Unfortunately, the peak usage pricing argument undermines itself because Canadian providers enforce usage limits 24/7, not only during peak usage periods.  This means there is no incentive for users to offload their heaviest usage to times when the network experiences low demand.  Independent providers continue to argue “peak usage pricing” may be defensible in certain circumstances, but it’s not even a possibility under Bell’s proposed wholesale UBB scheme.

The record being constructed from Canada’s hearings have direct implications for Americans, as the basic business models for cable and phone providers are similar in both countries.  The death rattle of the “congestion” myth is good news for North American broadband users who have long rolled their eyes at hysterical arguments about data floods and capacity crises.

The CRTC still needs to hear from some additional speakers, and we are under no illusion they will completely reverse themselves on Internet Overcharging schemes, but this represents a clear-cut case that consumers need not simply sit back and take abusive pricing.  Consumer activism can make a real difference in the broadband policies of both the United States and Canada.  It takes a concerted effort, but once a critical mass of consumers is achieved, the ability for providers to simply do as they please becomes a virtual impossibility.

That’s good news for all of us.

[flv width=”640″ height=”368″]http://www.phillipdampier.com/video/CBC UBB 7-11-11.flv[/flv]

CBC News covers the start of the CRTC hearings and what UBB pricing is doing to Canada’s Internet experience.  (2 minutes)