Cisco has released the results of the third annual study from the Saïd Business School at Oxford University, which looks at broadband quality in 72 countries and 239 cities around the world.  The results are an embarrassment to much of North America’s broadband.

Using data from 40 million real-life broadband quality tests conducted in May-June of 2010 on the Internet speed testing site, Speedtest.net, the researchers were able to generally evaluate broadband conditions in the 72 countries which generated enough tests to provide useful results.

Although these kinds of studies often end up indirectly promoting Cisco’s own products (which they’d argue go hand-in-hand with broadband improvement), the findings highlight the very real problem that most aggressive broadband development is taking place outside of North America.  Here at home, reduced investment and foot-dragging has kept growth in check, even as prices continue to rise.

Based on the findings, the countries with the most sophisticated and advanced broadband networks are:

While the United States and Canada both languish in 15th place, broadband in South Korea has gone from excellent to outstanding as it continues aggressive, almost revolutionary improvements in service and speed:

• South Korea tops the broadband leadership ranking for the second year in a row;
• Broadband quality in South Korea is ranked the highest and has set a new benchmark for the world;
• Average download throughput is 33.5 Mbps, an increase of 55% from 2009, average upload throughput is 17 Mbps, an increase of 430%, and average latency is 47ms, an improvement of 35% vs. 2009 figure;
• South Korea has achieved 100% broadband penetration.

Cisco’s study found North America is in peril of falling even further behind because providers are trying to incrementally upgrade inferior, obsolete copper-wire phone networks on the cheap instead of replacing them.

As long as providers in the United States and Canada maintain a Dollar Store-mentality towards broadband improvement, both countries will increasingly fall further and further behind countries many Americans couldn’t find on a map.

Developing economies, especially in eastern Europe, are poised to leapfrog over North America and potentially become new powerhouses in the digital global economy of the future.  Among the nations on the verge of blowing past the United States and Canada: Lithuania, Latvia, Bulgaria, Romania, the Czech Republic and Hungary.

Welcome to the 500GB Broadband Economy

Cisco’s study also includes some important findings about data consumption that expose North American broadband providers who support Internet Overcharging schemes as direct threats to our economic future in a knowledge economy:

The study assessed the average consumption of different household segments and found major differences between basic-digital homes and smart and connected homes:

• Basic digital homes which mainly use the web for simple-quality requirement applications such as web browsing, instant messaging and social networking, consume about 20 GB per month;
• Smart and connected households, who would use the web for high definition video communication, high definition entertainment, tele-education or telemedicine, home security and others, can easily consume 500 GB per month and require an assured bandwidth of 18 Mbps.

Under these terms, Canada’s digital economy is already destined to fail because virtually every provider in the country limits broadband consumption to levels far below that required by “smart and connected households.”  In the United States, some providers have suggested as little as 5GB would represent “enough usage” under residential broadband accounts.  The nation’s largest cable company, Comcast, limits consumption to half the amount required.  Those advocating unlimited broadband or far higher limits are accused of being “bandwidth hogs” or pirates by many of these providers and their dollar-a-holler friends.

World leaders in broadband have some things in common: availability of inexpensive, unlimited broadband delivering fiber-fast speeds.  Those falling behind or at the bottom are raising broadband prices, putting limits on consumption and delivering slow broadband speeds that would draw laughter in countries as diverse as Japan, Sweden, and the United Arab Emirates.

GCI, an Alaskan Internet Service Provider, is getting pummeled by angry customers as they continue to learn the company has launched an Internet Overcharging scheme that limits their broadband use.  Some customer claim the company is actively trying to trick those previously enrolled in unlimited plans into limited service tiers with tantalizing “free speed upgrades.”

Stop the Cap! reader Thomas was one of more than a dozen readers who complained to the Anchorage Daily News about the broadband ripoff.

He is outraged by the bait and switch tactics employed by GCI that sold customers on expensive bundled service packages that promised “unlimited Internet” service the company is now trying to take away.

Thomas first learned GCI had slapped limits on his broadband account… from Stop the Cap! GCI never bothered to inform him, or many other customers, about the new usage limits.  After he read our earlier story, he called GCI and learned he was a victim of Internet Overcharging.

GCI’s limits range from 40-100GB on plans ranging in price from $45-105 per month.

GCI, like most Internet Overchargers, tries to blame its customers for the imposed limits.

GCI estimates that 5 percent of its Internet customers are consuming 70 percent of the company’s available bandwidth. These users share a portion of their Internet cable with other GCI customers, and they have been slowing down the other households’ Internet speed, GCI spokesman David Morris told the Anchorage newspaper.

In an effort to prove their contention that usage limits improve service, GCI handed out free speed upgrades along with usage allowances and attempted to conflate the two.

In reality, most broadband slowdowns come from overselling access and being unwilling to invest in appropriate capacity upgrades to meet the growing needs of customers.  For companies like GCI, imposing usage limits to scare users away from high bandwidth services is cheaper and more profitable than meeting customer demand.

“Most of the under-30 crowd that I know use Netflix and Hulu streaming services so we can watch what we want, when we want. Cable TV does not give us the flexibility we want,” Sean Hogan, an Anchorage accountant, told the newspaper.

“I’m getting charged $180 per month and I don’t even want the phone or cable,” said Mike White, an Anchorage customer who upgraded his data-usage plan recently because he was worried about violating GCI’s limits.

GCI claims its new limits allow customers to do many things they had no interest in doing under their old unlimited plans, like sending millions of e-mail messages or browsing tens of thousands of web pages.  To make the limits sound generous, they made a chart:

Of course, these limits ignore the reality customers do most or all of these things, and if they use their high speed connection to download files or watch the increasing amount of video content delivered in High Definition, they’ll blow through some of GCI’s limits with little effort.

Despite GCI’s claims of generosity, its customers think otherwise, and many are moving to curb their usage to avoid potential penalty fees or service termination the company could impose with enforcement of their caps:

Morris said that most of GCI’s customers will discover that their Internet usage is far below the new limits. Depending on the plan, the limits range between 50 and 125 gigabytes per month.

Chris Bruns, an Anchorage father and college student, isn’t so sure. “I’m in the high-30 (gigabyte) range every month,” he said.

GCI’s cheapest substitute for an unlimited plan is 40 gigabytes — the equivalent of downloading and watching 60 movies per month on your computer.

Bruns found out recently — after calling GCI to ask some questions about his family’s Internet speed and usage — that his previously unlimited plan, called Ultimate Xtreme, now had a 40 gigabyte ceiling.

“I was pretty miffed. It came as a surprise,” he said.

“When we signed up, we specifically got the unlimited plan because we knew we used it a lot,” he said.

He said he has since curbed the family’s Internet usage to be on the safe side. He said he and his wife regularly download movies for themselves and cartoons for their two children on Netflix to watch on their computer. Using Netflix is a way to keep the kids from seeing “garbage” on TV, Bruns said.

Ed Sniffen, a consumer-protection attorney in the Alaska Department of Law, may a victim of GCI’s bait and switch broadband himself.

Sniffen said he has had an unlimited-data plan with GCI and didn’t know on Tuesday afternoon whether he received a notice about the new policy. He said anyone who has a concern should contact the Law Department’s consumer-protection office.

The story in the newspaper prompted an enormous response — some 265 comments and counting.  A sampler:

GCI provides terrible service compared to companies in the lower 48 at exorbitant prices. They are a monopoly that needs to be tweaked.

GCI’s Network costs are FIXED. They are raping and pillaging us.

“GCI said it hasn’t yet charged anyone fees for exceeding the data limits…” — GCI lies. Just a few months ago I was charged nearly $100 for exceeding the bandwidth limit. Since then, I’ve upgraded my package to a ridiculous amount of bandwidth (at a ridiculous price) just so I can avoid that problem.

This is crazy. You go anywhere in the lower 48 and almost every Internet provider out there has some sort of unlimited plan, and it doesn’t involve payment with an arm, a leg, a kidney, or a first-born child. GCI needs to get this crap sorted out.

I got an offer to double my Internet speed and usage for a few bucks extra, and free cable (the good package, not the basic cable). Two months later, I still haven’t seen anyone show up to do anything, and I’m still getting charged out the tail end for overage charges. I keep requesting to up my Internet (I have a college student who takes some Internet classes) but they never do it. The only reasons I switched from ACS were because when it rained we had no phone OR internet (they said the problem was with our lines – our landlord at the time needed to fix it, but the contractor said it was ACS’s line problem – THEY needed to fix it.)  If there was another alternative to phone/Internet, I would so be there.

I was out and out LIED to by a GCI Rep. I was told if I changed my plan I would receive higher speeds with NO OTHER CHANGE for the same price. I questioned the GCI rep about this in detail several times before agreeing. The next day I no longer had unlimited downloads. I was LIED to and RIPPED OFF by GCI.

GCI’s statement that they have not charged overlimit charges is incorrect as over ten individuals that I know including myself have been hit with bills ranging from $300 to $2000 for one month of service.

Verizon, the nation’s largest wireless phone company, has agreed to refund erroneous data charges for 15 million subscribers who paid for data sessions they did not initiate.

Those familiar with the proposed refund settlement claim the company could spend between $50-90 million in refunds for customers without data plans who were charged, in some cases repeatedly, $1.99 for a few seconds of web access.

The problem stems from Verizon phones that make accessing data services easy to trigger.  One misplaced button press can launch a data session, resulting in a web access fee.  Verizon repeatedly denied the company was charging customers who accidentally landed on the provider’s wireless home page, but customers loudly claimed otherwise, filing hundreds of complaints against Verizon with the Federal Communications Commission.

Teresa Dixon Murray, a reporter for The Plain Dealer in Cleveland, was among the first to report on the mysterious charges many customers couldn’t figure out, especially as they continued even for customers who placed a “block” on accessing data services or who had powered their phones off and were still charged the fees:

In a column last summer, I chronicled my battle with Verizon after I discovered Verizon had been concocting $1.99 monthly charges for supposed Web use by my family plan numbers. Verizon’s ruse ended the month that my son’s phone was dead and locked away for weeks.

Verizon responded directly to me in a meeting with several top executives, and they promised to investigate the problems suffered by thousands of customers nationwide. The company in August also promised to change its policy of charging customers if they accidentally hit their phone’s “mobile Web” button. The new policy: To get charged, customers now supposedly have to type in a Web address.

A Verizon Wireless employee anonymously told the New York Times the scheme was a planned money-maker for Verizon, which earned up to $300 million a month just from accidental web access:

“The phone is designed in such a way that you can almost never avoid getting $1.99 charge on the bill. Around the OK button on a typical flip phone are the up, down, left, right arrows. If you open the flip and accidentally press the up arrow key, you see that the phone starts to connect to the web. So you hit END right away. Well, too late. You will be charged $1.99 for that 0.02 kilobytes of data. NOT COOL. I’ve had phones for years, and I sometimes do that mistake to this day, as I’m sure you have. Legal, yes; ethical, NO.

“Every month, the 87 million customers will accidentally hit that key a few times a month! That’s over $300 million per month in data revenue off a simple mistake!

“Our marketing, billing, and technical departments are all aware of this. But they have failed to do anything about it—and why? Because if you get 87 million customers to pay $1.99, why stop this revenue? Customer Service might credit you if you call and complain, but this practice is just not right.

“Now, you can ask to have this feature blocked. But even then, if you one of those buttons by accident, your phone transmits data; you get a message that you cannot use the service because it’s blocked–BUT you just used 0.06 kilobytes of data to get that message, so you are now charged $1.99 again!

“They have started training us reps that too many data blocks are being put on accounts now; they’re actually making us take classes called Alternatives to Data Blocks. They do not want all the blocks, because 40% of Verizon’s revenue now comes from data use. I just know there are millions of people out there that don’t even notice this $1.99 on the bill.”

Verizon’s decision to refund the erroneous data charges also comes long after a class action lawsuit was filed earlier this year against the company by Goldman Scarlato & Karon, P.C., of behalf of customers.

Impacted existing customers can expect credits, typically ranging from $2-6 on their October or November bills.  Former customers will get refund checks in the mail.

The Federal Communications Commission said it was opening an investigation into the Verizon overcharges, seeking a financial penalty from the wireless carrier, according to Reuters.

The news agency noted some customers were billed for data fees just because of software pre-loaded onto phones:

The charges affected customers who did not have data usage plans, but were billed because of exchanges initiated by software built into their phones.

For example, trying out a demonstration of a game that Verizon Wireless had pre-loaded onto a phone would sometimes trigger data transmissions from the phone unbeknownst to the customers who were then charged by Verizon Wireless for the data.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WPRI Providence Verizon To Pay Millions In Refunds 10-4-10.flv[/flv]

WPRI-TV in Providence covers the Verizon overcharges, pondering ‘why did it take more than two years for refunds?’  (3 minutes)

Videotron last week unveiled 120/20Mbps broadband service loaded down with tricks and traps that will cost many Canadians far more than the $149.95CDN monthly asking price.

Québec’s largest cable operator introduced Ultimate Speed Internet 120 for “users who want to experience the fastest Internet access in Québec.”  But with a download limit of just 170GB per month combined with an upload limit of a paltry 30GB per month, what many Internet enthusiasts are also likely to experience is a huge bill.

Videotron is rolling out a high-speed Internet access service that will give residents of the Québec City area the fastest speeds in Canada. As of tomorrow, Ultimate Speed Internet 120 will support download speeds of 120 mbps and upload speeds of 20 mbps, a first for Québec City.

“Ultimate Speed Internet 120 pushes back the frontier for intensive Internet users,” said Robert Dépatie, President & CEO of Videotron. “Today, we are launching the high-speed Internet service of the future. With the pace at which users’ needs are changing, we are not so far from the day when 120 mbps will be a must-have convenience.”

Astonishing capacity
As of tomorrow, Ultimate Speed Internet 120 will be available in nearly 80% of the greater Québec City area, or to nearly 310,000 households and businesses. The service will be accessible throughout the Québec City area by December 31, 2010 and will then be gradually rolled out to other parts of Videotron’s service area.

Astonishing Overcharging

Yanette is going to the bank to withdraw more funds to pay her exorbitant Videotron broadband bill.

Unlike many other Internet Overcharging plans from Canada’s usage cap-happy providers, Videotron’s highest-speed plans don’t limit the amount of overlimit fees customers will be exposed to once their allowance is exhausted.  In little more than three hours of usage at near-maximum speeds, overlimit fees of $1.50CDN per gigabyte kick in until your usage allows resets the following month.  That’s more than $50 an hour in overlimit fees if running the service near top speeds.

Videotron’s press release says those limits are “well in excess of the current needs of heavy bandwidth users.”

Even worse, Videotron targets its highest speed broadband plan for “traffic management,” which throttles upload speeds dramatically for customers who “have uploaded a statistically significant amount of data,” which is never defined:

Every 15 minutes, a system checks the usage rate for each upload channel (each upload channel typically serves a few dozen modems). If the usage rate has reached a threshold beyond which congestion is imminent, the system identifies the USI 120 modems on that channel that have uploaded a statistically significant amount of data. Uploading from these modems is then momentarily given lower priority. Depending on the severity and duration of the congestion, uploading speed may be slowed for these modems.  […]The above measures are applicable at all times.

That assures customers of a less-than-blazing-fast broadband experience they have paid top dollar to receive.  In effect, this means Videotron’s customers who pay three times the regular price for a concierge-like-broadband-experience are pushed to the back of the line if they actually use it.

A Videotron customer on Broadband Reports wrote, “It’s like driving a jet-car in an alley. You can probably start the engine, but don’t open the gas too much!”

Another customer from Montreal noted it takes no time at all for customers to blow through those kinds of limits:

This is merely a political play to be able to advertise as “the fastest ISP in Quebec/Canada”. Obviously such ridiculous caps are nowhere near the needs of someone who would pay $150 for that kind of speed, but they don’t mind saying things like “well in excess of the current needs of heavy bandwidth users” because 90% of the population, even the journalists themselves, have no idea what gigabytes are in the first place.

Considering most recent games released on Steam/D2D can be over 20GB, one HD episode is 1.3GB to stream each, 170GB is very little.

The cable operator will also throw some small bones to their existing customers effective Oct. 13:

• Customers with Videotron’s standard High Speed Internet service ($42.95CDN – 7.5Mbps/720kbps) will get a 10 gigabyte usage allowance increase — to 40GB of usage per month.  The overlimit fee remains a stunning $4.50 per gigabyte, up to a maximum of $50 per month;
• Upstream speeds on Ultimate Speed Internet 50 service ($81.95CDN – 50/1Mbps) will be doubled from 1Mbps to 2Mbps with no price increase.  Considering that plan limits consumption to 125GB per month, the faster speeds mean unlimited overlimit fees of $1.50 per month will add up even faster.

Delivering high speed broadband at premium prices with usage limits and speed throttles is a business plan disaster.  Customers willing to pay the highest prices for fast broadband don’t seek those Cadillac plans to browse web pages.  They want to leverage the fastest possible speeds to make high bandwidth applications work better and faster.  In a business environment, those faster speeds save time, which saves money.  But broadband providers who engage in Internet Overcharging schemes that limit use and charge confiscatory overlimit fees destroy demand for their own products, because few customers are willing to pay the premium prices these plans charge -and- expose themselves to overlimit fees if they happen to exceed an arbitrary usage limit.

Further south in the United States, Americans are still rejecting overpriced DOCSIS 3-premium speed broadband plans, and they come with no usage caps.  Time Warner Cable’s DOCSIS 3 expansion delivers a premium price on the resulting faster speed tiers, and the company managed to sign up fewer than 2,000 customers as of January.

Now imagine a plan that commanded a premium price -and- slapped a limit on usage.

As they say in Québec: c’est ridicule!

Sprint CEO Dan Hesse told a crowd of Wall Street investors the wireless provider could drop unlimited wireless pricing if the costs to deliver it begin to upset shareholders.

“We are watching very closely,” Hesse said during a Goldman Sachs-sponsored conference.

“Clearly, I’m not ruling out metered [price packages],” he said. “But customers value simplicity.”

While Hesse stressed the company had no immediate plans to drop its “Simply Everything” plans, it does acknowledge a small percentage of its customers are using enough of Sprint’s network to cost the company more than it earns from its heavy users.

But Hesse argued the marketing benefits of unlimited service may have brought the number three wireless carrier more business (and revenue) than it loses.  Sprint has been trying to recapture a stronger position in the wireless market lost after years of notoriously poor customer service and reduced coverage areas.

Most customers who left Sprint switched to AT&T or Verizon Wireless.  Both of its larger competitors have been seeking to impose more usage limits on its customers, especially for data.  Sprint hopes to win some of them back, but Hesse admits the company still has a long way to go to improve customer numbers.