One of America’s largest midwestern cities is being victimized by not one, but two major Internet Service Providers with Internet Overcharging schemes that will limit broadband use by customers.

Charter Communications, which calls St. Louis home, delivers cable service to much of the city, and has lightly enforced arbitrary usage limits on its cable broadband customers since last November.  AT&T, the major telephone provider, plans to limit its DSL and U-verse customers starting in early May.

“Now we get to choose between Charter’s usage cap or AT&T’s,” says Reginald, a Stop the Cap! reader in St. Louis.  “As usual, AT&T is always the bigger ripoff — this company hasn’t done one consumer-friendly thing in at least a decade.”

Reginald is currently a U-verse customer who fled Charter around the time the cable company went bankrupt.

“Charter was, is, and will always be abysmal in providing good service and accurate bills, and I was not about to pay for their business mistakes,” Reginald writes.  “When U-verse became available I told AT&T I was signing up because they were offering unlimited use plans and Charter was playing games with their usage cap.”

When AT&T’s cap is in place, St. Louis residents will get to choose between the lesser of two evils:

Usage Limits

• AT&T DSL Customers:  150GB per month
• AT&T U-verse Customers:  250GB per month
• Charter Lite/Express: 100GB per month
• Charter Plus/Max: 250GB per month
• Charter Ultra 60: 500GB per month

AT&T will deliver three warnings and then a higher bill — $10 for each 50GB of “excess usage.”  Charter sends out occasional warnings, then reserves the right to terminate your service.

“It stinks, and if I had my way I would not do business with any provider who has a usage cap,” Reginald says.  “I would rather pay a few dollars more a month and not have to worry, and I can’t imagine I’ve ever used over 100GB in a month.”

Jess, another St. Louis resident, pulls the plug on AT&T U-verse May 2nd.

“I almost wanted them to charge me an early cancellation fee so I could pound them with their sudden change of terms,” Jess says.  “I am switching back to Charter on May 2nd, the day AT&T starts their crap.  AT&T acted all surprised about why I would possibly ever not do business with them over this issue.”

Jess says she would rather deal with warning letters from Charter than a higher AT&T bill.

“Every penny more AT&T gets from us goes right into their lobbying to screw consumers more, and here are the results for everyone to see,” Jess says.  “If Charter wants to pull their games with me and my family, the next step is to declare war on the politicians who let this stuff happen.”

Bill says AT&T offered him a discount to stay with the company — he is canceling his U-Verse service May 1st.  But he refused, telling AT&T he will not do business with a company that engages in Internet Overcharging.

“I’m not too worried about Charter,” Bill writes Stop the Cap! “If they try and threaten me, I’ll let them cut me off and then we’ll sign up under my wife’s name, and bounce from account to account.”

Your money = Their Money

For all three of our readers, none of whom claim they will exceed the allowance, it’s a matter of principle.

Reginald, Jess, and Bill all feel strongly usage caps and overlimit fees are unjustified, and are more about protecting video packages than “unclogging” providers’ networks.

Bob Zimmermann, an AT&T customer in Richmond Heights, tells the Post-Dispatch he doesn’t like the new limit either. He watches an occasional Internet movie, and sometimes downloads video to his iPad. He doubts he’ll exceed the cap, but he doesn’t want to worry about it.

He is shopping for alternatives.

“I’ll see if I can negotiate a better deal,” he told the newspaper.

Jess wishes him luck finding someone else in St. Louis.  She suggests customers like Zimmermann play AT&T and Charter off each other to get a lower bill, at least temporarily.

“What is most important right now is to tell AT&T you are leaving them because they are abusive, and then sign up with a new customer discount with Charter,” Jess suggests.  “Then if and when Charter cuts you off, go back to AT&T and see if you can get them to waive any fees after the third warning or else you are switching back to Charter.”

Another alternative is to sign up for Charter’s business service, which has no usage cap, but comes at a significantly higher price than residential service.  Their starter package includes unlimited Internet at 16/2Mbps speeds, a domain name, and a business phone line with unlimited long distance and calling features.  It runs a steep $120 a month.

“If Charter didn’t offer a 500GB allowance on their 60Mbps tier, I might consider a business package if I used my connection a lot,” admits Bill.  “Isn’t it ridiculous when someone wants to sell you a super fast package you cannot really use because of usage limits?”

Bill partly blames the state legislature for letting AT&T get abusive with customers.

“AT&T shows up with a lot of cash to dole out in the Missouri legislature and in return they get to abuse customers,” Bill notes.  “You notice Verizon cannot get away with this in the more consumer-protection-friendly northeast.”

Jess says the whole thing is a mess.

“It really shows how the midwest is getting screwed once again — this time for Internet access,” she notes. “There is no Verizon fiber here, and even Google showing up in Kansas City won’t be enough to shame the likes of AT&T.”

Time Warner Cable’s business services division today unveiled a new scalable online storage service for business class customers that automatically backs up computer and server files to a remote data center over its cable broadband network.

“Businesses are increasingly reliant on vital computer data, and their need to protect and maintain this critical information also continues to grow,” said Craig Collins, Senior Vice President, Business Services Sales & Marketing, Time Warner Cable Business Class. “Our new Business Class Online Backup provides our customers with a reliable and secure data storage service that will enable their business operations to proceed unimpeded should data loss occur.”

The service can support backups running well into the terabytes of data, uploaded over the cable company’s increasingly DOCSIS 3-compliant broadband network, which can help maximize upload speed.

Business class customers already enjoy “prioritized” service for business broadband traffic, which travels over the same cable lines used by residential cable customers.

With the introduction of online file backup, one of the most data-intensive services around, Time Warner Cable is demonstrating it believes its network can sustain the increased traffic online cloud storage will bring, all without usage limitations.

Some broadband providers, including Time Warner Cable, have historically claimed broadband traffic growth has necessitated experiments to control and manage usage.  But with necessary infrastructure upgrades, the cable operator has proven it can deliver a more robust broadband service to customers, and earn additional revenue selling products that take advantage of increased capacity.

Visions of higher broadband bills for consumers... complete with usage limits.

In our continuing campaign to call out shallow analysis of Internet Overcharging, we present today’s latest example from Strategy Analytics.

This group, which claims to be “a leading expert on telecommunications tariffs research and analysis” for OECD and EU operators and regulators offered this gem: (underlining ours)

As and when these caps come into force, users will doubtless complain – much as they did with mobile broadband caps. Some will worry about overage charges, while others will bemoan the fact that the caps are set so high that they are paying for bandwidth they simply won’t use (which is kind of ironic, if they have come from a world where they were paying for unlimited usage). From a provider perspective, it is very much a case of damned if you do, damned if you don’t. The ‘trick’ for them is to strike the right balance between fairness – if you use, you pay – and simplicity/transparency, by not creating too many layers around broadband pricing.

We can probably expect to see providers follow AT&T’s lead in fixed broadband pricing. But before the critics start on the inevitable tirade against them, it is worth remembering that genuine flat rate pricing across comms services is not as prevalent as we would all like to believe – a closer look at service terms and conditions will reveal that.

The “critics” Strategy Analytics wants to lecture are consumers.

In nearly three years of covering Internet Overcharging schemes as our main focus of interest, we have never… we repeat never, heard of anyone complaining their home broadband provider delivered ‘too much’ usage allowance.  In fact, consumers who complain about broadband pricing point to relentless rate increases, particularly when they come on top of usage limits and/or speed throttles.

The only “strategy” on offer from this group is an apparent interest in raising consumer broadband bills with price tricks.  The ultimate in simplicity and transparency is today’s enormously profitable unlimited use broadband service that has raked in billions in profits for cable and phone companies.  Consumers need not think twice about every website they visit, providers don’t have to deal with billing confusion, customers are given the opportunity to buy faster speed tiers at a premium price that actually delivers value without restricted use provisions.

The group also claims unlimited broadband is not as ubiquitous as we might believe, hinting use restrictions can be found in Acceptable Use Policies.  The truth is, those restrictions which allow a provider to control traffic that proves harmful to the network (bot attacks, hacking, and viruses) or other customers (spam bombs, commercial use of residential accounts, running a server) have always been a part of Acceptable Use Policies since phone and cable companies started selling service.  Most providers responsibly enforce these provisions not as a backdoor usage cap, but to prevent activities that clearly create demonstrable problems for the provider or other customers.  Few consumers object to them.

Phillip Dampier

I could spend all day refuting sloppy ‘accepted as true with no fact-checking’-reporting done by news organizations on the issue of Internet Overcharging.  Facts not in evidence:

• Assumptions that what is “fair” in wireless must be fair on wired networks;
• Everyone is doing it around the world so North America should do the same;
• People are not paying “their fair share” for the growing amount of usage.

It’s all a big bucket of wrong, and the only thing getting rolled over month after month are consumers.

Yesterday, it was GigaOM telling us “Comcast DSL” (?) had no usage caps at all.  (They do — 250GB per month, and they sell cable broadband, not landline DSL.)

Today, it’s ComputerWorld‘s Matt Hamblen, who blows it right in the first paragraph:

Data caps on nearly all wireless and wired networks in the U.S. seem likely to be in place soon, despite the latest unlimited data offers from Verizon Wireless and Sprint.

Impressive crystal ball gazing there.  Nearly all networks will be capped?  Even though Sprint is banking its near-future on selling unlimited use plans and the economics of wireless are considerably different than wired broadband, Hamblen boldly predicts near-universal usage caps, even as most providers have no formal caps at all.

Hamblen’s journey starts with a survey of capped broadband offerings on the wireless side.  Spectrum issues and the nature of wireless technology makes providing unlimited use plans more challenging, especially when users consider their mobile broadband service a home broadband replacement.  Some have even left peer-to-peer software running in the background 24 hours a day.  It was this, according to Clearwire, that did in that provider’s unlimited service, which is now heavily speed-throttled in many areas.

Stop the Cap! has argued repeatedly current generation wireless broadband will never be a suitable replacement for traditional wired broadband, unless your use is confined to web browsing, e-mail, and occasional multimedia.  The capacity isn’t there and the technology is susceptible to serious speed loss in congested areas.  That is not to say future wireless technology might not change this reality.  The political debate over re-purposing unused UHF television channel frequencies for wireless broadband is just getting underway in Washington.

But trying to draw arguments from the wireless world for usage caps across wired broadband networks is where the line ends.

Hamblen predicts because AT&T wants to gouge its wired broadband customers (many who are now cancelling service and heading back to the cable company, when possible), now everyone will be going to the Internet Overcharging party:

Data caps on both wired and wireless customers are widespread, even if they annoy some smartphone early adopters in the U.S. Ars Technica listed the policies of 11 different wired network data caps for several different countries.

Hamblen’s report isn’t simply false — it’s sloppy.  Wired broadband usage limits are not widespread in the United States, and despite Ars Technica‘s sampler, the trend globally is away from usage-capped wired broadband, not towards it.  Evidently Hamblen didn’t bother to read Matthew Lasar’s piece, which includes references to BT in the United Kingdom moving towards unlimited use service in the near future, Canadian consumers’ victories against usage-based billing preserving unlimited use plans from resellers, and Australia’s own ever-increasing usage allowances.

In fact, even Lasar missed the fact several Australian ISPs now sell unlimited use plans themselves — something unheard of just a few years ago.  As in Britain, some users who consume over 300GB in a month may find their speeds reduced at peak usage times, but only until capacity improvements allow the throttles to be removed.  Even South Africa, one of the most challenging places to deliver 21st century broadband, has providers delivering unlimited use service.

Hamblen then moves on to another inaccurate argument — consumers will simply reserve their high bandwidth downloads on smartphones for the office Wi-Fi network, that will also face usage caps.

Except virtually every usage cap that does pop up in the United States applies to residential accounts only.  Commercial accounts are exempt, as are the Wi-Fi networks powered by them, especially for cable broadband-based service that is increasingly popular with small and medium sized companies.

Although Wall Street wants usage caps and regularly says they are inevitable, that does not make them reality.  Consumers certainly do not want them and will cancel service with a provider if an uncapped alternative exists.  While certain providers, their backers on Wall Street, and some dollar-a-holler groups defending them all have a financial interest in pushing memes about Internet Overcharging, members of the media should not.

Lynch

Verizon’s ambitions to provide 285 million people with the option of ditching their cable or DSL broadband account for its new LTE/4G wireless network is a dream that will never come true with the company’s wireless Internet Overcharging schemes.  With a usage cap of 5-10GB per month and a premium price, only the most casual user is going to give up their landline cable or DSL service for Verizon’s wireless alternative.

Dick Lynch, executive vice president and chief technology officer at Verizon spoke highly of Verizon’s new next generation wireless network as a perfect platform to deliver broadband service to landline customers, including many of those the company sold off to Hawaiian Telcom, FairPoint Communications, or Frontier.

“[LTE] provides a real opportunity for the first time to give a fixed customer in a home, broadband service — wireless — but broadband service,” Lynch said. “In wireless, I see a great opportunity within the LTE plans we have to begin to service the customers who don’t have broadband today … They will be able to have mobile LTE and also to be able to have fixed broadband.”

Unfortunately, Verizon’s LTE network comes with usage limits and a premium price — $50 a month for 5GB or $80 a month for 10GB.  At those prices, rural America will have two bad choices — super slow 1-3Mbps DSL ($30-60) with allowances ranging from 100GB-unlimited or LTE’s 5-12Mbps (assuming the local cell tower is not overloaded with users) with a usage cap that guarantees online video will come at a per-view cost rivaling a matinee movie ticket.

Still, Verizon is likely to test market the service as a home broadband replacement, particularly in territories they no longer serve.  Verizon has done much the same thing pitching a home phone replacement product that works with their wireless network to residents of Rochester, N.Y., and the state of Connecticut, neither currently served with landlines from Verizon.

Despite the pricing and cap challenges, Deutsche Bank — one of the Wall Street players that follows Verizon — thinks the company’s DSL-replacement has merit, if:

1. If you are a regular traveler that needs a wireless broadband service anyway;
2. You use broadband exclusively for web browsing, e-mail, and very occasional multimedia access;
3. You are wealthy enough not to care about the overlimit penalty.

For everyone else, sticking with traditional DSL service will continue to be the most affordable option, assuming usage caps are kept at bay.  Where available, cable broadband service from companies that serve smaller communities, including Comcast Cable, Time Warner Cable, and Cablevision, among others, will probably continue to deliver the most bang for the buck in rural America.