Lebanese consumers and businesses are fed up with Lebanon’s archaic Internet infrastructure and the usage limits that come with it.

Now the country is waiting with anticipation as the government prepares to open up new bandwidth from a 3.84 terabit per second underseas cable that passes through the region, but has been left idle since last December.

Lebanon’s Internet is ranked among the slowest in the world, mostly thanks to an over-controlling state telecommunications authority that has priced broadband Internet access into the stratosphere.  Most Lebanese cannot afford the ridiculously slow and expensive “top speed” DSL connections offered by the country’s phone company, offering “up to 2Mbps” speeds for $200US per month.  Instead, most lower income households still use dial-up access, while Lebanon’s middle class settles for 256kbps DSL that still runs a ridiculous $25 a month.

But the 60 percent of the country choosing 256kbps Internet finds even those speeds less than useful when considering they come with a usage allowance of a paltry 3GB per month.  Going over that limit delivers an expensive lesson.  Excess usage is billed at $17 per gigabyte.

Ghanem

Lebanon’s Ministry of Communications, who made the announcement of the forthcoming access improvements, didn’t impress many consumers with word they would “double or triple” the usage cap to celebrate forthcoming speed increases.

“It [is] like entering [the knowledge economy] through a small window,” said Diana Bou Ghanem, head of the the ministry’s ICT office.

Even with the forthcoming improvements, government controls have kept Lebanon’s Internet in the dark ages.  Broadband statistics reveal war-torn Afghanistan and Iraq enjoy faster broadband than Lebanon, and some of the world’s poorest countries like Zambia and Tanzania enjoy speeds twice as fast as those found in downtown Beirut.

Lebanon’s Daily Star newspaper covered the broadband debacle with some alarming reporting suggesting some of the government’s key officials on telecommunications barely grasp telecommunications networks, policies, and practical realities.

For example, former Telecom Minister Charbel Nahhas, a major booster of Lebanon’s forthcoming foray into 3G wireless broadband, seems to believe such networks will deliver up to 20Mbps to Lebanese cell phone users.

Nahhas considers 3G cutting edge for Lebanon, even as the rest of the world prepares to retire it for faster 4G wireless networks.

Telecom Minister Adviser Antoine Boustani seems to think broadband is a tangible resource that can be exported like oil, gas, or electricity.

“We will have an overflow of capacity with [the new underseas cable],” Boustani told the newspaper. “We could even distribute the excess to other countries.”

Ogero is the state-administered phone company in Lebanon.

The Lebanese government and state run phone company — Ogero — have even been willing to celebrate broadband achievements both have regularly failed to meet:

Ogero had planned to host a huge party announcing the [underseas] cable last December, under the auspices of then Prime Minister Saad Hariri. According to sources close to the affair, it was to feature a seated dinner for some 500 persons at the prestigious Pavillion Biel, prime time live television coverage and even Lebanese Opera singer Hiba Kawas, who was commissioned to write a song for the event, performed with a full orchestra. Despite the fact that the Lebanese leadership failed to deliver broadband to its citizens for the past decade, some 10 trophies were to be crafted by the Lebanese sculptor Rudy Rahme and distributed to various officials.

But all this was cancelled when then Telecoms Minister Nahhas received an invitation and challenged Ogero’s role in managing the [underseas] cable and the prime minister’s patronage of it.

Lebanon is following developments elsewhere in the region where broadband usage limits are becoming a thing of the past. When a cartel of Kuwaiti ISP’s threatened to introduce new usage caps in unison, a full-scale consumer revolt forced the government to ban usage caps in the country.

“The Internet has become a cornerstone in development, economy and everyday life in Kuwait,” the country’s telecoms minister, Salem al-Uthayna, said last month in explaining the decision to abolish caps.

Most observers place the blame for Lebanon’s snail-like broadband development at the feet of the government and the state-run phone company, which has blocked efforts to radically change broadband in the country.

Critics accuse both the government and phone company of fearing major market changes, preferring incremental development over a full-scale broadband revolution.  But not everyone is a critic.

“It’s better to look for solutions – play it in a positive way,” said Abu Ghanem, who has worked at the ministry for 15 years. “I don’t want to blame anyone. Just let us work and let us deliver.”

One member of the private sector trying to put Lebanon’s bottom-rated broadband in a different context suggested citizens look on the bright side.

“OK, we are last in Internet [speed] but we are better at other things,” the source added. “Look at the price of real estate in Beirut.”

One of the conditions Comcast had to agree to as part of its multi-billion dollar deal to acquire NBC-Universal was to throw a bone to some of America’s poorest households by offering discount Internet access for three years.  Comcast agreed and is rolling out low-speed Internet at a discount in time for the upcoming school year.

“Comcast Internet Essentials,” is the ultimate in bare-bones Internet.  For $9.95 a month, customers in Comcast service areas will get 1.5Mbps download speed and 384kbps upstream, with the usual 250GB usage limit Comcast applies to everyone.  But not just anyone can qualify.  Comcast has limited the program only to households with at least one child qualified to receive free (not discounted) school lunches under the National School Lunch Program.  So if your income-challenged household doesn’t include children, or you pay for your own school lunches, you are out of luck.

Comcast is also denying access to anyone who has had any level of Comcast Internet service within the last 90 days.  So if you’ve scraped enough money together to pay Comcast’s regular prices, the cable company is not going to give you a break.

If your kids graduate or are removed from the school lunch program, your inexpensive Internet service goes with it.

If you have been late on a Comcast bill, or owe the company for unreturned cable equipment, you also cannot receive the service.

The company will also provide vouchers for a “discounted laptop” for $150 — a computer that turns out to be a netbook.  At least it comes with Windows 7 (Starter Edition).

Comcast requires would-be customers to start with an application, available by phone, at 1-855-8-INTERNET (1-855-846-8376).  The merger approval agreement required Comcast to provide the service for three years.  Guess what happens to it when the requirement ends.  No matter — Comcast is turning the entire affair to its public relations advantage, showing up on various media outlets promoting the program as if Comcast thought it up on its own.  Not quite.  We have three questions:

1. How many consumers would sign up for the service if Comcast offered $9.95 1.5Mbps to anyone who wanted it?
2. How many might consider downgrading their current service for something less expensive, especially if they are only interested in occasional web browsing?
3. Will the “digital divide” Comcast decries today be magically gone at the end of three years, when they quietly drop the program?

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KRIV Houston Comcast Internet Essentials 8-8-11.mp4[/flv]

KRIV-TV in Houston explores the various conditions Comcast places on its Internet Essentials program.  (2 minutes)

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/CNN Low Cost Internet 8-10-11.flv[/flv]

Comcast’s David Cohen appeared on CNN promoting Comcast’s Internet Essentials as a way to “bridge the digital divide” — a disparity of access American ISP’s originally created with their excessively high-priced Internet services. (3 minutes)

New Zealand is one of a handful of countries stuck with pervasive Internet Overcharging schemes that limit usage or throttle broadband speeds because of international connectivity limitations.  But as international underseas fiber cables ease traffic congestion, Internet Service Providers are increasingly relaxing usage caps and reducing the level of speed throttling during prime time usage hours.

Now one ISP, Slingshot, has gone all-out, reintroducing an unlimited, flat rate broadband option for New Zealanders who don’t want to worry about how much usage they’ve racked up over the past month.

For roughly $32.50US for the first six months, $65 after that, customers don’t have to watch a usage meter or “gas gauge” or face a wholesale heavy speed throttle when deemed to be using “too much” Internet service.

Leap Wireless is trying to save face on less-than-impressive second quarter financial results showing the company is losing its mobile broadband customers who are increasingly weary of Cricket’s price increases and speed throttles.

The company lost at least 132,000 broadband customers since the first quarter, mostly due to price increases, reduced usage allowances and “network management” practices, which reduce speeds to near dial-up for customers who are deemed to be “using too much.”

“On broadband, we tightened our focus to more profitable customers while shedding less profitable ones,” said Leap Wireless CEO Douglas Hutcheson.

Internet Overcharging Facts of Life: What 'Network Management' tools are really used for. (Courtesy: Cricket's Second Quarter Results Investor Presentation)

Cricket recently announced increased pricing on their usage limited plans: $45/month for 2.5GB, $55/month for 5GB, or $65/month for 7.5GB.

With a less-than-robust regional 3G network and higher pricing, broadband customers have decided to take their business elsewhere, despite the company’s recently announced expanded data roaming agreement with Sprint.

Cricket acknowledges their “increased network management initiatives” are partly to blame for the loss, but the company also says increased prices for mobile broadband devices, which used to be available for free after rebate, are also responsible.  Cricket’s least expensive mobile broadband modem now runs just under $90.

Company officials told investors the losses “were expected,” and that the company has been trying to make up the difference with higher value smartphone data plans.  Mobile broadband customers tend to consume more data than smartphone users, so the company’s emphasis on smartphone data users, who use less, will deliver increased revenue at a reduced cost.

Cricket’s CEO explains the company’s renewed focus on keeping highly-profitable mobile broadband customers while effectively getting rid of “heavy users” who have been targeted with aggressive speed throttling over the past year, and now face higher prices for lower usage allowances. Also explored: Cricket’s future 4G LTE network buildout.  August 3, 2011.  (4 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Cricket's declining mobile broadband business

In fact, the company’s presentation to investors credits network management tools for driving away “higher usage customers,” allowing Cricket to reap the benefit of “improved revenue yield per gigabyte.”  In short, that means Cricket profits handsomely from data plans they hope customers will only occasionally use.

One of Cricket’s biggest product priorities this year is pitching its Muve Music service, bundled into an all-inclusive $55 wireless prepaid phone plan.  It gives Muve phone customers unlimited access to an enormous downloadable music library accessed on the phone.  Since the service does not allow customers to transfer the music to other devices, record companies are happy to participate.

The biggest downside for some is that the Muve phone becomes your music player — a phone many customers consider a work in progress.  Some critics have labeled the service a “total fail” because of sound quality and DRM restrictions. But since the service is already bundled into the wireless plan at no additional cost, more than 100,000 customers are using it, downloading at least 130 million songs since it was first introduced in January.

Muve Music is another way Cricket is trying to differentiate itself from other wireless providers, and the company may try to expand the Muve Music service to much-more-profitable smartphones in the near future. Cricket hopes to begin selling no-contract smartphones at prices below $100 by Christmas.

Cricket executives answer questions from Wall Street about how the company intends to deal with a decline in mobile broadband customers, and explains their use of network speed throttles. Cricket plans to “follow industry trends” and experiment with “session-based” throttles sometime next year. These allow customers to pay an extra charge to temporarily remove the speed throttle when they need additional bandwidth. It’s just one more source of lucrative revenue from conjured up network management schemes.  August 3, 2011.  (4 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Cricket is also planning further expansion of its ‘welfare wireless’ plan — a Universal Service Fund-backed home phone replacement for customers receiving public assistance.  The Lifeline USF subsidy is designed to provide affordable home telephone service to the most income-challenged among us.  Many landline providers charge around $1 a month for the service (before fees), and then charge for every call made.

Cricket’s implementation of this subsidy could draw some controversy because it delivers a $13.50 monthly discount off -any- of their rate plans.  That means qualified customers could pay just over $40 a month for a high end smartphone service plan, subsidized by every telephone ratepayer in the country.

Cricket also plans to launch LTE 4G service starting in early 2012.

Cricket plans to introduce 4G LTE service in 2012.

Cogeco Cable customers are about to pay for the company’s tragic financial results from its Portuguese operations in the form of broad-based price increases the company is selling as service “improvements.”

July’s financial results for Cogeco, which owns cable systems in Ontario, Quebec, and Portugal, are not good.  With mass subscriber defections and downgrades from Cogeco’s Portuguese cable system Cabovisao, company officials have decided to write off their European investment, resulting in a $56.7 million loss in the third quarter.

Tempering the damage is the company’s decision to raise broadband prices for Canadian customers by $2 a month for their Standard broadband package, soon to be priced at $48.95.

(Courtesy: 'Gone' from Fort Erie, Ontario)

“To add insult to injury, they are calling these changes ‘improvements,'” writes Stop the Cap! reader Claudette, who is a Cogeco customer in Ontario.  “In fact, the only thing Cogeco is improving is their skill at overcharging us.”

Cogeco's financial mess in Portugal.

Cogeco has sent letters to subscribers notifying them about the “improvements,” mostly in the form of a name change for the company’s ‘Standard’ plan, soon to be renamed ‘Turbo 14.’  They have also launched a new section on their website to break down the changes.

The only benefit Cogeco is introducing for customers with their Standard plan is a slight bump in usage allowances, from 60 to 80GB.  But that change comes with a major catch.  Cogeco charges customers a $1.50/GB overlimit fee with a monthly maximum overcharge of $30.  When ‘Turbo 14’ premieres Oct. 1, the maximum overlimit fee will jump to $50 a month.

“That is a total ripoff, because the next plan up with bigger allowances — just over 100GB a month — costs nearly $77 a month, for a whopping 16Mbps,” she adds.  “They just raised our rates last July and now they want more.”

Cogeco is punishing their premium customers even more by taking the maximum overlimit fee cap completely off their DOCSIS 3-based Ultimate 30Mbps and 50Mbps plans.  Available in some Cogeco service areas at prices of $60 and $100 a month respectively, the plans come with usage limits of 175-250GB.  The sky is the limit for overlimit fees, racked up at $1 per gigabyte.

Cogeco customers are outraged, and have begun shopping for alternatives, just like their counterparts in Portugal who have put their cable service on the chopping block.

The ongoing Portuguese financial crisis has been met with tax increases and benefit reductions by the government, and Portuguese consumers have responded with wholesale cord-cutting, cancelling Cabovisao cable-TV service in droves.

Cogeco's systems in Ontario (click to enlarge)

“You now have customers squarely opting out of [cable TV],” said Louis Audet, Cogeco’s president and chief executive officer. “These are economic circumstances that we have not, nor has anyone here, witnessed in North America. These are very unique to the circumstances in Portugal.”

At least Audet hopes they are.

With fewer competitive choices in the rural and suburban Ontario and Quebec markets Cogeco favors, consumers have a tougher time finding alternative providers, but not an impossible one.  Many are dropping Cogeco’s phone and broadband packages, moving to Voice Over IP or cell phone service for the former, and independent broadband providers like TekSavvy for the latter.  TekSavvy still retains unlimited use plans and has been traditionally more generous with allowances for the usage-based plans the company also sells.

Investors have been placated with a boost in Cogeco’s dividend payout… for now.  But many have adopted a “told you so” attitude about the company’s controversial decision to invest in overseas cable to begin with.

Scotia Capital analyst Jeff Fan said he had a negative view about Cogeco’s Portuguese venture.

“We hope this paves the way for a sale,” he wrote in a note to investors, “as Portugal is still cash-flow negative and dilutes the strong Canadian results.”

In fact, many investor groups dream of an even bigger sale — of Cogeco itself.

Joseph MacKay of Mackie Research said Canada’s fourth-largest cable company is ripe for a takeover by a larger cable operator, presumably Rogers or Shaw Communications.  Rogers already blankets Ontario with cable services, so Cogeco’s operations in eastern provinces would be a ‘natural fit’ for the company.  Shaw’s interest in expanding eastward could also get a boost from the buyout of Cogeco.

But one significant roadblock remains — the controlling interests of the Audet family, which have no intention of selling and control enough voting shares to stymie a hostile takeover.  In fact, despite the poor showing of the company’s Portuguese operations, the Audet family claims to be interested in acquiring other providers and expanding Cogeco’s size.

With the benefit of a two-dollar rate increase and the proceeds of Internet Overcharging, they’ll be in a position to put more dollars toward that goal.