BendBroadband introduces a new logo and tagline

BendBroadband, a small provider serving central Oregon, breathlessly announced the imminent launch of new higher speed broadband service for its customers after completing an upgrade to DOCSIS 3.  Along with the launch announcement came a new logo of a sprinting dog the company attaches its new tagline to: “We’re the local dog. We better be good.”

What some BendBroadband customers didn’t realize was that dog comes with a leash.

“The new speeds sound great, right until you read the fine print and discover the awful usage allowances they attach to them,” writes Seth, a Stop the Cap! reader.  “That’s Bend (Over) Broadband.”

BendBroadband plans range from 8Mbps service for $36.95 a month ($46.95 broadband-only), 14Mbps service for $44.95 a month ($54.95 broadband-only), and a forthcoming Gold 25Mbps plan for $54.95 a month ($64.95 broadband-only).  The 14Mbps service represents a speed increase for their current Silver plan.  All of these plans have a 100GB usage allowance, with a $1.50/GB overlimit penalty.

A new Platinum plan will offer 60Mbps service for $89.95 a month ($99.95 broadband-only), yet only incrementally bumps the usage cap up by 50GB, to 150GB per month.

BendBroadband's dog comes with a leash... 100GB Usage Caps

Company officials seemed pleased with themselves.

“Who would of believed ten years ago that we would have these types of speeds available?” said Frank Miller, the company’s Chief Technology Officer. “60Mbps…that’s one fast puppy!”

“That dog (logo) has broadband rabies and needs to be put down,” replies Seth’s wife Angelica, who telecommutes and does most of her work from home.

“Central Oregon can be wowed by the speed, but what good is it if you can’t use it without running into their usage caps and limits,” she asks.

“I’d pay for the premium tiers and get on a waiting list today if they did away with the usage caps.  There is no way I am paying to support a company that sticks usage caps on their customers and makes me waste time doublechecking how much I’ve used this month,” she said.

Seth and Angelica have taken a pass on BendBroadband’s dog show and are sticking with the local phone company’s DSL service until something better comes along.

“The speed isn’t the best, but at least you can use the service and not have to worry about it,” Seth writes.

Phillip "I Can See the Problem" Dampier

Yesterday’s proposal by FCC Chairman Julius Genachowski gets Net Neutrality halfway there.  That already puts us ahead of Canadian broadband, which is a throttler’s paradise, but remember — an eventual FCC rulemaking is not a law.  An FCC policy is only as good as the agency’s willingness to enforce it.  If a new administration decides Net Neutrality is not to their liking, they could very well appoint new Commissioners who agree, and while they may not repeal such policies, they aren’t likely to spend time enforcing them either.

Americans must insist that Net Neutrality have the force of federal law, and that can be done by telling your member of Congress to co-sponsor the Internet Freedom Preservation Act (H.R. 3458.)

Canadians need to immediately appeal to their MPs and ask why Canada is stuck with throttling broadband providers that completely ignore Net Neutrality when the United States not only has a bill to codify Net Neutrality protections but a regulatory communications body that is going to enforce it as policy even without a new law.  That’s a far cry from the Canadian Radio-television Telecommunications Commission (CRTC) which has spent all year rubber-stamping the wish list of the broadband industry.  That’s simply unacceptable, and Canadians need to tell MPs their vote in the next round of elections will depend on which candidate has the best plan to solve this mess.  There is absolutely no justification for Canada falling behind the United States in broadband service.  If the CRTC won’t represent Canadian citizens, perhaps it’s time to get rid of it and let them form an industry trade group, which isn’t far off from where they are right now.

Net Neutrality alone is not nirvana for broadband consumers.  Indeed, there is every expectation some broadband providers may try to slap more Internet Overcharging schemes on consumers and try to blame Net Neutrality for it, under the false “either/or premise.”  Too often, public interest groups and some consumers have been led astray with the assumption that one is better than the other, and that’s a false choice.  Both are extremely bad for innovation, broadband advancement, and consumer adoption and acceptance of broadband service.  When you engage in Overcharging schemes like raising prices, imposing usage caps, meters, overlimit fees and penalties, some consumers will decide it just isn’t worth it.  Few consumers will risk using high bandwidth online applications of the future worried about their usage allowance for the month, or the penalty for exceeding it.

Free Press Illustrates the Telecom Industry's Lobbying Frenzy

Internet Overcharging schemes are not dead, although some of the earlier experiments have been temporarily shelved.  Some smaller providers in rural and small cities are already engaged in usage caps combined with consumption billing.  AT&T continues its experiment in Beaumont and Reno.  Comcast celebrated its first anniversary of the 250GB usage cap by leaving it right where it is, unchanged.  Wireless mobile broadband is a 5GB capped experience all-around.

Although I realize it is difficult to generate intensity when there aren’t big bad actors imminently dropping Internet Overcharging on millions of broadband customers, this is not the time to keep the pressure off.  Let’s make sure providers realize the intense, red hot hatred of gas gauges, meters, and all of the other Overcharging schemes has not cooled a single degree.  You can do that by making another round of phone calls and sending messages to your member of Congress to support Rep. Eric Massa’s Broadband Internet Fairness Act (H.R. 2902.)

This bill does -not- get the government involved in regulating the pricing of broadband service, as some astroturfers have alleged.  It simply demands proof that a provider has a financial need to engage in these practices, and in the absence of independent verification, protects consumers by prohibiting providers from leveraging their de facto monopoly/duopoly status and imposing them anyway.

No government legislation alone is ever going to solve all of our broadband problems and concerns.  But some pro-consumer protections protect our wallets from the undercompetitive broadband industry most of us have to deal with.

Don’t be fooled by providers openly wondering why such protections are necessary.  It was ironic watching yesterday’s panel discussion on broadband when David Young from Verizon started asking what problem Net Neutrality was trying to solve.  He didn’t see any and had no problem living under the open platform standard Genachowski proposed.  That’s ironic because Verizon has nearly 200 paid lobbyists fighting Net Neutrality and related telecommunications policy spending well over $10 million dollars on it this year.  If Young doesn’t see the problem, why are ratepayers and shareholders footing the bill to address it?

A Wall Street Journal article this morning calls the imminent introduction of Net Neutrality policy “a boon for consumers […] to use their computers or cellphones to enjoy videos, music and other legal services that hog bandwidth.”

The article refers to the widely expected announcement today by FCC Chairman Julius Genachowski that Net Neutrality should be adopted as the fifth principle governing Internet service in the United States.

But Journal reporter Amy Schatz’s judgment about who wins and who loses in the Net Neutrality debate is framed by the flawed broadband provider arguments she adopts as reality:

The proposed rules could change how operators manage their networks and profit from them, and the everyday online experience of individual users. Treating Web traffic equally means carriers couldn’t block or slow access to legal services or sites that are a drain on their networks or offered by rivals.

The rules will escalate a fight over how much control the government should have over Internet commerce. The Obama administration is taking the side of Google, Amazon.com Inc. and an array of smaller businesses that want to profit from offering consumers streaming video, graphics-rich games, movie and music downloads and other services.

Setting aside the inappropriate use of the word “hog” to define broadband usage, which comes straight out of the broadband industry’s public relations strategy, Schatz ignores the fact some of the biggest drains on these networks will soon come from the industry’s own efforts to dominate online video — TV Everywhere.

In fact, the excuses for imposing Internet Overcharging schemes in 2009 do not reference much beyond online video growth as a justification to impose speed throttles and price increases on consumers.

Schatz adopts industry positions as fact in a number of places throughout her piece, which belongs on the Editorial page of the Journal:

If the FCC does force U.S. wireless carriers to open their networks to data-heavy applications like streaming video, it could push them beyond the limited capacity they have. Already, in areas like New York and San Francisco, a high concentration of iPhones has caused many AT&T customers to complain about degrading service.

In fact, many wireless carriers already provide their own wireless video to customers, and don’t seem to be engaging in a lot of hand-wringing over that.  Should Net Neutrality force open the wireless platform, the quality of the service, not the provider’s self interest will govern the success and failure of individual applications.  AT&T, which has earned massive revenue from its exclusive iPhone arrangement with Apple, can and should continue to invest some of that revenue into expanding their network to meet the demand.  If they cannot, it is an open question why they would allow any online video or other data-heavy applications on their networks until those networks can handle the traffic.

In such a scenario, wireless carriers may have to rethink how much they charge for data plans or even cap how much bandwidth individuals get, said Julie Ask, a wireless analyst at Jupiter Research.

This ignores the fact providers have already rethought about how much they charge for data plans.  Some providers are now compelling subscribers to choose data plans as part of their two year service agreements, while the industry is replete with 5GB usage caps on wireless data services today.  Someone should ask Ask what she thinks is forthcoming that hasn’t already happened.

The FCC’s proposal will take into account the bandwidth limitations faced by wireless carriers, according to people familiar with the plan, and would ask how such rules should apply to current networks.

…which takes the wind out of the sails of the argument Net Neutrality would be ruinous to wireless providers.

The proposals come as the FCC faces a federal appeals court case over its authority to regulate Web traffic. Comcast is fighting an FCC decision last year to ding it for violating the agency’s “net neutrality” principles when it slowed traffic for some subscribers who were downloading big files. Comcast said it didn’t violate any rules because the FCC had never formally adopted any, but it did change how it manages its network.

In reality, Comcast’s speed throttle targeted files small and large, all because they were delivered over a specific network Comcast didn’t like: peer to peer.  That’s a protocol that relies on a group of people obtaining files by sharing pieces already downloaded with one another until the file is complete for everyone.  That involves uploading and downloading file pieces, often over a lengthy period.  Comcast’s network was built with the assumption most customers would download far more than they upload, and peer-to-peer challenged that model with its file sharing methodology.  The surge in upload traffic challenged their network at times, so Comcast decided to throttle the maximum speeds consumers could use while engaged in peer-to-peer file sharing.

Republicans are likely to oppose the FCC’s new proposal — both at the FCC and in Congress — arguing that the FCC is trying to fix problems that don’t exist and that the agency should take a more hands-off approach to the fast-changing industry.

“With only a few isolated instances of complaints alleging net neutrality-like abuses ever having been filed, it is a mistake,” said Randolph May, president of Free State Foundation, a free-market oriented think tank.

It’s difficult to fathom exactly how much more “hands-off” the agency can get with respect to broadband, an unregulated service in the United States.  That “hands-off” policy was responsible for the establishment of de facto monopoly/duopoly broadband service in most American cities, wireless broadband that charges nearly the same price for the same usage capped service, and is tinkering with Internet Overcharging to leverage that market status into higher pricing for all consumers.

May’s argument is akin to calling the fire department only after a fire has consumed half of your home, not when the smoke detector first goes off.

As a result, both the cable companies and phone companies had incentives to create conditions on the Internet — either through pricing or slowing or speeding up certain sites — to favor their own content.

This sentence, buried towards the end of the piece, exemplifies exactly why Net Neutrality is so important.  Let’s put this fire out before it burns out of control.

Professor Rodney Tiffen

The Sydney Morning Herald ran a piece Friday morning that had absolutely nothing nice to say about the former leadership of Telstra, Australia’s “Private Telecom Monopoly.”

Sol Trujillo was the George W. Bush of telecommunications. For both, the American way was the only way. Being the biggest meant you did not have to do diplomacy, and both were better at starting wars than finishing them. Both used patronage and punishment to ensure a like-minded leadership group that made worse decisions more harmoniously.

Australians remain unimpressed with the tumbleweeds that routinely blow across the Land Down Under’s broadband superhighway — the result of a combination of failed government leadership, special-interest dominated public policies which put the interests of private companies ahead of their own citizens, and the predictable emergence of greedy telecommunications providers delivering the least possible service at the highest possible price for millions of Australians.

Rodney Tiffen, professor of government at the University of Sydney, calls out a succession of Australian governments which have repeatedly dropped the broadband ball, and have left the country with comparatively overpriced service with ludicrous Internet Overcharging schemes that punish citizens with usage caps, outrageous reductions in their broadband speeds or, worse, overlimit fees and penalties:

Australian consumers suffered particularly from the stringent caps placed on downloads and the high expense of exceeding the cap. While in nine of the countries no explicit caps were placed on broadband subscriptions, Australia was one of only four countries (with New Zealand, Canada and Belgium) where all survey offers included caps, and among these four was by far the most expensive when the caps were exceeded – an average of 11 cents per megabyte compared with 1 cent for the others.

Tiffen rejects the argument that Australians have to pay more because Australia has low population density.

“It should also be remembered Australia has a higher percentage of people living in large cities (defined as those with more than three-quarters of a million people) than any of the other countries (measured by the Organization for Economic Co-operation and Development),” Tiffen writes.

The key policy issue Tiffen identifies is: what is a natural monopoly and when does competition produce more dynamism and responsiveness to consumers? Since telecommunications reform came on to the public agenda about two decades ago, there had been a bipartisan failure to address this central question.

Tiffen wants Australia to recognize the mistakes America made dealing with its cable television industry — “replete with cases where a company controlling the delivery platform has favoured its own company’s channels over its competitors.”

“Indeed a private monopoly at a key gate-keeping point often leads to less competition in services than there would be with a publicly owned or regulated infrastructure,” Tiffen argues.

Mark Cuban, owner of HDNet, maintains a personal blog

Mark Cuban is on another tear this week.  Stop the Cap! reader Michael referred us to the latest.  This time it’s TV Everywhere, the cable industry’s answer to online video they get to own and control.

TV Everywhere is a concept put out by TV distributors that basically says that if you pay for cable or satellite, you should be able to watch the content you want, where you want. Everywhere. To some people this is not a good idea.  As is always the case,  many people think tv programming should be widely available for free on the internet.  Of course the content is never free. Someone has to pay to create it and we purchasers of cable and satellite services pay the subscription fees that pay the content companies and allow them to create all that content. Someone always must pay for free. Its unfortunate that there are some incredibly greedy people who think their entertainment needs should be subsidized. We aren’t talking healthcare, we are talking The Simpsons.  No one in the country has the right for their Simpsons to be subsidized.

I am uncertain why Mark is tilting at windmills here, fighting a battle with arguments that are beside the point.

He should know, as an independent programmer, permitting another cartel for video program distribution online has the potential to place control of that content in the hands of the pay television industry.  Agreements to carry a cable network on a cable system could easily become contingent on participation in TV Everywhere once it becomes more established.  Mark knows all about restrictive carriage agreements.  Some of his networks were trapped in a mini-premium HD tier on Time Warner Cable, despite his wishes to see them a part of the general HD lineup.  Once Time Warner Cable threw his networks off their cable systems nationwide, presumably so would go our online access to it as well.

For consumers, the basic concept of TV Everywhere seems like a positive development, if it brings online video content people want to see without charging them yet another fee on their pay television bill.  Consumers, raise your hand if you have a problem with more online video.

In fact, the loudest concerns about the entire endeavor these days are coming from the content producers and owners themselves.  They are the ones worrying about giving content away.

The Wall Street Journal chronicles the concerns:

While 24 networks are taking part in the Comcast trial, including Time Warner’s Turner cable networks, broadcaster CBS, AMC, BBC America, and Hallmark Channel, Walt Disney Co. (DIS) has so far avoided the “TV Everywhere” experiment because it doesn’t offer the Disney networks enough money in return for allowing their shows to be streamed over the Web.

“A new opportunity to reach consumers is very attractive … [but] we want to do so in a way that delivers proper compensation [to us] for that value,” said Disney Chief Financial Officer Tom Staggs, who spoke at the Goldman Sachs media conference on Tuesday.

That brought out Jeff Bewkes, Time Warner CEO, who scoffed at the demands for compensation.  Bewkes reminded Disney who is paying the bills.

“[The content providers are] not the ones who are going to the effort and expense of making this possible,” he remarked. “The ones that are making this possible are the distributors – the telcos, the satellite companies, the cable companies.”

Second, nobody is arguing that TV programming should be given away “free” online with absolutely no compensation.  The existing online video models are primarily advertiser supported.  The advertisers pay the costs to make the service available, and viewers endure online commercials during each ad break.  Some networks want to cram a ton of ads equaling the number a viewer would see on their television (get ready for more Snuggie and door draft stick on tape ads). Others are more realistic and will place a maximum of 30 seconds of commercials during each break.  Finding the right balance will be important — too many ads and consumers will pirate the content to avoid the ads.  Run smaller amounts and consumers will easily tolerate them.

Third, nobody I am aware of is arguing TV needs to be “subsidized.”  What does that even mean?

Besides the skirmish between content providers and the companies that want to distribute TV Everywhere, the concerns I’ve seen expressed include:

• The concentration and control of online video content through a cable industry-controlled authentication system that is long on generalities and short on specifics regarding how it will operate.  How do non-cable subscribers get “authenticated.”  What procedures are in place to protect the competitive data other providers will have to share with any authentication process?  How about customer privacy?  Is there equity of access to TV Everywhere regardless of the pay television service the consumer subscribes to?
• The credibility of the broadband providers’ argument that their networks are already overcrowded to the point they must “experiment” with usage caps, consumption billing, and other Internet Overcharging schemes.  Apparently their networks aren’t nearly as congested as they would have us believe, considering the fact they are participating in a project to place an even greater load on those networks.
• Mark seems to support content portability, namely the ability for a subscriber to place that content on any device for viewing.  Good luck.  Content producers go bananas over content that can be downloaded and viewed on any device or computer, because such open standards are also open to rampant piracy.

TV Everywhere can be a consumer value-added service for pay television providers, if it’s handled in a consumer friendly way.  The cable industry does not have an excellent track record of keeping their customers in love with them.  My personal concern is that what TV Everywhere gives away for free to “authenticated” subscribers today will tomorrow be packed with advertising, carry an additional fee for access on your cable bill, and will be just one more excuse to try and ram usage caps and consumption billing down the throats of the broadband customers trying to take advantage of their broadband service.