In an effort to keep up with Comcast, Cox Communications has quietly expanded its internet overcharging scheme to customers in Arkansas, Connecticut, Kansas, Omaha, Neb, and Sun Valley, Ida. (perhaps the only community that can afford Cox’s threatened overlimit fees). Cox’s customers have noticed and told DSL Reports about the forthcoming highway robbery.

These unlucky customers join those in Cleveland, Oh., Florida and Georgia who have already been enduring Cox’s usage cap and penalty fee system.

Cox hasn’t shown any interest in listening to customers who do not appreciate usage allowances and have repeatedly told the company they want unlimited access, especially considering how much they already pay Cox for service.

“It’s a total ripoff and customers have no option to keep unlimited, unless they move to the next city over where Charter/Spectrum offers internet access without any data caps,” notes Cleveland resident Shelly Adams.

Cox has followed Comcast by boosting most usage allowances given to customers to 1TB, an amount many believe was set high enough to avoid threatened regulatory scrutiny of stingy data caps by the FCC under the former Obama Administration.

As with every provider that has ever conjured up an internet overcharging scheme, no matter what the allowance is, the company always claims it is generous and impacts almost nobody. Cox claims 99% of their customers will never hit the cap, which always begs the question, if it affects so few customers why spend time, money and energy creating a data cap, usage measurement tools, and billing scheme for only a handful of customers? Is that Cox’s idea of innovation?

Usage caps for one and all.

In fact, Comcast has claimed the same thing, but their math came into question when more than 13,000 Comcast customers managed to stumble their way to the FCC’s complaints bureau in one year and write a formal protest about Comcast’s own overlimit fee scheme. We are certain there are many more customers with overlimit fees on their bills than that, and guess only a small fraction took the time to write a complaint and submit it.

As Stop the Cap! has said for almost a decade, beware of cable company “generosity” because it usually comes with fine print.

“Cox High Speed Internet packages include 1 TB (1,024 GB) of data to provide you with plenty of freedom to stream, surf, download, and share,” the company writes on its support website (its much rarer Gigablast gigabit plan includes 2TB). For now, if you use Cox Wi-Fi or CableWiFi hotspots, usage on those networks does not count toward your data plan.

Cox reserves itself some extra freedoms, such as automatically charging customers who exceed their allowance a $10 overlimit penalty for each 50GB of usage they incur until the next billing cycle begins. Cox’s generosity ends with the unused portion of your allowance, which Cox keeps for itself, not allowing customers to roll over unused data to the following month.

In an effort to get customers to accept the scheme, Cox calls it a “data plan,” similar to what wireless customers might pay, and says other companies have data caps too. But none of this justifies the practice.

You’re over our arbitrary usage limit!

In another “generous” move, Cox is offering a grace period for two consecutive bill cycles before it slaps overlimit penalties on customer bills for real in Arkansas, Connecticut, Kansas, Omaha, and Sun Valley. The grace period window begins with bills dated on or after Feb. 20, 2017. To make sure you get the message, the company will bill you the overlimit fee it claims almost nobody will ever pay along with a corresponding grace period credit for two months, just to put the scare in you. After May 22, it is time to pay up.

Cox will make sure you can’t claim you “didn’t know” you ran through your allowance by harassing you with data usage messages via Cox browser alert, email, text message, or an automated outbound call when you have used about 85% and 100% of your monthly data plan. You will receive additional alerts when you have reached 125% of your monthly data plan, at which point Cox will throw a party in your honor with thanks for allowing them to run up your bill.

Coincidentally, Cox isn’t testing their scheme in markets rife with competition from providers like Verizon FiOS, where usage is effectively unlimited. In many of Cox’s usage-capped markets, customers have AT&T as their alternative, and they have a 1TB usage allowance as well.

Incoming FCC chairman Ajit Pai is on record opposing any involvement in regulating usage-based pricing schemes, claiming it amounted to government meddling in business. But customers can complain directly to Cox and threaten to cancel service. It may be a good time to renegotiate your cable bill to win discounts that may help cover any overlimit fees that do make it to your bill.

There remains little, if any justification for a company like Cox to peddle data plans with usage allowances to their customers. The company is moving towards gigabit broadband speeds but apparently lacks the resources to manage customers that want a hassle-free unlimited experience? If Cox is being honest about how few customers will ever be affected by the cap, there is no reason the company cannot continue an unlimited plan at current prices.

Cox’s scheme does shine light on the uncompetitive broadband marketplace that continues to afflict this country. As one reader pointed out, customers are constrained by the offerings of whatever provider has set up shop in a city that typically has, at best, one other choice (usually a phone company selling DSL or up to 24Mbps U-verse). A truly competitive market would give customers a wide choice of “data plans” that include unlimited plans customers enjoyed for years and want to keep. But safe in their broadband duopoly, cable companies like Cox have no incentive to treat customers to a better or even fair deal.

The real reason for usage caps and data plans with penalty pricing was exposed by Wall Street analysts like Jonathan Chaplin, a research analyst for New Street Research LLP. Although he was speaking to a cable company executive at the time, his words traveled to our ears as well:

“Our analysis suggests that broadband as a product is underpriced,” Chaplin said. “Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment).”

“The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business,” Chaplin added. “Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

Exactly.

Despite ten years of promises to do better, Comcast Corporation remains America’s most hated company, according to a new survey from 24/7 Wall St:

The internet service provider and subscription television service industries are not known for superior customer service. In fact, the two industries have the worst average scores in the American Customer Satisfaction Index. Still, Comcast has a significantly worse customer satisfaction score than either industry average.

The company’s internet services received the fourth worst score out of some 350 companies. In J.D. Power’s rating of major wireline services, only Time Warner Cable — recently subsumed by Charter — received as poor of an overall satisfaction score. In the same survey, Comcast received the worst scores in cost to consumer, performance, billing, and reliability. In 24/7 Wall St.’s annual customer satisfaction poll conducted in partnership with Zogby, nearly 55% of of respondents reported a negative experience with the company, the second worst of any corporation.

Customer complaint intensity remains very high for companies that have a history of increasing fees and charges, those that enjoy the benefits that come from a lack of competition, and at companies where there is a high likelihood of customer contact with customer service. The cable industry fits the bill on all three, and customers do not like what they see in Comcast.

For at least a decade, company executives have claimed to be dramatically improving customer service, most recently relying on Charlie Herrin, executive vice president of customer experience at Comcast. Comcast calls Herrin an in-house “consumer advocate.”

Herrin

“We know we still have work to do, but we’re excited about the progress we’re making,” Herrin tells customers on Comcast’s XFINITY Customer Experience website. “We’ve reached all-time highs across many of our key customer service areas. The number of customers who have had to call us is down 14 percent – which means your products are more reliable, your bill is easier to understand and our self-service platforms are making a difference. Our on-time arrival rate for technicians coming to your home has improved to over 97 percent.  Our success rate for solving your issue on the FIRST call is up by 7 percent, getting us closer to our goal of fixing it right the first time, every time. Our Digital Care team is also getting back to you faster, as our response time on social channels improved by 95 percent.”

Although Herrin seems convinced, customers are not. The Better Business Bureau’s Comcast file warns visitors the BBB receives so many complaints about the cable operator, it can only publish approximately one out of every twenty on its website. But that amounts to at 34,902 complaints published online in just the last three years. The majority relate to issues like Comcast’s usage caps, billing errors, mysterious fees, and poor service.

Customers may not appreciate Herrin’s metrics for improvement if they reported a service problem over an app, received an inaccurate (but easier to read) bill, or got a speed increase and a bill with penalty overlimit fees for using too much of their internet service.

Time Warner Cable customers hoping for improved service from new owner Charter Communications also appear to be out of luck. As Charter has grown in size, its already-mediocre customer satisfaction rating is apparently slipping again, now making it to 24/7 Wall Street’s Worst list at #12.

“Charter has one of the poorest reputations for customer service of any company in the subscription television service industry,” 24/7 Wall Street wrote. “It also scores below average in customer service compared to its competitors in the fixed line telephone industry and internet service industry.”

Two other telecom companies also scored very poorly – DISH Networks, also called out by its employees as an awful place to work, and Sprint, perpetually in the middle of a “service improvement” project that never seems to end, leaving many customers running out of patience.

AT&T’s rivals are likely to cry foul over the company’s practice of “zero rating,” in which it exempts its own video services from data-cap usage. The Wall Street Journal’s Shalini Ramachandran explains how this could impact the proposed AT&T-Time Warner merger. (2:44)

After gracing Cleveland, Ohio with the dubious honor of being the first Cox service area in the country to be treated to compulsory data caps and overlimit fees, Cox Communications has announced it is expanding its internet overcharging scheme to customers in Florida and Georgia starting Nov. 21.

Stop the Cap! readers in both states shared Cox’s service change notification introducing hard caps in both states next month.

“Cox High Speed Internet packages include 1 TB (1,024 GB) of data,” Cox explains. “Approximately 99% of Cox customers are currently on a data plan that more than adequately meets their monthly household needs.”

That begs the question: if 99% of customers are unaffected by a data cap, then why have a data cap at all?

Cox “Data Plans”

Note: Unused data does not carry over to the next month.

Content managed by Cox included in Cox-provided services do not count toward data usage:

• TV and On Demand content accessed in the Contour app while connected to Cox in-home Wi-Fi
• Cox Digital Telephone
• Cox Homelife

Note: Third party content and content identified as internet services on receivers or TVGO in the Contour app may count toward data usage.

Customers in these areas who exceed their allowance will be billed $10 for each 50GB of excess usage. Customers will get a two-month grace period to become accustomed to internet rationing before the overlimit fees are added to customers’ bills.

Cox has not said if or when it will expand the data caps to other markets.

Customers can send Cox a message by calling the company and threatening to take your business to another provider specifically because of data caps and overlimit fees. Affected customers should also file a complaint with the FCC asking the federal agency to ban data caps as unnecessary and discriminatory against competing online video services.

Let the FCC know data caps are a major concern and are unnecessary considering the steep decline in internet provisioning and transit costs and the extremely high price (and profitability) providers already get from offering unlimited broadband service.

With the advent of AT&T/DirecTV Now, AT&T’s new over-the-top streaming TV service launching later this year, AT&T is preparing to bury the U-verse brand.

Earlier this year, AT&T customers noticed a profound shift in the company’s marketing priorities. The phone company began steering potential customers to AT&T’s latest acquisition, satellite television provider DirecTV, instead of U-verse. There is an obvious reason for this – DirecTV has 20.45 million customers as of the second quarter of 2016 compared to 4.87 million customers for AT&T U-verse TV. Volume discounts make all the difference for pay television companies and AT&T hopes to capitalize on DirecTV’s lower programming costs.

AT&T’s buyout of DirecTV confused many Wall Street analysts, some who believe the days of satellite television are past their peak. Satellite providers lack the ability to bundle services, although some phone companies partner with the satellite company to pitch phone, broadband, and satellite TV to their customers. But consider for a moment what would happen if DirecTV introduced satellite television without the need for a satellite dish.

Phillip Dampier: The “U” in U-verse doesn’t stand for “unlimited.”

AT&T’s DirecTV Now will rely on the internet to deliver television channels instead of a satellite. AT&T is currently negotiating with most of the programmer conglomerates that own popular cable channels to allow them to be carried “over-the-top” through broadband connections. If successful, DirecTV Now could become a nationwide powerhouse alternative to traditional cable TV.

AT&T is clearly considering a potential future where DirecTV could dispense with satellites and rely on broadband instead. The company quietly began zero rating DirecTV streaming in September for AT&T Mobility customers, which means watching that programming will not count against your data plan. For current U-verse customers, broadband speeds have always been constrained by the need to reserve large amounts of bandwidth to manage television viewing. Although AT&T has been boosting speeds in selected areas, a more fundamental speed boost could be achieved if AT&T dropped U-verse television and turned the service into a simple broadband pipe that relied on DirecTV Now to manage television service for customers.

AT&T seems well on the way, adding this notice to customer bills:

“To make it simpler for our customers U-verse High Speed Internet and U-verse Voice services have new names: AT&T Internet and AT&T Phone. AT&T Internet product names will now align with our Internet speed tiers. Our voice plan names will remain the same.”

An earlier internal company memo suggested AT&T would eventually transition all of its TV products into “AT&T Entertainment” after completing a transition to its “next generation TV platform.” Increasingly, that platform seems to be an internet-powered streaming solution and not U-verse or DirecTV satellite. That transition should begin in January.

Gone by end of 2016.

It would represent a formidable change, but one that makes sense for AT&T’s investors. The transition to IP networks means providers will offer one giant broadband pipe, across which television, phone and internet access will travel. The bigger that pipe becomes, the more services customers are likely to use — and that means growing data usage. Having a lot of fiber infrastructure also lays the foundation for expansion of AT&T’s wireless network — particularly towards 5G service, which is expected to rely on small cell technology to offer faster speeds to a more localized area — fast enough to serve as a home broadband replacement. Powering that network will require plenty of fiber optics to provide backhaul access to those small cells.

Last week, AT&T announced it launched a trial 100Mbps service using point-to-point millimeter-wave spectrum to offer broadband to subscribers in multiple apartment complexes around the Minneapolis area. If the initial trial is successful, AT&T will boost speeds to include 500Mbps service to those same complexes. AT&T has chosen to provide the service outside of its usual service area — Minneapolis is served by CenturyLink. AT&T acquired a nationwide license to offer service in the 70-80GHz band back in 2009, and an AT&T spokesperson claimed the wireless signal can reach up to two miles. The company is also experimenting with new broadband over power lines technology that could offer service in rural areas.

Just like its wireless service, AT&T stands to make money not just selling access to broadband and entertainment, but also by metering customer usage to monetize all aspects of how customers communicate. Getting customers used to the idea of having their consumption measured and billed could gradually eliminate the expectation of flat rate service, at which point customers can be manipulated to spend even more to access the same services that cost providers an all-time low to deliver. Even zero rating helps drive a belief the provider is doing the customer a favor waiving data charges for certain content, delivering a value perception made possible by that provider first overcharging for data and then giving the customer “a break.”

As of mid-September, streaming media analyst Dan Rayburn noted Akamai — a major internet backbone transit provider — was selling content delivery contracts at $0.002 per gigabyte delivered, the lowest price Rayburn has ever seen. Other bids Rayburn has reviewed recently topped out at 0.5 cents per gigabyte. According to industry expert Dave Burstein, that suggests large ISPs like AT&T are paying something less than a penny per gigabyte for internet traffic.

“If you use 139GB a month, that costs your provider something like $1/month,” Burstein wrote, noting doubling backbone transit costs gives a rough estimate of the cost to the carrier, which also has to carry the bits to your local exchange. In this context, telecom services like broadband and phone service should be decreasing in cost, not increasing. But the opposite is true. Large providers with usage caps expect to be compensated many times greater than that, charging $10 for 50GB in overlimit fees while their true cost is well under 50 cents. Customers buying a cell phone are often fitted with a data plan that represents an unprecedented markup. The extent of price increases customers can expect can be previewed by looking at the cost of phone service over the last 20 years. The average, often flat rate telephone bill in 1995 was $19.98 a month. In 2014, it was $73 a month. In 2015, it was $90 a month. Those dramatically rising prices in the last few years are mostly as a result of the increased cost of data plans providers charge to clean up on customers’ growing data usage.

Both Comcast and AT&T are dedicated to a campaign of getting customers to forget about flat rate, unlimited service at a reasonable cost. Even as both companies raise usage caps, they continue to raise prices as well, even as their costs to provide the service continue to drop. Both companies hope to eventually create the kind of profitable windfall with wired services that wireless providers like AT&T and Verizon Wireless have enjoyed for years since they abandoned unlimited flat rate plans. Without significant new competition, the effective duopoly most Americans have for telecommunications services offers the opportunity to create a new, more costly (and false) paradigm for telecom services, based on three completely false claims:

• data costs are expensive,
• usage must be monetized, and
• without a bigger return on investment, investors will not finance the next generation of telecom upgrades.

But as the evidence clearly shows, profits from selling high-speed internet access are only growing, even as costs are falling. Much of the drag on profits come from increasing costs related to licensing television content. Voice over IP telephone service is almost an afterthought for most cable and phone companies, often thrown in for $10-20 a month.

AT&T’s transition puts all the attention and its quest for fatter profits on its broadband service. That’s a bad deal for AT&T customers no matter what the company calls its “next generation” network.