Should any family have to fight over the monthly Internet bill?

One of the side effects of Internet Overcharging is the one-two punch of the usage cap combined with a steep overlimit penalty.  While usage capping providers pay pennies for your Internet traffic, they can charge you up to $10/GB if you dare exceed your plan allowance.

Making sure you don’t… too much… is the job of the provider who will helpfully educate you on how to use your service less, how to establish an in-home Ministry for State Security — tracking down those malfeasant family members who want to deny running the bill up, and providing inaccurate monitoring tools designed to make you think twice about everything you do online.

Far-fetched?

Not really.  Just ask Mathew Ingram, a Rogers Cable customer in Ontario who tells Techdirt he spends much of his free time trying to figure out who is doing what with the family broadband account:

I have three teenage daughters who also download music, TV shows and so on. I figured someone had just gone a little overboard, and since it was close to the end of the month, I thought it wasn’t anything to be worried about. The next day, however, I went online and checked my usage (Rogers has an online tool that shows daily usage), and it said that I had used 121 GB more than my allotted amount for the month. In other words, I had used more than 100 GB in less than two days.

I just about spit my coffee all over the computer screen. How could I possibly have used that much? According to Rogers, I owed $181 in overage charges. Luckily there is a maximum extra levy of $50 a month (just think what it would cost if I was subject to usage-based billing).

With the help of Rogers (who also helped themselves to $50 of Ingram’s money for overlimit fees), an employee identified security holes in his wireless router which could have let all the neighbors join the broadband usage party at his expense.  But in reality, after considerable family tension and drama, one of Ingram’s daughters confessed to downloading some TV shows and forgot to close the file sharing software used to grab them.

Ingram learned a $50 (this month) lesson — he is not free to sit back and enjoy his broadband account that costs him much more than American providers charge for the same thing (without a usage cap).  He serves at the pleasure of Rogers Cable, who wins if Ingram succeeds in keeping his family’s usage under the limit — costing Rogers less money, or by pocketing the overlimit fees charged when he fails.

What scares many Canadians are plans by some providers to eliminate the monthly maximum overlimit fee.  That would have left Ingram paying a $181 penalty instead of $50.  As far as cable companies like Rogers are concerned, it’s his own fault for not keeping his family under control, and now he will pay the price.

In what one website is calling a data witch hunt, AT&T is reaching out and touching some unlimited data plan customers the company suspects of “tethering” — the practice of sharing your smartphone data plan with other devices such as a laptop, iPad, or even home computer.

Just a short time ago, Stop the Cap! reported AT&T was tracking down “heavy users” that were using over 10GB of wireless usage per month.  But now it appears AT&T is starting to contact customers using less — as little as 5GB, warning them they must sign up for a tethering plan if they intend on tethering their phones.  Only many getting the warnings are not tethering at all.  Modmyi, which has an active forum discussing the subject, reports their latest findings:

The first round appeared to be users on AT&T unlimited data plans that used more than 10GB of data in March. The latest round appears to be similar users using more than 5GB in March. It appears AT&T is on a data witch hunt. We’ve seen the message sent to users who simply use a lot of bandwidth (and never even tether/jailbreak) as well as users that use unauthorized tethering.

What’s most shocking is that many users have reported calling AT&T and were asked if they were using Netflix, Pandora, etc. Some have been told that using those services is the definition of tethering. We’re not sure if this is coming down from the AT&T top, or if this is simply non-technical AT&T customer service reps that are confused about what tethering is. However, based on the number of user reports, and the chances that users are very likely reaching different reps, this seems like deliberate AT&T rep training. Seemingly unethically, many customers are being convinced to pay for a tethering plan when they’re in fact not tethering at all.

AT&T has sought to monetize data usage across all of their networks, first imposing a 2GB usage cap on their wireless customers and now plans a 150-250GB cap on their wired broadband services.

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.

Their bull got you right in your wallet.

The next time you hear a provider telling you usage-capped broadband is the way the rest of the world does business, understand one thing:

They are lying to you.

Stop the Cap! conducted extensive research on just what kind of broadband plans are sold around the world. We researched every member country of the Organization for Economic Cooperation and Development, and included several developing and non-aligned countries for good measure.

Our findings are conclusive: Unlimited broadband packages are the global norm. Some providers sell a mix of “light use” plans with usage allowances, but almost always side-by-side affordable, unlimited use options for those who want them. The only exceptions we found:

• Australia: The most common reason for usage caps comes from lack of capacity.  Countries in the South Pacific continue to experience international capacity shortages that are gradually easing with the introduction of new underseas fiber cables.  Several providers have promised to ease or eliminate caps as new capacity comes online.
• Canada: For reasons of marketplace concentration, lack of competition, and regulatory malpractice, Canadian broadband has lost its former status as a world-leader in broadband and has now become an also-ran, with almost universally usage-capped and throttled broadband from large cable and phone companies delivering expensive, comparatively slow service.
• Iceland: International capacity problems limit international broadband traffic with usage caps, but some providers offer unlimited service for domestic traffic.
• New Zealand: Just like Australia, New Zealand suffers from international capacity problems not seen in Europe, North America, or continental Asia.  Both Australia and New Zealand are using public finances to overcome broadband shortages and reduce or eliminate usage caps.

Some providers in the United States are following Canada’s lead attempting to monetize broadband traffic to maximize profits.  Some Canadian providers claim usage-based billing is necessary to finance the construction of broadband networks across the broad expanse of rural Canada.  Yet Russia, a far larger country with fewer financial resources, succeeds in delivering unlimited service where Canada fails.  Their arguments just don’t add up, and combined with the reality we present here proves providers are telling tall tales about the need for their Internet Overcharging schemes.

If Albania can deliver unlimited Internet access, why can’t your provider?

Netflix continues to get a lesson on broadband economics from the Internet Service Providers out to scare their customers away from spending too much time watching the company’s online streaming service.  As some Canadian ISPs lowered usage caps in response to Netflix’s imminent arrival, the video streaming service just announced it was letting customers turn down the bit rate of online videos to conserve their monthly usage allowance.

Neil Hunt, Netflix Chief Product Officer, told customers about the bit rate reduction in a company blog post:

Starting today, watching movies and TV shows streaming from Netflix will use 2/3 less data on average, with minimal impact to video quality.

Now Canadians can watch 30 hours of streaming from Netflix in a month that will consume only 9 GBytes of data, well below most data caps.

We made these changes because many Canadian Internet service providers unfortunately enforce monthly caps on the total amount of data consumed.

In the past, viewing 30 hours of Netflix could consume as much as 70 GBytes, if it was all in HD, and typically about 30 GBytes. While there is some lessening of picture quality with these new settings, the experience continues to be great.

Video compression reduces data consumption, but also sacrifices video quality and enjoyment. An example of high video compression on the left can be more than noticeable.

Unfortunately for Hunt, providers can continue to lower data caps to the point where Netflix would have to present their video library as a slideshow to keep customers under their limits.

Stop the Cap! responded directly to Hunt imploring Netflix to get involved in the battle that consumers have thus far fought alone:

While some customers appreciate Netflix for turning down the video bitrates, I am here to tell you it’s not nearly enough.

For nearly three years, our consumer group — Stop the Cap! has fought Internet Overcharging schemes in both Canada and the United States.

Whether it’s Bell’s proposal to eliminate flat rate broadband across all of Canada, Time Warner’s 2009 pricing experiment to limit broadband users to just 40GB of usage per month, or AT&T’s 150-250GB cap taking effect this spring, your competitors are on a mission to scare customers away from using your online video streaming service.

[…] The fact is, Netflix MUST engage in this fight. Consumers cannot do it alone, especially when up against billion dollar companies spending millions on lobbyists trying to convince lawmakers usage caps are about “fairness” when they are really about monetizing broadband traffic and scaring off cord-cutting.