Gary McCallum, a Shaw customer in Edmonton, Alberta, has received word his broadband service is about to get more expensive — a lot more expensive.

“Holy crap, it’s like text messaging [bill shock] all over again when your broadband bill arrives and you are now looking at hundreds of dollars instead of the $40 or $50 you used to pay,” McCallum told CTV News.

McCallum, and other designated “heavy users,” are receiving letters in the mail from Shaw notifying them they have been exceeding the company’s declining usage limits imposed on its broadband service.  If they exceed the limits again, they may be subject to penalty fees of as much as $2 per gigabyte.

“I’m upset about the backdoor tactics,” McCallum complains.  “They keep it secret and then lambaste you later.”

Most Shaw customers will be forced to confine their usage to 60GB per month, the limit on the company’s most popular broadband plan.  If they don’t, after some warning, they’ll pay a stiff fine.  Just 20GB of overlimit usage will more than double the average customer’s broadband bill, currently around $37 a month.

A house full of teenagers watching Netflix or downloading files could cost far more than that.

Company officials deny the potential revenue bonanza is unjustified.

Customers who use more will pay more, admits Terry Medd, vice-president of operations for Shaw Communications in Calgary.

“It’s video over the Internet that’s driving a lot of this cost,” he said. However, most Shaw Internet customers won’t hit their caps, Medd claims, suggesting it should affect fewer than 10 per cent of customers.

“The average user consumed about one-third of what the cap is. In other words, we’ve set the caps at three times the average usage. For the average user, there’s no concern here,” Medd said.

However, Shaw recently reduced their usage caps on virtually all of their Internet plans, making it more likely customers will be snagged by overlimit fees.

Some customers want to know what they will get if they use far less than their plan allowance.

Don McGregor believes Shaw’s plan to charge Internet users for the data they use is fair and equitable, so long as those who use less than the allowance get a break on their bills.

“Shaw should plan on refunding fees for any use of data below the contracted amount,” the Edmonton resident wrote in a letter to the editor published in the Edmonton Journal.  “Since 90 per cent of Shaw’s subscribers use less than the full GB capacity they pay for, I am sure these subscribers’ refund cheques are in the mail.”

Don, like other Canadians, is about to learn Internet Overcharging is never about fairness or saving customers money.  It’s about charging customers more for the same service they used to receive for less, without any improvements.  ISPs will not provide true “usage pricing” for consumers because it would slash revenue from their broadband service.

But western Canadians need not be victims of Shaw’s overcharging.  Telus, which sells landline-based DSL service in British Columbia and Alberta says it has upgraded its facilities to accommodate usage demands and won’t expose customers to overlimit fee bill shock.

Telus offers a way out of Shaw's Money Party hangover

Although Telus’ website does show usage limits, company officials claim they are rarely enforced, and not at the subscriber’s expense.

Telus could make a significant dent in Shaw’s customer base by dropping them altogether, which will save the phone company from these kinds of  silly legal gymnastics in their FAQ:

Why do you call your service unlimited, when my monthly usage is limited?
We refer to TELUS High Speed as being unlimited because you get unlimited hours of monthly access.

If you do not want to play Shaw’s Internet Overcharging game, perhaps spending time with a new Xbox 360 would be better?  Telus is giving them away to qualified new customers signing up for service.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/CTV Edmonton Shaw Internet Overcharging 1-7-11.flv[/flv]

CTV News in Edmonton informs Alberta’s Shaw customers their broadband service could get a lot more expensive.  (2 minutes)

Shaw sets the bar lower.

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

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

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

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

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

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

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

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

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

Frontier used Time Warner Cable's usage cap experiment against them in this ad to attract new customers in the spring of 2009. Now they're no better.

Stop the Cap! reader Mike in Elk Grove, California reports his departure from Frontier Communications carried a goodbye kiss he’ll not soon forget: a $680 final bill made up primarily of early termination fees:

“I just got my Frontier bill after canceling (they canceled me because I ported my number to another provider),” Mike writes.  “The bill cycle was through 2/14/2011 (my contract ends on March 6, 2011).”

The bill was for $679.72.

More than 22 months into his 24 month contract, Frontier charged him early termination fees at the same rate he would pay if he departed 14 days into his term:

• High Speed Internet Loyalty Fee: $200
• Netbook Term Fee: $300
• California Unlimited Term: $200

The only reason his final bill was not higher is that he received some service credits for the partial month he was not their customer.

Needless to say, Mike is livid.  He is one of several Sacramento-area customers who received letters from Frontier threatening to terminate his Internet service if he did not reduce his usage.  When Mike ultimately decided to reduce his usage to zero and switch providers, Frontier dumped every termination fee it could find on Mike’s final bill.

But before Mike opens his checkbook, he (and any other customer gouged with early termination fees) should remember this:

Frontier cannot bill you early termination fees and expect to be paid when they unilaterally changed the terms of the contract.

From Frontier’s Terms and Conditions for High Speed Internet:

Our Right To Make Changes

UNLESS OTHERWISE PROHIBITED BY LAW, WE MAY CHANGE PRICES, TERMS AND CONDITIONS AT ANY TIME BY GIVING YOU 30 DAYS NOTICE BY BILL MESSAGE, E-MAIL OR OTHER NOTICE, INCLUDING POSTING NOTICE OF SUCH CHANGES ON THIS WEB SITE, UNLESS THE PRICES, TERMS AND CONDITIONS ARE GUARANTEED BY CONTRACT. YOU ACCEPT THE CHANGES IF YOU USE THE SERVICES AFTER NOTICE IS PROVIDED.

When Mike (among others) signed up for Frontier service, their broadband service did not carry any usage limits.  Frontier’s “price protection agreement” claims it will “lock in” your current price.  But Frontier violated their own contract when they sent letters to customers threatening to terminate their broadband service for using Internet service that had no specified usage limit and demanding they pay a higher price of up to $250 a month to continue service.  So much for “price protection.”

You are not obligated to accept Frontier’s unilateral action and can notify the company they have made a “materially adverse” change to your contract by specifying that you exceeded a never-defined usage limit (100GB), and that the company sought a price increase ranging from $99-250 to continue service with them.  If you exceeded 100GB a year ago, you would not have received this letter.  Today you will — and that is a change you need not accept.

Frontier defaulted on their obligations to you as a customer, and your recourse is to cancel the contract, penalty-free.

Frontier Communications’ outrageous term contract fees were precisely what got the company in hot water with the New York State Attorney General in 2009, and the company settled charges with refunds and waivers for those unjustly billed cancellation fees Frontier was not entitled to receive.  Apparently they have not learned their lesson.

Your response:

1. Send a registered, return receipt requested letter to Frontier notifying them under the terms of their own contract, you do not accept the changes outlined in their letter limiting your broadband service.  Your original contract with Frontier did not include a specified usage limit and now using more than 100GB results in a request to pay more or reduce usage.  That represents a “materially adverse change” in your agreement.
2. Under these conditions, you are exercising your right to depart, penalty-free, from your term contract with Frontier Communications.
3. Warn Frontier that any attempt to collect early termination fees or other cancellation fees will result in civil action appropriate to protect your credit rating and will trigger a complaint with the California Attorney General’s office.
4. Keep copies of all correspondence and record dates, times, and names of any representatives you speak with, as they will be helpful in any official investigations that follow.
5. Also be sure to proceed with the terms found on the back your Frontier bill to protest erroneous charges, preferably in writing.  You want a paper trail and you want to protect your credit rating from any adverse collection activity.

Mike has already contacted local media about his case, which is a smart idea.  Warning other consumers about the potential costs of doing business with Frontier is likely to only further deteriorate their reputation in the Elk Grove area.  Alienating and overcharging your customers is a great way to get them to share their story with as many people they can find, and that only makes a bad company look worse.

[flv width=”360″ height=”240″]http://www.phillipdampier.com/video/WROC Rochester Frontier Flagged for Not Telling Customers About Fees 10-5-09.flv[/flv]

WROC-TV Rochester reported back in October, 2009 that Frontier was on the hook for hundreds of dollars in refunds to some customers. (2 minutes)

Does today's decision assure the birth of Comzilla, ready to destroy anything or anyone in its path, or is it the next colossal big media deal flop worthy of AOL-Time Warner?

The wedding of Comcast and NBC-Universal was given the blessings of two federal agencies today that all but seals the multi-billion dollar deal.

In a 4-1 decision, the Federal Communications Commission approved the merger.  It’s chairman, Julius Genachowski, claimed it would ultimately be good for consumers as the company promised to add at least 1,000 hours of news and information programming and a new ultra-budget “lifeline” broadband tier priced at $9.95 per month for low-income families.

The lone dissenter, Democratic commissioner Michael Copps, rejected notions that a combined company the size of Comcast, which controls more than a quarter of all cable subscribers, and NBC-Universal, a major media company, would deliver anything to consumers.

“It’s too big. It’s too powerful. It’s too lacking in benefits for American consumers,” Copps said after the FCC vote to approve the merger. “And it continues us down a road of consolidation we’ve been on for a couple of decades now.  And the most threatening part about it is that this is not just traditional media, but it’s new media, too. It touches just about every aspect of our media environment.”

National Public Radio’s ‘All Things Considered’ gave measured coverage to today’s Comcast-NBC merger developments, and how it will impact consumers. (3 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Indeed the combined Comcast-NBC will own or control one of every seven television channels and networks seen by Americans.  Copps worries that kind of media concentration is sure to reduce diversity in programming and on-air voices.

Even worse, some analysts predict the merger could trigger a new wave of media consolidation as other players try to maintain their positions in the media marketplace.  Second-place Time Warner Cable could begin looking for merger opportunities with smaller cable companies, such as Cox, for example.

Just about an hour after the FCC gave approval, the Justice Department and five states’ Attorney General announced a tentative settlement that could resolve concerns that the transaction was anti-competitive.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WNYW New York Comcast FCC Approval 1-18-11.flv[/flv]

WNYW-TV in New York reported on today’s merger decision and explained how Comcast customers, and online video fans, could be impacted.  (3 minutes)

The Terms & Conditions

Two different federal agencies insisted on Comcast’s agreement to several terms and conditions before agreeing to the deal.  Many of them presented no problem for Comcast, who had voluntarily agreed to several of them early on in negotiations.  But the Justice Department delivered one of the strongest conditions, and a first for online video protection — it insisted the new combined entity of Comcast-NBC bow out of its voting rights in Hulu, the online video service.

√ No Playing Favorites: Comcast has to agree that if it carries its own news and business channels, it has to include competitors on the same tier.

Since Comcast-NBC has ownership interests in so many news, sports, and weather channels, making space for the competition was considered crucial by federal regulators.  The cable company can’t bury its competitors in Channel Siberia, or stick them on “digital tiers” that are priced higher than standard cable service.  Who wins?  Bloomberg News, rarely found even by cable viewers who go looking, and the very low-rated Fox Business Channel, which can’t attract 30,000 viewers on a good day.  Both will find prominent positions on Comcast Cable going forward, even if nobody watches.

√ Cheap Internet Access for Qualified Families: Comcast has agreed to provide a “lifeline” broadband service, but only for families pre-qualified by federal eligibility for free school lunches.

No word on what speeds these customers will receive, and Comcast estimates the program will barely make a dent in its bottom line.  It is expected to reach only around 400,000 homes nationwide, and only as long as those subscribers remain eligible under federal guidelines.  No free lunch for broadband.

√ Standalone Internet Service Must Be Provided: Comcast must sell at least a 6Mbps broadband plan without cable or telephone service for $49.99 a month for three years.

Since Comcast already routinely sells standalone broadband service to customers at around this price, this was hardly a concession.  Comcast can still pile on extra fees, such as their overpriced cable modem rental, and any other charges that could be mandated by federal, state, or local government in the future.  They can also keep their usage caps.

√ Comcast must agree to the FCC’s Homeopathic Net Neutrality Rules:  Comcast has to agree to the FCC’s heavily-watered down definition of Net Neutrality… the ones Comcast itself suggested.

Since the FCC largely caved-in to Big Telecom’s lobbying against Net Neutrality, Comcast’s agreement to adhere to what the FCC calls Net Neutrality won’t present any problems, because those terms were similar to what Comcast had asked for all along.  Their “digital phone” service is exempted, which means Comcast can “manage” competing Voice Over IP services at its pleasure.

√ Evidence That PBS Has A Lobbyist, Too — Special Favors for Public Broadcasting: Public television stations win carriage protection from Comcast “for several years.”

In an effort to free spectrum, PBS stations could be pressured to give back some channels or reduce their transmitter power to free up UHF frequencies for more wireless broadband.  Should this happen, Comcast has agreed to keep those stations on their cable systems as if nothing changed at all.  It assures stations that even if their broadcast coverage areas are reduced, their cable carriage will stay the same.

√ Binding Arbitration Comes to Buyers of Comcast-owned Networks:  If a cable system or other provider runs into trouble getting an agreement with Comcast, the FCC offers help.

To protect other cable systems, telco-TV, and satellite companies from uncompetitive pricing or access blockades to Comcast-controlled networks, the cable company agrees to come to the table and submit to binding arbitration over carriage disputes.  Unfortunately for Comcast subscribers, the cable giant can’t force broadcasters or other cable networks to the same table to settle their own carriage wars.

√ Online Access to Programming Comes to Existing Players, Unless Something Big Changes: Everyone loves the status-quo, and this agreement assures it.

The Department of Justice provisions protecting access to online video programming were carefully crafted by lawyers with one eye on Washington and the other on Wall Street.  It effectively provides “stability” in the marketplace and avoids the kinds of competitive surprises Wall Street hates.  Effectively, the agreement grants access to Comcast-owned programming to ventures that existed prior to the agreement reached today.  Existing players have the government’s assurance carriage contracts are secure.  Those with a pre-existing relationship to Comcast can also purchase the entire bouquet of Comcast-controlled programming (no a-la-carte) at prices similar to those charged to other cable and satellite customers.

But brand new players that threaten to turn existing business models on their heads?  Forget it.  The agreement says nothing that would require access to Comcast programming for upstart services like ivi, or even Google TV for that matter.  The only potential, real-world competitive scenario comes if an existing player (say Time Warner Cable, Verizon FiOS, or AT&T U-verse) decided to start a national virtual online cable company open to any American, anywhere.  What are the chances of that happening?  How many of you can choose Time Warner -or- Comcast? Verizon FiOS -or- AT&T U-verse?  Would AT&T risk its U-verse revenue selling Time Warner Cable customers the same channel lineup, knowing it can’t also easily bundle broadband and phone packages with it?

√ No Voting Rights for Hulu: Comcast agrees to limit its role in one of the biggest potential reasons some consumers are prepared to cut cable’s cord.

The Justice Department’s requirement that Comcast effectively butt-out of the day to day decisions affecting Hulu may protect consumers, but Hulu’s partners don’t want to devalue their programming by giving it away for free forever, either.  Nothing prohibits the birds-of-a-feather-partners in Hulu to put the service under a full ad load or behind a pay wall, reducing its value and interest to consumers.  Or, the whole project could be terminated at the behest of News Corp. and Disney.

Phillip Dampier: The real answer to this question is "both."

Whatever consumer protections the FCC and Justice have included, they won’t last forever.  Virtually all expire within three to seven years, at which point Comcast might be humbled by the culmination of a bad business decision the likes of AOL-Time Warner, or become Comzilla, ready to trample its competition (and consumers) into the dirt.

Was This a Commission Cave-In or a Foregone Conclusion?

Although Commissioner Copps calls today’s decision a “dangerous” deal, some ex-regulators suggest the package presented to federal regulators was effectively a foregone conclusion.

Bruce Gottlieb was formerly Chief Counsel of the Federal Communications Commission, and offered his take on today’s developments for The Atlantic:

How mergers at the FCC will play out is notoriously hard to predict, but the ultimate result is not. The historical truth is that, in virtually every instance, the commission will approve any major proposed transaction. The only time in recent memory that the commission declined to do so was the proposed merger of the two leading satellite-TV providers (Echostar and DirecTV) — and that marriage was running into problems with other agencies long before the FCC put the final nail in the coffin.

(Yes, then-Chairman Reed Hundt also famously ended rumors of an AT&T and Southwestern Bell merger in 1997 by preemptively declaring it “unthinkable.” But those companies simply had to wait until 2005, when a different FCC chairman let it go through.)

The real action at the FCC involves what “conditions” the agency will put on a merger. These are supposed to be narrowly tailored to address specific harms raised by the merger at issue. But, regardless of who is in charge at the agency, it’s all relative.

Often, the conditions applied to a particular merger have more to do with what the chairman and commissioners at the time want to achieve on an industrywide basis. It’s just easier to get these things done when you have the extraordinary leverage of controlling the timing of a multibillion-dollar transaction that the parties are desperate to consummate.

[…]  The FCC’s rules, as described in the press release announcing the merger, appear to be aimed at ensuring that “over the top” providers have fair access to programming (which the NBCU part of Comcast-NBCU will provide), as well as to consumers (which the Comcast part of Comcast-NBCU will provide).

This is, by far, the strongest statement yet from the commission about the importance of over the top video competition. But the business and regulatory stakes in this fight are only going to increase over time. Indeed, the two Republican commissioners (Robert McDowell and Meredith Attwell Baker) issued separate statements saying they have concerns over whether the FCC should be writing rules to encourage over the top video. So this is likely to be the first skirmish in what will surely be a long and bloody war.

In the weeks ahead, the lawyers will be able to parse the specific provisions to see where the loopholes are and how it will all play out in practice. The details surely matter. But years from now, the specifics of what was decided in this merger may mean a lot less than the fact that the FCC is now deeply involved in the multifront war to decide who will win online video.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/PBS Newshour Comcast Merger Announced 12-3-09.mp4[/flv]

More than a year ago, PBS’ ‘The Newshour’ explored the reasons why Comcast and NBC-Universal would want to join forces.  Now, after millions of dollars of Comcast subscribers’ money has been spent lobbying for approval, will consumers ultimately pay an even higher price later on?  (12/3/2009 — 11 minutes)

Some of America’s largest media companies are starting to get nervous over reported stipulations Comcast and NBC-Universal must meet in order to win FCC approval of their merger deal.

The Wall Street Journal reports ‘all-lobbyists-on-deck’ as companies fear collateral damage to their own nascent online video businesses.

At issue is the FCC-proposed condition that would require Comcast to offer NBC programming to any online video service that has reached a similar deal for content from at least one of NBC’s competitors, such as Walt Disney Co. or News Corp.

That could create a highly competitive online video marketplace, with open access to video programming — content many companies want to tightly control.

Last week, lobbyists from Disney, News Corp., and Time Warner pelted the FCC with filings fearing Comcast-NBC deal stipulations could also impact their businesses, potentially risking exclusivity deals with firms like Netflix or Apple.  At the worst, such rules could permit the development of virtual ‘online cable systems,’ delivering hundreds of hours of programming daily — more than enough to potentially invite customers to turn away from traditional cable-TV or satellite packages.

Perish the thought, suggest some Wall Street analysts who are prepared to downgrade companies that cannot maximize revenue from a controlled online video marketplace.

The three companies, among others, have suggested language that limits any stipulations exclusively to the Comcast-NBC deal, or changing the terms to impact their own operations less.

Public interest groups continue to press their views that the proposed deal delivers nothing to consumers but higher bills and fewer programming choices.

Consumers Union, publisher of Consumer Reports, joined with more than two dozen public interest groups urging a more careful review of the deal:

“We believe that a merger of this size and scope will have a devastating effect on the media marketplace,” a letter to President Barack Obama and Congress says. “It will result in less competition, higher consumer costs and fewer content choices. It also will give one company unprecedented control over innovative new media that offer news, information, entertainment and cultural programming through emerging technologies.”

Joel Kelsey, policy analyst for Consumers Union, said this proposed merger could have major consequences for consumers: “This merger would combine a major television network and film studio with the nation’s largest cable company and residential broadband provider, which could be a recipe for disaster. This merged giant has great potential to lead to higher cable and broadband rates for consumers, less competition in online video, and less diversity among the programming choices for viewers. There are no clear benefits to consumers from this merger.”

Comcast has agreed to several stipulations that are supposed to protect consumers.  Among them, a three-year requirement Comcast provide standalone Internet service to consumers for $49.95 a month.  But the deal says nothing about Comcast’s Internet Overcharging scheme — an arbitrary usage cap on their broadband service.

Comcast would also agree to adhere to Net Neutrality rules (as defined by the FCC) for up to seven years.  Since those rules are closely aligned to what Comcast volunteered to follow earlier, there was little reservation agreeing to them going forward.

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Bloomberg News’ Todd Shields explains the proposed conditions the FCC seeks to impose on the Comcast-NBC merger deal.  (12/23/2010 — 4 minutes)