This slide, produced to sell "network management" equipment, is the best argument for Net Neutrality around.

Want to visit Facebook?  That will be two cents per megabyte, please.  Skype?  You can get a real bargain this month — your ISP is only charging you $5 for an unlimited monthly permission pass.  YouTube?  All customers with a deluxe bundled broadband plan get a special discount — just 50 cents for up to 60 videos, this month only!

All of these charges, levied by your Internet Service Provider, are real world scenarios being sold by two equipment vendors — Allot Communications and Openet, for immediate use on Net Neutrality-free wireless broadband networks.  Thanks to Stop the Cap! readers Lance and Damian for sending us the story.

Both companies are excited by the potential harvest of bountiful revenue — for themselves in selling the equipment that will carefully monitor what you do with your Internet connection and then control what kind of experience you get, and for providers who can finally bend the usage curve down while “finally” getting average revenue per customer shooting sky high once again.

In the webinar, run last Tuesday and moderated by Fierce Wireless, the two companies carefully divided their one hour presentation between the technological and financial benefits of “network management” technology.  For every statement about how their bandwidth management system would improve the predictable responsiveness of the provider’s network, another comment followed, touting the enormous new revenue potential this technology will bring providers, all without costly network upgrades.

Poor provider. His stuffed pockets of profit are leaking your money paid to access websites you want to visit. But with Allot and Openet's products, the pot 'o gold is just a few steps away.

On Tuesday, the Federal Communications Commission will vote on a watered-down Net Neutrality proposal that would do nothing to prevent this nightmare scenario from becoming reality.  The webinar and its accompanying slides couldn’t illustrate Net Neutrality-proponents’ arguments better:

1. Such technology requires providers to carefully track and monitor everything you do with your web connection, obliterating privacy and creating a potential data trail that could be exploited for just about anything.  Indeed, Allot and Openet treat the data tracking feature as a benefit, opening the door to marketing campaigns to upsell your broadband connection or target upgrade offers based on your web history;

2. It’s all about the money.  Allot and Openet see their products as a cost-saver for providers to control expenses by cutting speeds/access for heavy users to provide a more consistent service for others, reducing the urgency to upgrade networks.  The companies also heavily focus on the revenue opportunities available from Internet Overcharging schemes;

3. The webinar includes a slide showing that providers can charge individual fees just to visit and utilize third party websites and applications, while letting providers deliver their own content, services and applications for free.  Got a bothersome competitor?  Just make a quick change with Allot’s product and your customers will face a withering admission fee in the amount you choose before they can even use the application;

4. The technology allows providers to wreak special havoc on peer-to-peer traffic, always the bane of traffic-conscious ISPs;

5. Want to extract more cash from an individual subscriber?  Providers can custom-design packages based on web site habits, usage, speed, and even the time of day the person is most likely to use the web.  Providers can then develop so many different usage packages, comparison shopping becomes meaningless.  The price you pay may be different than what others on your street pay, and you may never know by how much or why.

These Big Telecom workmen are not hard at work upgrading networks to meet demand. They are wrangling an Internet Overcharging scheme to reduce your usage while charging you more. (All of these slides were produced by the vendors themselves.)

Public Knowledge legal director Harold Feld saw right through the slide show: “If you want the slide deck to show why we need the same rules for wireless and wireline, this is it.”

Listen to the audio portion of “Managing the Unmanageable: Monetizing and Controlling OTT Applications,” which does not include the slide show. (60 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Broadband advocates have been warning providers have been dreaming of this kind of pricing for a few years now.

“I have been saying that this is where they want to go for a while,” Barbara van Schewick wrote to Wired. “The IP Multimedia Subsystem (IMS), a technology that is being deployed in many wireline and wireless networks throughout the country, explicitly envisages this sort of pricing as one of the pricing schemes supported by IMS.”

Although the system described by the webinar is currently being sold for use on wireless networks, nothing prevents providers from adopting similar schemes on their wired networks, arguing their use is about “intelligent network management,” not content or pricing discrimination.

It’s a scenario likely to be tested soon, especially with FCC Chairman Julius Genachowski’s watered down Net Neutrality proposals.  More than one observer believes the chairman has made a deal with the Big Telecom Devil: observe our watered down rules, don’t sue to have them thrown out, and the Commission will not invoke Title II and reinstate regulatory authority over broadband.

But as anyone who watches the broadband industry must realize by now, providers always break these deals.  They will sue the moment a controversy erupts that is not in their favor, and they are very likely to win.

In a welcome turn of events, the League of United Latin American Citizens (LULAC), which has routinely turned up as a member of Big Telecom-backed astroturf campaigns and takes money from AT&T, has come together with Latinos for Internet Freedom to issue a joint statement calling on the Federal Communications Commission to adopt equal Net Neutrality policies for wired and wireless broadband services.

“Although we disagree on some of the components of the proposed network neutrality regulations, there is one point on which we are in lock step: the FCC’s network neutrality rules must apply equally to wireline and wireless internet access.  Of course we understand that what is ‘reasonable network management’ may be slightly different over different types of connections.  Cost is the primary barrier to broadband adoption, and Latinos are turning to their mobile phones as their only onramp to the internet.  We are committed to finding ways to lower broadband costs by increasing competition through wireless access and other means.  It is therefore essential that the FCC ensures that users of wireless and wireline services are protected by its openness rules.”

Of course, broadband providers’ demands for deregulation and unified opposition to Net Neutrality have never delivered and will never provide cheaper Internet service to anyone.  In fact, the court ruling that eliminated the FCC’s authority over broadband gave providers nearly a year of a wide open marketplace, yet many providers are now sending out notices they are -increasing- broadband prices for subscribers.  Net Neutrality has never been enforced against wireless networks either, and as a result most either usage cap, throttle, or charge enormous overlimit fees for users deemed to be “using too much.”

Increased competition can bring lower prices, but only if it extends well beyond today’s duopoly.  In areas where one provider is likely to maintain a de facto monopoly, effective oversight is required to ensure consumers receive adequate service at fair prices.

Still, it is a surprising and welcome change to see LULAC recognizing the true nature of broadband access for many economically-challenged Americans, especially in minority communities where unemployment continues to be catastrophic.  Some consumers are finding prepaid wireless broadband service to be one way onto the Internet, yet Big Telecom has sought to keep those networks exempt from any Net Neutrality consumer protections.  That cannot be allowed to happen.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizon vs. Latinos for Internet Freedom.flv[/flv]

Watch these two competing spots from Verizon and the Latinos for Internet Freedom.  One is self-serving and a tad condescending, the other calls for a free and open Internet where individuals get a level playing field to tell their own stories and live their own lives without fear or special favor.  (2 minutes)

Clearwire’s often-unclear “network management” policies are the subject of a lawsuit filed yesterday in Seattle seeking class action status.

Angelo Dennings vs. Clearwire Corporation was filed in the Western District of Washington federal court, and seeks refunds for consumers who were mislead by the company’s failure to disclose its network speed throttling and usage limitations, and charged early termination fees when subsequently canceling service.

Clearwire promises that its high-speed Internet service provides a “fast” and “always on, always secure” Internet connection allowing users to “[d]ownload pictures, music and videos.” But Clearwire does not provide an “always on,” “high-speed” connection as it promises. Clearwire purposefully slows the connection of its users because it cannot accommodate the high volume of traffic. Clearwire engages in a practice known as “throttling,” which is the intentional delay and/or blocking of Internet communications. This practice deprives Clearwire customers of the ability to “[d]ownload music and videos,” and leads to slow connection speeds.  Clearwire engages in throttling at times when demand for Internet use is highest, beginning at approximately 7:30 p.m. and ending at about 1:00-to-2:00 a.m.

If users attempt to cancel their service, Clearwire claims that, pursuant to its “contract” with them, it is entitled to collect an early termination or a re-stocking fee. The “contract” referred to by Clearwire is not a contract between it and its customers. The contract between Clearwire and its customers is simply that the customers will pay for, and Clearwire will provide, “unlimited” Internet usage at certain speeds, depending on the speed and payment plan selected in Clearwire’s stores, kiosks, or online.

The remaining “terms” invoked by Clearwire at its convenience are embedded in a document that consumers never see prior to subscribing to Clearwire’s service. Clearwire sells its services in its stores, kiosks at shopping centers, and online. Clearwire’s stores and kiosks do not have copies of this “contract” on hand for potential subscribers to read before they “agree” to its terms. Users who subscribe through Clearwire’s website never see the contract either because the link to it is at the bottom of a page, in substantially smaller font and lighter shade than all of the other text on the page. The text states: “Want to read the fine print (and who doesn’t read the fine print?) It’s all there in the CLEAR Legal Index.” No one wants to read fine print legalese and almost no one does. The statement is obviously and sharply ironic, and mocks anyone who may have been fussy enough to have considered continuing.

Despite not showing its terms to consumers, Clearwire refuses to allow users to cancel their service without paying the unconscionable fees it claims it is owed under this “contract.” These fees include an early termination fee (“ETF”), which penalizes consumers that want out before the end of the two-year term. Although Clearwire breached its contract with its customers, Clearwire insists on the payment of this ETF when customers realize they are not getting what they bargained for.

The suit argues that Clearwire has oversold its wireless broadband network, and allegedly quotes a company representative at one point telling Dennings, “Clearwire had signed up more customers than its cell towers could accommodate, and that therefore it was ‘managing’ users’ accounts.”

Attorney Clifford Cantor argues in the filing that Clearwire reduces customer speeds to 300kbps or lower when their network is congested, making the service unsuitable for most broadband applications.  Dennings, who lives near Ft. Worth, Tex., was outraged to learn Clear sold him a home and mobile broadband account that was advertised as a replacement for wired cable or DSL broadband, but was left with service he considered largely useless when throttled.  Even more upsetting, the suit alleges, Denning was asked to pay a $219 early contract termination and restocking fee when he tried to cancel service over the matter.

Cantor is asking for a court ruling declaring Clear’s policies to be unconscionable, attorneys’ fees of at least $5,000, and refunds for all impacted subscribers.

Thanks to Stop the Cap! reader Michael in Chicago for sending along a copy of the lawsuit.  He runs the “Clear/Clearwire internet not as advertised” Facebook group.

A Facebook group has been established to oppose Clear's Internet Overcharging schemes

The clock may be running out on Clearwire, America’s “4G-WiMax” wireless broadband provider controlled by Sprint, with close investment ties to Comcast and Time Warner Cable, who both resell Clear wireless broadband under their own brands.

At issue is money — the lack of it, and the wireless company’s cash on hand has grown so perilously low, Clearwire was forced to admit to its investors it may not survive beyond the first half of next year:

Based on our current projections, we do not expect our available cash and short-term investments as of September 30, 2010 to be sufficient to cover our estimated liquidity needs for the next 12 months. We also do not expect our operations to generate positive cash flows during the next 12 months. Without additional financing sources, we forecast that our cash and short-term investments would be depleted as early as the middle of 2011.

The Securities and Exchange Commission rules governing public companies represent a public relations nightmare for anyone trying to put a positive spin on bad news, and Sprint chief Dan Hesse desperately tried to make lemonade out of the financial lemon Clearwire increasingly represents for the wireless company.

“If you get to the point where you don’t have 12 months of cash in the till, even if you’ve got negotiations going on, or what have you, you have to, from an accounting perspective, say you have a going-concern issue,” Hesse said. “That doesn’t mean that Sprint and other partners won’t continue to fund Clearwire.”

With Sprint’s 54 percent stake in Clearwire defining the entity as a subsidiary of Sprint, its demise could risk Sprint’s own financial well-being, something Sprint plans to address in 2011, potentially ending its majority stake in the company.

For Hesse and his cable partners, Clearwire’s financial problems are being spun as a result of the venture’s success.  The company says it cannot afford the rapid expansion it has undertaken to expand its WiMax network into additional cities across the country, and faces serious financial challenges from the subsidies consumers demand when buying smartphones.

Hesse particularly complains about the latest whiz-bang smartphones consumers demand, many costing upwards of $600.  Consumers in the United States don’t pay full retail price.  In return for two year contracts carrying steep cancellation penalties, carriers cut the price of most high end phones to $200 or less.

“Subsidies are going through the roof in our industry,” Hesse said. Nearly 40 percent of Sprint customers use the company’s 4G network, and that number is rising.

Revenues are up 114 percent from a year earlier to US$147 million. But Clearwire’s losses for the last quarter alone amounted to $139 million, or $0.58 per share.

As a result, Clearwire slashed 15 percent of its staff, laying off nearly 600 employees and has indefinitely suspended its expansion plans to bring the network to additional cities.  Clearwire will also shutter many of its planned retail outlets — some already built — and delay the introduction of its own branded smartphone.

But even that may not be enough.

Although Clearwire’s growth has been double the level anticipated, achieving a net gain of 1.23 million subscribers in the third quarter — reaching 2.84 million total subscribers, not all of those customers are sticking around once they begin using the service.

Complaints about the company’s poorly disclosed speed throttling continue to be a regular topic on Clear’s support forums.  At least 1,000 complaints have been logged on Clear’s own support forums and elsewhere online about the speed traps.  A Facebook group opposing the schemes has also been established.

Stop the Cap! filed a formal complaint with the New York Attorney General’s office accusing the company of false and misleading advertising and fraud for claiming customers would enjoy “blazing fast speeds” with no limits or speed throttling, despite the fact company officials later admitted they were throttling customers deemed to be “using the service excessively.”  Dozens of additional complaints from Clearwire customers have been filed with state Attorneys General across the country, as well as with the Federal Trade Commission in Washington.

Just how much is too much has never been made clear by the company, but many users report the speed throttle reduces speeds to 250kbps, often for hours at a time.

Clearwire told Electronista:

Throtting is based on the current utilization for each cell tower, and many low-use towers do not throttle speeds at all. For high-use towers, throttling occurs during peak-use times.

A customer’s maximum speed is based on the number of gigabytes of data transferred in the past seven days and the download speeds for the past 15 minutes. Speeds are recalculated every 15 minutes, at which point a throttled customer will be bumped up to a higher speed. Rather than implementing one speed for throttling, the calculations will move customers between 48 different speed brackets.

The worst offenders using peer-to-peer software on Clearwire’s network may face repeated throttling.

Clearwire advertises a faster Internet experience for their 4G service, but many report they receive speeds far slower, even if they have engaged in very little usage.

Many consumers are also unknowingly finding themselves back on Clear’s network even though they signed up with a third party provider.  Clear resells access to its network under a variety of different brands not limited to Sprint, Road Runner Mobile, Comcast Internet2Go, and Best Buy Mobile/Wireless.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Clear Speed Woes 11-10-10.flv[/flv]

This Clearwire customer visits a Clear hotspot location and discovers even on a Wi-Fi network, Clear’s speeds don’t match their advertising claims.  Then, he discovers just how sneaky Clearwire gets in disclosing important information about the company’s wireless speeds customers might want to know before signing up.  (5 minutes)

Frontier Communications is continuing to suffer service outages and problems across many of their respective service areas.  Some of the most serious continue in West Virginia, especially in the northern panhandle region where emergency response agencies continue to complain about sub-standard service from the phone company that took over Verizon phone lines this past summer.

Hancock County officials report their T1 line that connects emergency dispatchers with the county’s dispatch radio system was out of service again early Wednesday evening.  This Frontier-owned and maintained circuit has suffered repeated outages over the past year, and the latest outage comes after company officials promised to inspect the 12,000 foot line inch-by-inch.  Once again, the county’s emergency agency is relying on help from nearby counties and a backup radio system to communicate with at least some of the area’s police and fire departments.

Outages of 911 service are not just limited to West Virginia.  Illinois Valley (Oregon) Fire District Chief Harry Rich was forced to rely on amateur radio operators and extra staffing in county firehouses to cope with a 911 system failure caused by Frontier service problems in late September.  Rich called a public meeting in late October with Cave Junction Mayor Don Moore, Josephine County Sheriff Gil Gilbertson and Josephine County Commissioner Dave Toler to discuss the implications of Frontier’s outage and what steps the region needs to take to mitigate future outages.

In Greencastle, Indiana a Frontier phone outage disrupted service for DePauw University and the Putnam County Hospital Oct. 20.  In Meshoppen, Pennsylvania an outage caused by a downtown fire on Oct. 24 left 1,200 homes in the community without telephone service for most of the day.  Frontier has also suffered periodic copper wire thefts, particularly in the Appalachian region where illicit sales of copper can bring quick cash for those addicted to drugs.  In Eastern Kanawha County, West Virginia, some 100 customers lost service for at least a day after thieves yanked phone cables right off the poles.

Sandman

In Minster, Ohio village officials have hired a law firm to sue Frontier Communications over a wiring dispute.  Village officials accuse Frontier of being intransigent over the removal of telephone lines from poles to bury them underground.  Village Solicitor Jim Hearn told the local newspaper utility companies should be responsible for the costs of installing underground wiring.

In Wenatchee, a community in north-central Washington state, Frontier’s general manager is going all out to try and assuage customers Frontier will provide better service than Verizon.  Steve Sandman went as far as to hand out his direct number to the local media, inviting residents with service problems to call.  It’s (509) 662-9242.

Sandman promises other changes for his customers, according to The Wenatchee World:

Sandman said all Frontier technicians will be fully trained in the installation of phones, internet and TV. No more modems sent through the mail for the customer to install by themselves, he said.

“We’ll be there on the premises for complete installation,” he said. “And, if the customer needs it, we’ll provide some fundamental training on how to turn on the computer, hook up to the internet and get started using online services. Or give advice on how to use the TV remote.”

But all of these issues pale in comparison to the all-out battle forming in the state of West Virginia over broadband stimulus money awarded to help Frontier extend fiber broadband service to local government and community institutions.  One of their biggest competitors, Citynet, has launched a well-coordinated attack on what it calls “a flawed plan that does nothing to provide faster Internet speeds or lower the majority of Internet costs for West Virginians.”

Frontier will spend $40 million of federal broadband stimulus money on a network that will deliver fiber-fast speeds only to government, educational, and health care institutions.

Martin

James Martin II, president and CEO of Citynet argues Frontier is building a state of the art fiber network very few West Virginians will ever get to use, from which it will profit handsomely delivering service to government entities with which it already has contracts.  For the rest of West Virginian homes and businesses, Frontier will deliver outdated DSL service delivering an average of 3Mbps service at a time when adjacent states are enjoying service 2-4 times faster.

Citynet argues funding would be better spent on a middle mile, open fiber backbone available for use by all-comers.  Martin notes West Virginia is one of the few states in the northeast and mid-Atlantic region almost completely bypassed by the core Internet backbone.  The only exception is a fiber link connecting Pittsburgh with Columbus, Ohio, which briefly traverses the northern panhandle of West Virginia.  Citynet’s perspective is that West Virginia cannot improve its poor broadband standing — 48th in the nation, unless it has appropriate infrastructure to tap into for service.

As an example, Martin points to the community of Philippi, served by fiber to the home cable TV and broadband service.  The community’s fiber network is capable of Lamborghini speeds between homes within Philippi. But the community can only afford a single 45 megabit DS-3 connection to the outside world, provided by Citynet for just under $8,000 a month.  That line is shared among every broadband customer in Philippi trying to get out onto the Internet. The result is that Philippi residents can only buy a broadband account with speeds up to 2Mbps for $60 a month on that all-fiber network. That’s equivalent to being forced to drive that Lamborghini on a dirt road.

Martin says if the broadband stimulus money was spent on constructing a statewide open fiber backbone, they could sell the community a 1Gbps pipeline for around $3,000 a month.

Philippi's fiber optic broadband is not so fast, thanks to a bottleneck between the community and the rest of the Internet

“West Virginia is at a crossroads,” Martin said in a prepared statement. “We can build a ‘middle-mile’ solution for high-speed Internet infrastructure and create jobs, or we can stick with the status quo and watch West Virginia fall behind once again. The outcome will determine our state’s economic growth for years to come.”

The state, according to Martin, is reneging on its promise to build a broadband network that will deliver improved service to institutional users as well as at least 700,000 homes and 110,000 business in the state.

Instead, the project would only serve 1,000 “points of interest,” he said. The state’s plan would limit Internet speeds and make broadband service unaffordable, Martin argues.

“If the state were to build a true middle-mile solution, then businesses and residential Internet customers would see a significant reduction in price, as well as an increase in quality, capacity and speed,” Martin said. “Regretfully, the state chose to support a plan that relies on outdated telephone lines and a monopoly.”

Of course, Citynet does have a vested interest in the outcome of the project.  As a provider specializing in selling bulk broadband lines, they would be a prime beneficiary of a government-backed middle-mile broadband network.  Citynet’s argument that funding should be spent primarily on that network ignores the reality few new entrants are likely to enter West Virginia’s rural broadband market, with or without the benefit of a robust broadband backbone.  One of the biggest flaws of broadband stimulus spending is that much of the money will never directly provide “last mile” access to individual consumers and businesses that want broadband service where none is available.

Citynet needs to acknowledge much of West Virginia’s broadband is going to come from the phone company or a local municipality that elects to build its own network.  While cable companies deliver service in larger cities and suburban areas, large swaths of the state will never be wired for cable.  In fact, West Virginia is poorly covered even by wireless companies who see little benefit building extensive cell tower networks in the notoriously mountainous areas of the state that serve few residents.  The only existing rural telecommunications infrastructure universally available is copper telephone wires.  Like it or not, Frontier Communications will be the biggest provider of broadband in rural West Virginia.  A fiber backbone network alone delivers minor benefits to those residents who either cannot connect at any broadband speed, or are stuck with Frontier’s current 1-3Mbps DSL service.

Still, Citynet’s campaign is a useful reminder that too many broadband stimulus projects direct most of their money to networks ordinary consumers and businesses will never access.  And so long as local governments, schools, and hospitals “get theirs,” they have little interest in fighting to share those networks with consumers and for-profit businesses.

Citynet produced two radio ads criticizing West Virginia’s allocation of broadband stimulus money, and Jim Martin appeared on a local radio show to explain to West Virginia why this issue matters. (Ads from 11/2010 — Interview with Jim Martin: September 16, 2010) (18 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Ultimately, Verizon may get the last word, even after they abandoned the state’s landline customers.  Charleston, the state capital, has been selected as one of the early communities to receive Verizon Wireless’ new 4G LTE wireless broadband network, according to WTRF-TV:

Verizon subscribers in Charleston with devices that are 4G compatible will see changes within the next six to seven weeks. The whole city is expected to be covered by the network by mid-2011, according to company officials. From there, it will be expanded to cover Huntington, Parkersburg, Wheeling, Weirton, Beckley, Clarksburg, Morgantown, Fairmont and Martinsburg by 2013.

The company also plans to expand coverage along the entire Interstate 79 corridor from Charleston to Clarksburg.

The decision to include Charleston among the 39 metropolitan areas where Verizon would deploy its 4G network left many analysts of the industry scratching their heads, although they noted in online posts that Rockefeller chairs the Senate committee that regulates the telecommunications industry.

Should West Virginians find Verizon Wireless a suitable replacement for their landlines, Frontier may have bought themselves a pig in the poke.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/West Virginia Frontier 11-4-10.flv[/flv]

WTOV-TV covers the emergency services outage in northwestern West Virginia in two reports, WBOY-TV covers the Citynet-Frontier controversy, and WTRF-TV covers the arrival of Verizon’s LTE upgrade, starting with Charleston.  (7 minutes)