More evidence arrived this week that Internet Overcharging schemes are becoming a thing of the past for many global broadband users.

Sky has announced it is getting rid of its usage limits and speed throttles for most of its broadband customers.  It’s also giving away a free speed upgrade to up to 20Mbps for its DSL-provisioned broadband service.

“It comes with no usage caps, fair use policies or traffic management, making it ideal for those who want the freedom to download emails, photos, TV programs, movies and games. It’s also ideal for those who want to access live and on-demand TV through Sky Player,” Sky said.

That may be part of the plan.  Sky, a satellite television company serving the United Kingdom, is preparing to launch new video on demand features that will work in conjunction with its broadband service.  Delivering faster access, without limits, could be part of the equation of making their video on demand service a success.

For occasional broadband users who don’t exceed 2 gigabytes of use per month, Sky is giving free usage-limited broadband service to customers who also subscribe to Sky’s telephone service.  For those that don’t, the 2 gigabyte-capped service costs £5 ($7.59US) per month.

For those looking for unlimited service, Sky Unlimited is available for £7.50/$11.38 per month for Sky customers with Sky Talk or £12.50/$18.97 per month for those without.  In the United Kingdom, line charges for the phone line are broken out from broadband pricing and have to be considered towards the total monthly cost for broadband service.  Line rental from BT costs £12.50/$18.97 a month for customers who pay by direct debit and receive paper billing (£11.25/$17.08 with paperless billing).

Sky requires a 12 month service commitment.  These prices and plans take effect June 1st.  New customers can get a promotion offering six months of free broadband service, including line rental, when signing a 12-month service commitment.

New customers can get six months of broadband service for free when signing up

Is there a downside to this offer?  Not as far as usage limits are concerned.  However, the service is dependent on BT-provisioned DSL phone lines, which can create great variability in the maximum actual speeds customers receive.  The further away from a BT exchange office, the slower the maximum speed a customer will achieve.

But for existing Sky satellite customers looking for a discount on bundled service and an end to worries about monthly usage or speed throttles, Sky Broadband is a welcome relief for those tired of Internet Overcharging schemes.

It’s also one fewer example North American providers can point to as an excuse to attempt Internet Overcharging schemes of their own.

Last year I participated in an online focus group about wireless broadband pricing.  The subject was consumption billing vs. usage limits — do consumers value unlimited broadband plans with overlimit fees more than strict usage caps that cause speeds to plummet for customers who reach them.  Also under consideration were various usage allowances sold at different price points.  Focus group members could rate the plans’ acceptability from a scale of “extremely interested” to “would not consider this plan.”  It took me mere minutes to work my way through dozens of combinations, rating them all unacceptable.  Participants were next directed into an online forum to discuss the different plans amongst ourselves, with a moderator focusing and encouraging discussions.

Inevitably, I was asked why I rated every plan on offer as not worthy of my consideration.  My short answer was that while I understand wireless was not presently a limitless resource, the plans suggested all included overlimit fees or plan allowances that would-be customers had to choose, many with no insight into what their monthly usage could or would be.  Not on offer was a true consumption plan that charged wireless customers only for what they used during a month.  If they didn’t use it at all, no bill would result.  My bottom line — customers should not have to take a crash course in data consumption to predict their usage or face steep penalties when they guessed wrong.

T-Mobile has found a third way, although Cricket’s wireless broadband service beat them to it well over a year ago.

The company’s new 5GB wireless broadband plan offers a traditional usage cap every mobile broadband customer is familiar with, but imposes no overlimit fees on customers that exceed it.  Instead, they reserve the right to dramatically reduce your speed until the next billing cycle begins.  T-Mobile representatives tell Stop the Cap! the company won’t automatically impose the speed throttle unless customers have a history of regularly exceeding their usage allowance (or dramatically exceed it.)  T-Mobile also may forgive a customer for an occasional breach, dropping the speed throttle for those who contact customer service and ask.

This effectively matches Cricket’s pricing and usage plan, which may cause that carrier to consider increasing usage allowances or reducing the price to compete.

T-Mobile's data plans for mobile broadband and smartphones

Broadband Reports notes that the 200 megabyte plan still requires overlimit fees, but they’ve been cut in half from 20 cents per megabyte to 10 cents.

Larger carriers like AT&T and Verizon still impose overlimit fees on their usage-capped wireless broadband accounts.  Cricket sells a $50 10 gigabyte usage allowance plan through Wal-Mart as well.

Plans by Frontier Communications to clamp down on “excessive usage” of their DSL service and overcharge customers who exceed 100GB of usage per month brought a strong negative reaction from a consumer group, who called Frontier’s limits “divorced from the underlying economics.”

Sources also tell Stop the Cap! the company is actively working on changing language in their Acceptable Use Policy that, as of this morning, is still misleading customers in Minnesota about their service.

A Frontier spokesperson also told an Oregon newspaper Frontier’s acquired FiOS service areas are not guaranteed cap-free service — the company may implement some restrictions there as well.

But first, Frontier Communications’ Acceptable Use Policy no longer matches reality for customers in Mound, Minnesota who are getting notified that their service is at risk of being shut off if they don’t agree to new, dramatically-higher priced service plans.  But such e-mails run contrary to several sections in the company’s own published policies:

Frontier’s Residential Acceptable Use Policy (Last Update: December 23, 2008) (PDF Archived 4/15)

The Company has made no decision about potential charges for monthly usage in excess of 5GB.

Frontier’s Supplementary “5GB” Addendum to their Acceptable Use Policy (PDF Archived 4/15)

Frontier has not implemented tiered usage plans and will continue to evaluate if and when they would be necessary. If and when Frontier implements a tiered usage plan pricing and usage information will be communicated to all High-Speed customers.

Does Frontier plan to limit my use of the Internet?
Frontier is providing (NOT LIMITING) all customers with a minimum of 5GB of usage on a monthly basis. The Company has made no decision at this time to charge for additional usage but wants to start to educate customers about their usage.

If I hit 5GB will my service be interrupted?
No. Your service will not be interrupted at 5Gb. You will continue to use our High Speed Internet service without disruption.

How will I know how many Gigabytes I am using?
Sometime in the future, Frontier will provide to all customers visibility as to what your usage is on a daily, weekly and monthly basis. We will also provide a the ability to estimate bandwidth usage for different types of activities – like streaming video downloads or file sharing. These tools will give our customers the ability to make informed decisions about broadband usage consumption.

Tell that to the customers in Mound who have 14 or fewer days and counting to either pay extortionist broadband pricing, curtail their usage, or go elsewhere for service (if they can).

It’s no surprise some customers in Mound are outraged when receiving the company’s e-mailed notification about paying higher prices for usage because it runs completely contrary to the published policies of Frontier’s broadband service.

That’s just one more mistake in a series of mistakes Frontier has made in marketing its broadband service, especially in areas where consumers can take their business elsewhere and not have to worry about exceeding Frontier’s minuscule usage allowance.

Wendy Davis at MediaPost quotes a statement released by Free Press research director S. Derek Turner: “While there may be a place for discussing reasonable usage-based billing, the scheme Frontier is testing is completely divorced from the underlying economics. Even worse than their price-gouging is Frontier’s assertion that a mere 5 gigabytes per month is a ‘reasonable’ amount of usage when just last month the National Broadband Plan reported that average Internet users with a fixed connection consume 9 gigabytes of data per month.”

Davis also managed to get a Frontier spokesperson on the record about the debacle, telling MediaPost, “the company is only trying to prevent some exceptionally heavy bandwidth users from degrading service for others on the network. She also says that people who received the letters were given an option of decreasing their bandwidth consumption or switching to a different, higher-priced plan.”

Yet the concept of DSL customers degrading the broadband experience of other customers on the network is itself controversial, as DSL providers have always emphasized they do not suffer from slowdowns like shared networks used by cable broadband providers.  While heavy consumption can theoretically congest “middle mile” networks that serve regional areas or connect telephone company switching offices, those congestion issues are not difficult to address when companies use fiber connections to connect them, as Frontier frequently does.  Indeed, Frontier is far more likely to suffer congestion issues when millions of former Verizon customers are piled on Frontier’s network.

Nowhere in Frontier’s e-mail does it tell customers they can reduce usage to retain service.  It only says “if you do not wish to switch to this new rate plan, you can have your service disconnected.”  Mound residents are faced with the prospect of immediately reducing usage from 100GB to just 5GB to stay within Frontier’s terms and conditions.  Under those conditions, they could do better with dial-up.

Meanwhile, those soon-to-be-discarded Verizon customers facing a transition to Frontier Communications may soon find themselves potentially impacted by some sort of usage limit as well, which could also apply to the areas served by FiOS.

Mike Rogoway at The Oregonian talked with Frontier spokesman Steven Crosby about Frontier’s plans:

I talked this afternoon with Frontier spokesman Steven Crosby, who said there won’t be tight bandwidth restrictions after Frontier acquires FiOS — but he indicated that there may be some restrictions.

Currently, Frontier’s user agreement sets a nominal 5 gigabyte cap on monthly bandwidth usage.

“You know, I know and everyone knows that’s a very low number,” Crosby said. “We don’t hold people to that.”

The letters that went out in Minnesota went to a small group of very heavy bandwidth users in one community, Crosby told me. It’s not meant to reflect a broader policy.

As Frontier prepares to take over Verizon’s operations in Oregon and other states — Crosby says the deal is on track and likely to close in late June or early July — Frontier is reviewing its Internet use policies.

I pointed out Comcast’s bandwidth cap, and told Crosby that it seems likely his company will do something similar. He left that possibility open, but said any Internet limits are still under discussion.

“I don’t know what that limit will be,” he said. “The one thing I do know is we don’t want to impact our customers.”

St0p the Cap! responds:

• This is the first time Frontier has hinted that usage limits could eventually apply to the FiOS fiber-to-the-home service it is acquiring from Verizon, a network constructed to manage 21st century broadband traffic Frontier now also seems willing to limit;
• Frontier does hold people to the 5GB usage cap when they are in violation of it, using it as an excuse to expose customers to far-higher-priced service plans or service disconnection.  If Frontier isn’t serious about it, why retain the language in customer agreements?
• If Frontier’s Mound e-mail notifications do not reflect a broader policy, than the only customers who will see a change in the Acceptable Use Policy will be those in the Mound, Minnesota area.  If customers elsewhere see a change, it -does- reflect a broader policy after all.
• As part of Frontier’s “review of Internet use policies,” the company should not defray expenses surrounding the Frontier-Verizon deal by dumping them on broadband customers with outrageously punitive pricing plans.
• As for not wanting to impact customers, our response is “too late.”  Frontier’s original introduction of the 5GB usage allowance in the summer of 2008 impacted customers far and wide, and for its largest service area — Rochester, NY, gave Time Warner Cable happy hunting grounds to experiment with a usage cap of their own.

Wendy Davis at MediaPost offers some food for thought:

Frontier’s letters could well trigger regulatory or judicial scrutiny, especially given the seeming disconnect between the company’s acceptable use policy and its recent actions.

Of course, the underlying problem is the lack of competition. If consumers had more options for broadband providers, a company that threatened to disconnect its customers, or charge $99 or $250 a month for broadband service, might quickly find itself dealing with more pressing problems than public criticism.

Karl Bode over at Broadband Reports offers an additional detail on Frontier’s Internet Overcharging experiment which is now being tested in Minnesota:

Late last week, someone familiar with business operations at Frontier Communications indicated to Broadband Reports that the company was going to begin testing a new capping scheme for heavy users. “Just wanted to let you know that Frontier is sending out letters to the top 50 bandwidth users in Mound Minnesota,” said the individual.

The city of Mound, a suburb located 19 miles to the west of Minneapolis/St. Paul, is home to 9,800 residents.  Mound is the birthplace of the Tonka truck, named after Lake Minnetonka, which surrounds Mound.  Residents of Hennepin County have watched their local phone company change hands several times over the years from Contel to GTE of Minnesota to Verizon to Citizens Telecommunications Company of Minnesota, which does business as Frontier Communications. Frontier has served this part of Minnesota since the end of August, 2000.

Hanus

For a community aggressively pursuing a downtown revitalization and redevelopment program designed to make the community attractive to new residents and businesses, news that the local DSL provider is now going to limit broadband usage and overcharge those who exceed their arbitrary limits is not good.

Among city officials, Mayor Mark Hanus and councilman David Osmek are both Frontier broadband customers.  The city is proud to stream its regular city council meetings online, something Frontier DSL customers will now have to avoid if they want to preserve as much of their 5GB monthly usage allowance as possible.

Action Alert and Alternatives for Mound, Minnesota

For Mound residents who do not want to be forced to limit their broadband activities to the ridiculously low 5GB allowance Frontier is now enforcing, we recommend these actions:

1) Call Frontier Communications at 1-800-921-8101 and tell them you will not keep your Frontier broadband service with a usage cap and you are prepared to take your business elsewhere immediately if they do not rescind their “experiment.”  If they attempt to charge you an early termination fee or cancellation fee if you do decide to cancel, let us know through the Contact link at the top of the page or in the comments attached to this article.

2) Contact your local media — the Minneapolis Star-Tribune, the Lakeshore Weekly News, The Laker, local news radio and television stations and let them know you think they should be covering this story and its potential impact on the local economy in Mound.

3) Your best alternative broadband provider is cable operator Mediacom which does not have a usage limitation on their broadband accounts.  Their speeds and pricing are also much better, based on Frontier’s advertised pricing of  “as low as” $49.99 a month for Frontier High-Speed Internet Max 3Mbps service or “prices starting at” $39.99 a month for Frontier High-Speed Internet Lite 768kps service.

Mediacom offers 3, 12 and 20Mbps broadband service in Mound.  Here are the details:

For New Mediacom customers:

Mediacom offers soon-to-be-ex Frontier customers free standard installation and a 12-month introductory offer for 12/1Mbps service for $49.95 a month.  Telephone service is also available through Mediacom with a bundled service discount.  Customers looking for a budget broadband alternative can sign up for 3Mbps service for $29.95 a month if they also take digital cable or digital phone.  For customers looking for the highest speeds, Mediacom offers 20/2Mbps service for $59.95 a month if you also get digital cable or phone service.

Mediacom is Mound's incumbent cable company

For Current Mediacom Non-Broadband customers:

If you have cable from Mediacom but use Frontier for broadband, you can switch to Mediacom cable modem service and obtain special discounts.  Add Mediacom’s 12/1Mbps service to your existing cable TV account for $19.95 a month for 12 months, or 20/2Mbps service for $59.95 a month for 12 months.  Installation is done by the customer.

Questions about Mediacom service in Mound can be directed to 1-800-332-0245.  Mediacom’s local offices in and around Mound are at:

4) Customers who are absolutely stuck with Frontier broadband who anticipate approaching or exceeding the 100/250GB usage levels should explore a business broadband account with Frontier.  Although pricing may vary from city to city, residents of Rochester who confronted the original effort to impose a 5GB usage cap in western New York found business account DSL service was not much more expensive than residential service, and carried no usage limitations.  Pricing is likely to be less than the punitive rates Frontier wants to charge residential customers for exceeding their allowances.

Frontier Communications has quietly begun testing an Internet Overcharging scheme in Minnesota designed to charge confiscatory prices to residents who exceed the company’s usage allowances, demanding customers pay up to $249.99 a month to keep their broadband service running.

Stop the Cap! has learned Frontier has begun measuring customers’ broadband usage, and for those in Minnesota who exceed 100GB of usage during a month, Frontier is dispatching e-mail messages telling them they’ll have to agree to pay more — much more — or their service will be cut off in 15 days.

Two e-mail messages are being sent to customers who break the 100 and 250GB usage barriers.  Both reference Frontier’s 5GB usage allowance that Stop the Cap! has strongly and repeatedly criticized the company for implementing in the first place.  Using that usage allowance as a baseline, Frontier calls out its customers using more demanding they switch to a higher priced service plan if they want to continue service with the company.

• For those achieving 100GB of usage, the new monthly rate is $99.99 per month
• For those achieving 250GB of usage, the new monthly rate is an incredible $249.99 per month

Sources tell Stop the Cap! the Internet Overcharging scheme Frontier is running is an experiment to gauge customer reaction.  If the furious customer e-mail reaching us is any indication, it’s another public relations disaster for Frontier Communications.  One customer didn’t even realize there was a 5GB usage allowance to begin with, much less a vastly higher new monthly price if he wants to stay with Frontier DSL.  He’s not.

"You can earn this much money just from overcharging Minnesotans for their Internet service!"

Ironically, the experimental pricing plan comes at a time when Frontier is still trying to get state regulators to approve its deal with Verizon to assume control of landline and broadband service in several states.  Residents in West Virginia and a dozen other states might be a bit concerned that their unlimited Verizon DSL broadband service, often the only service provider available, could be replaced with a company that is willing to punish its customers with $250 in monthly charges once a customer hits 250GB in usage.  Even worse, Frontier takes the overlimit penalty concept to a whole new level, telling customers that new high price represents their new monthly rate plan, not just a temporary penalty.

To add insult to injury, Frontier continues to mislead its customers about the experimental pricing on its own website.  As of this writing, Frontier’s Acceptable Use Policy still states:

Customers may not resell High Speed Internet Access Service (“Service”) without a legal and written agency agreement with Frontier. Customers may not retransmit the Service or make the Service available to anyone outside the premises (i.e., wi-fi or other methods of networking). Customers may not use the Service to host any type of commercial server. Customers must comply with all Frontier network, bandwidth, data storage and usage limitations. Frontier may suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period. The Company has made no decision about potential charges for monthly usage in excess of 5GB.

For customers receiving Frontier’s Scare-o-Gram, it sure sounds like they made up their minds… to charge a lot more for the exact same level of service.

For state regulators, watching Frontier charge ludicrous pricing for broadband service that would make most providers blush should be more than enough evidence that approving Frontier’s plans to take over Internet and landline service in their state is not in the best interests of consumers.  For many, it saddles them with a broadband provider that can charge these kinds of prices knowing full well many customers have nowhere else to go.

Copy of E-Mail Sent to Minnesota Customers Exceeding 100 GB of usage a month [emphasis in bold is ours]:

Dear [Customer]:

Frontier is focused on providing the best possible internet experience across our entire customer base.  We bring you a quality service at a fair price, dependent upon an average monthly bandwidth usage of 5GB.  Over the past months, your account is in violation of our Residential Internet Acceptable Use Policy.

Our policy states that Frontier reserves the right to suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period.

We realize there are times when our customers use the internet for services such as video and music downloads, however your specific usage has consistently exceeded 100GB over a 30 day period.

We would like to provide you with the option of keeping your Frontier internet service at a monthly rate of $99.99 which is reflective of your average monthly usage.  Please call us within 7 days of the date of this email at 1-877-273-0489 Monday – Friday, 8AM – 5PM CST to review your options.  If you do not wish to switch to this new rate plan, you can have your service disconnected.  If we do not hear from you within 15 days, your internet service will be automatically disconnected.

We continue to manage our network to ensure all of our customers have equal access to the internet and the ability to enjoy all of its available content, at our committed level of service quality.

Sincerely,

Frontier Communications

Copy of E-Mail Sent to Minnesota Customers Exceeding 250 GB of usage a month [emphasis in bold is ours]:

Dear [Customer]:

Frontier is focused on providing the best possible internet experience across our entire customer base.  We bring you a quality service at a fair price, dependent upon an average monthly bandwidth usage of 5GB.  Over the past months, your account is in violation of our Residential Internet Acceptable Use Policy.

Our policy states that Frontier reserves the right to suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period.

We realize there are times when our customers use the internet for services such as video and music downloads, however your specific usage has consistently exceeded 250GB over a 30 day period.

We would like to provide you with the option of keeping your Frontier internet service at a monthly rate of $249.99 which is reflective of your average monthly usage.  Please call us within 7 days of the date of this email at 1-877-273-0489 Monday – Friday, 8AM – 5PM CST to review your options.  If you do not wish to switch to this new rate plan, you can have your service disconnected.  If we do not hear from you within 15 days, your internet service will be automatically disconnected.

We continue to manage our network to ensure all of our customers have equal access to the internet and the ability to enjoy all of its available content, at our committed level of service quality.

Sincerely,

Frontier Communications