Verizon Begins 'Testing' DSL Usage Caps It Refuses To Call Usage Caps

from the tightening-the-noose dept

For years now broadband providers have used a lack of competition to impose all manner of obnoxious additional fees on the backs of broadband consumers. That includes arbitrary and obnoxious usage caps and overage charges, which not only raise rates on captive customers, but quite intentionally make using streaming video competitors more expensive and cumbersome. Once caps are in place, large ISPs often exempt their own content from usage caps while still penalizing streaming competitors (aka zero rating).

ISPs used to claim that such limits were necessary to manage network congestion, but as that argument was increasingly debunked (caps don't actually help manage congestion) they've shifted their justifications to more flimsy alternatives. These days, ISPs usually offer no justification at all, or issue vague declarations that they're simply trying to help users "better understand their consumption habits."

Case in point: Verizon DSL customers in Virginia recently began noticing language on Verizon's website indicating that the company's already expensive (and slow) DSL service will now face ambiguous "usage" limitations depending on the speed of your tier. While caps are now pretty common among cable ISPs, it's the first time Verizon has begun flirting with such limits:

For some context: Verizon has long been trying to get rid of DSL customers it doesn't want to upgrade so it can spend more of its time focused on slinging ads at Millennials via its new Oath (Yahoo and AOL) brand. It has been doing this by either refusing to repair and upgrade these users, or by constantly imposing rate hikes on lines that can't even get close to the FCC's 25 Mbps definition of actual "broadband." Because regulations require they keep servicing these lines (since most were taxpayer subsidized), they've had to engage in more creative methods to drive users off of them.

When I pressed Verizon as to why the company felt the need to impose any "usage" restrictions upon slow, over-priced DSL lines at all, it first informed me that these aren't caps because they aren't being enforced (yet). It then tried to claim that the company was simply trying to help consumers "see their usage":

"We're not applying data caps, overage fees or any sort of restrictions on DSL customers," Verizon claims. "There is a small trial in Virginia of displaying data usage in customer billing. It affects less than 2,000 homes over three remote terminals. But while the customers are shown data allowances of 150-250 GB, none of them are charged if they exceed those amounts."..."We've never had a way for these customers to see their usage," a company spokesman added, stating this is "just a very small trial with that." "Lots of cable companies display broadband data usage to customers even though they don't impose data caps. I'm afraid this isn't as exciting as you think," the spokesperson argued.

But there's simply no legitimate reason for Verizon to even be hinting at usage caps. The company's DSL lines are so slow, the cost of providing the service is largely negligible, and the volume of bandwidth these lines consume are largely irrelevant. And if the company really wanted users to understand their consumption, it could have simply provided an actual usage meter that mirrors the meters you often see on routers or the OS. So why is Verizon doing this?

As ISPs flirt with usage caps, usually they'll first employ "soft caps" (read; intially unenforced) and a usage meter (usually inaccurate) aimed at "educating" users on their monthly bandwidth consumption. This usually warms consumers up to later efforts at hard caps and overage fees (usually around $10 per each additional 50 GB). It's like the boiling frog anecdote: once users are ok with the idea of such restrictions, ISPs can then tighten the noose slowly to further monetize these users -- with less of a backlash if than if you'd simply imposed hard caps from the start.

But in this case Verizon didn't even bother to offer users an actual usage meter showing their usage. I pressed Verizon as to why, if it's simply concerned about consumers understanding their usage, it didn't just provide users with an actual bandwidth meter? Why even use language hinting at usage limits at all? It's at that point the company stopped responding to my inquiries.

Again, Verizon has made it abundantly, repeatedly clear that it doesn't want to keep these DSL users as the company shifts focus. For Verizon, the goal is either to drive them to Verizon Wireless, or to a cable competitor (that in many instances will upsell them to a Verizon Wireless service bundle anyway). The very worst case scenario for Verizon is these users stick around and wind up paying even more money for last-generation DSL. "Educating consumers" is traditionally the very last thing on an ISP exec's mind when a company begins flirting with this kind of language.

It's pretty clear Verizon was experimenting with the idea of caps and simply hoped the limited footprint meant nobody would notice. And with net neutrality now formally slated to expire June 11, there's going to be a lot more "experimentation" where this came from.

Filed Under: broadband, broadband caps, competition, dsl, usage caps
Companies: verizon

As Broadband Usage Caps Expand, Nobody Is Checking Whether Usage Meters Are Reliable

from the what-could-possibly-go-wrong dept

Despite the hype surrounding Google Fiber and gigabit connections, vast swaths of the U.S. broadband industry are actually becoming less competitive than ever. As large telcos like Windstream, Frontier, CenturyLink, and Verizon refuse to upgrade aging DSL lines at any scale, they're effectively giving cable providers a growing monopoly over broadband in countless markets. And these companies are quickly rushing to take advantage of this dwindling competition by imposing entirely arbitrary, confusing and unnecessary usage caps and overage fees in these captive markets.

The benefits of these pricey limitations are two fold: they allow cable providers to not only jack up the price of service, but they're an incredible weapon against the looming threat of streaming video competition. Caps and overage fees make using streaming alternatives notably more expensive, helping to protect legacy TV revenues. But cable operators are also exempting their own streaming services from these caps (as Comcast did with the launch of its own, new streaming platform this week), while still penalizing competitors. This kind of behavior is just one of several reasons why net neutrality rules are kind of important.

Oddly though, you'd be hard pressed to find politicians or regulators from either party that give much of a damn that this massive distortion of the level internet playing field is occurring. Which is why, unlike in other sectors, nobody anywhere is verifying whether ISP usage meters are accurate. As a result, there have been countless instances where users say they've been billed for bandwidth despite their modem being off or the power being out. And numerous studies have indicated ISPs routinely abuse this lack of oversight by overcharging for service.

Comcast has, of course, been at the forefront of imposing these usage limitations and overage fees. And unsurprisingly, consumers pretty consistently state that the cable giant -- already world renowned for historically-abysmal customer service -- isn't tracking usage or billing these customers accurately. Users who were billed for usage while away on vacation have had no real ability to challenge Comcast's meter readings. And Ars Technica documented another user this week who says he battled with Comcast for months over errant meter readings before cancelling fixed-line broadband service entirely:

"At one point, Weaver says he left town for three days and had left his wireless router unplugged, though the modem itself was plugged in. After his trip, Comcast's meter showed that he "used 500GB in three days of not even being home and not having a Wi-Fi network running," Weaver said. He then tried disconnecting the modem for three days and found that Comcast's meter finally stopped counting data usage, he said.

"I have been told no less than eight times that I can rest easy if I would just buy the $50 unlimited data plan," he said. "This whole thing reeks of scam."

In short it goes something like this: lobby to keep the broadband industry uncompetitive, use that lack of competition to impose arbitrary and unnecessary limits that hinder competitors, then charge users $50 more per month if they want to enjoy the same, unlimited connection they used to enjoy. It is a scam, but again, you'd be hard pressed to find absolutely anybody in government that gives much of a damn, despite the ploy's negative impact on competition and the health of the internet. What a wonderful time to dismantle some of the only rules we have protecting consumers from this kind of behavior, don't you think?

Filed Under: accuracy, broadband, broadband caps, competition, data caps, meters
Companies: comcast

ISPs Are No Longer Even Bothering To Provide Bogus Excuses For Their Expanding Use Of Bullshit Usage Caps

from the pay-more-money-for-the-same-exact-service dept

A few years ago, large ISPs began taking advantage of a lack of competition in the broadband market by imposing arbitrary, unnecessary and confusing usage caps and overage fees. Initially, these companies tried to claim that this was necessary to manage congestion on their networks. As data emerged indicating that this claim was bullshit, large ISPs were ultimately forced to acknowledge as much and back away from the claim.

Shortly after that, ISPs instead began claiming that these glorified price hikes were necessary as a simple matter of "fairness," and the industry narrative-du-jour became that it only made sense that heavier users should pay more money for broadband.

This excuse was bullshit too; Americans already pay some of the highest prices for broadband of any developed nation under the flat-rate pricing model, which any large ISP earnings report will show you is perfectly profitable. And if "excessive consumption" really was a problem, it was a problem caused solely by a small number of users that could easily be shoved toward business-class tiers. It didn't require saddling everyone with confusing and expensive surcharges.

These days, after being hammered for years for bogus justifications, large ISPs no longer even provide a reason for these rate hikes. Take Cox Communications for example. The company has quietly announced it would be expanding usage caps into several new markets, charging users $10 per each additional 50 GB of data users consumed over a one terabyte limit. The e-mail being sent to users, which is getting widespread attention on Reddit, doesn't even really bother to offer a justification for the price hike:

Several news outlets and reporters (including myself) tried to get Cox to explain its reasoning for the hikes, and the company simply refused. Of course there's a simple reason ISPs no longer try to justify this behavior: they don't have to.

Consumers in captive markets can't vote with their wallets, and cable providers are slowly but quietly enjoying a growing monopoly over next-gen broadband as telcos refuse to keep pace and upgrade their DSL networks. The end result is the ability for these companies to impose massive new rate hikes that not only result in users paying more money for the same-exact service, but help incumbent ISPs penalize the use of would-be streaming competitors. Zero rating an ISPs own services -- while still penalizing competitors like Netflix -- adds another layer of anti-competitive adventure to the proceedings.

But fear not! Cox did tell some news outlets that the company would soon be letting users avoid the caps and subscribe to an unmetered connection, for an added, unspecified cost. In other words: if you don't want to pay us more money for the exact same service, please pay us more money for the exact same service. Why? Because we can, and regulators couldn't care less.

Whenever the conversation about broadband caps pops up, many people quickly get bogged down in debate over whether or not a terabyte is fair, losing sight of the fact that these limits are utterly unnecessary, and we wouldn't be seeing them at all in a healthy, competitive market. What's deemed "fair" today won't necessarily be fair in the multi-user 4K streaming households of tomorrow. And without competitive pressure, there's nothing ensuring these caps scale with use. In fact, ISPs are incentivized to tighten the noose further once you've agreed to have your usage metered.

And with the current Ajit Pai-led FCC clearly intent to turn a blind eye to both a lack of competition and the predatory behavior that results from it (be it violations in privacy or net neutrality), there's plenty more anti-competitive shenanigans and feebly-justified nonsense waiting in the wings.

Filed Under: broadband, broadband caps, competition, fcc
Companies: cox

Charter's Trying To Kill Recent Merger Conditions Banning Usage Caps, Net Neutrality Violations

from the pay-more-money-for-the-same-product dept

For decades now the FCC has been an expert at imposing utterly meaningless merger conditions. Usually these conditions are proposed by the companies' themselves, knowing full well these "demands" are utterly hollow -- and FCC punishment for ignoring them will be virtually non-existent. The end result has been a rotating tap dance of merger conditions that sound good upon superficial press inspection, but wind up being little more than hot air. It's a symbiotic relationship where as the telecom sector consolidates (often at the cost of less competition) the FCC gets to pretend it's not selling consumer welfare down river.

But last year something weird happened.

When Charter proposed its $79 billion acquisition of Time Warner Cable and Bright House Networks, former FCC boss Tom Wheeler brought in net neutrality advocate Marvin Ammori to help hammer out conditions that wound up actually being meaningful. Under the deal, Charter was banned from imposing usage caps, engaging in interconnection shenanigans with content providers like Netflix, or violating net neutrality (even if the rules themselves were killed) for a period of seven years. Charter was also required to expand broadband to 2 million additional locations.

Not too surprisingly, broadband providers and the new incumbent-cozy FCC are getting right to work trying to eliminate those conditions entirely. New FCC boss Ajit Pai is circulating an order that would kill requirements that Charter overbuild into competing ISP territories, something demanded recently in a letter to the FCC by the American Cable Association. As is kind of telecom sector status quo, smaller cable companies say they'll take their investment ball and go home if the threat of additional, regulator-mandated competition isn't eliminated:

"To respond to growing consumer demand for increased bandwidth, all of us have been planning to upgrade the electronics on our networks and to deploy more fiber closer to customer locations over the next five years (the lifespan of the overbuild condition). Many of us have been planning to extend our networks to serve communities adjacent to our current service territories. But we have been forced to reconsider, scale back, or halt these investments in the wake of the Commission’s order."

Of course that's not how competition works, and companies believing they get to choose when you upgrade their networks speaks to the level of competition these companies already see. Elsewhere, broadband industry-funded think tanks like the Competitive Enterprise Institute (CEI) are also pushing Pai to kill off the usage cap ban, trotting out the long-standing industry claim that usage caps are all about fairness:

"...the Order requires New Charter to refrain from imposing “data caps” or setting "usage-based prices" for its residential broadband Internet access services for seven years after the transaction closes. Given that “the record makes clear that online video places enormous demands upon the networks of Charter and Time Warner Cable and increases their capital costs,” Commissioner Pai asked a simple question in his dissent: “Who should bear those costs?" Because the Order concludes that “all customers must do so equally,” New Charter’s natural response to this condition “will be to increase prices on all consumers in order to amortize the cost of serving a bandwidth-hungry few."

Granted if you've been paying attention to the usage cap debate, you realize this is a stale canard. Industry executives have acknowledged that caps have nothing to do with network management, and aren't an effective way to police network congestion anyway. As any earnings report highlights, caps aren't a financial necessity either, since flat-rate broadband has been incredibly profitable for the industry for years.

What usage caps are is a price hike imposed on uncompetitive markets. Granted they also help ISPs protect their TV revenues from the rise of internet video by penalizing competing streaming services, while letting the incumbent's own services sail through without penalty (aka zero rating). Anybody believing that imposing caps and overage fees on all users is really about making sure a few people "pay their fair share" should steer clear of swampland and bridge salesmen.

Granted Charter's latest merger has still proven harmful for consumers, who say the company has frozen broadband upgrades and raised rates dramatically in the wake of the megamerger. If consumer welfare were truly a U.S. telecom regulatory criteria the deal likely would have never been approved at all, but the cap condition specifically at least kept things from being arguably worse in the face of limited competition. If the FCC's looking to give a middle finger to the millions of customers impacted by this deal, killing the conditions -- and requiring these users pay even more money for the same service -- is a fantastic way to do so.

Filed Under: broadband caps, data caps, fcc, merger conditions, net neutrality, usage caps
Companies: charter, time warner cable

Comcast Dramatically Expands Unnecessary Broadband Caps -- For 'Fairness'

from the pay-more-for-the-same-service! dept

For years, we've noted how there's absolutely zero financial or technical justification for usage caps on fixed-line networks. They don't really help manage congestion, and as any incumbent ISP earnings report indicates, flat-rate broadband has proven incredibly profitable. But thanks to limited competition, caps are a great way to raise rates, hamstring streaming video competitors, and give incumbents a distinct advantage for their own services (aka zero rating). Ultimately, caps disadvantage startups and small businesses, while making broadband more expensive and confusing for everyone.

Needless to say, Comcast is pursuing this option with reckless abandon.

The cable giant this week again expanded its usage caps into a massive number of new areas according to an updated Comcast FAQ. As it stands, Comcast customers in capped markets face a 1 terabyte usage limit, after which users pay $10 per each additional 50 GB consumed, or they pay $50 a month for the same unlimited consumption they previously enjoyed. Hoping you'll ignore the fact that there's no functional justification for such limits, Comcast's FAQ and press release go well out of their way to try and claim that they're imposing this draconian new price hike out of...'fairness':

"A terabyte is a massive amount of data. More than 99 percent of our customers do not use 1 TB of data in a given month. But for those who do use more, we have options. Our data plans are based on a principle of fairness. Those who use more Internet data, pay more. And those who use less Internet data, pay less."

Bullshit. If "heavy users" were really a concern, these users could be shoveled to business-class tiers, since they make up a minority of Comcast's overall customers. No, the goal of usage caps isn't fairness, it's to impose punitive new restrictions on all of a company's customers, who can't vote with their wallet because they don't have any broadband alternatives (or if they do, don't have any alternatives that don't also cap usage). The end result is customers being forced to pay significantly more money for the same, unlimited service they had yesterday.

Then, to add insult to injury, these users are told this confusing new price hike is somehow an act of corporate altruism and fairness.

Comcast hopes that you'll be distracted by the fact that at the moment, most people shouldn't bump into the terabyte cap (recently raised from 300 GB after Comcast began worrying the FCC might actually start doing its job). As such, Comcast provided a handy little video to try and explain just how generous the cable giant is being:Again though, focusing on the fact that people aren't bumping into the cap now ignores the certainty that they will bump into the cap down the line. As 4K video streams and technologies we haven't even invented yet emerge, consumers will inevitably face having to ration their usage or pay steep penalties. And, since Comcast exempts its own streaming service from these caps, those users are being incentivized anti-competitively to stick with Comcast's video services.

Usage caps are an embarrassing con being played on an unsuspecting public by one of the least liked companies in any industry in America. More embarrassing perhaps is the fact that the FCC, tasked with protecting broadband consumers, hasn't shown the slightest interest in either cracking down on this behavior, or if not -- ensuring that usage meters are accurate. The end result is vastly more expensive broadband, disadvantaged competitors, and frustrated and angry consumers whose complaints to the FCC simply aren't being heeded.

Filed Under: broadband, broadband caps, data caps
Companies: comcast

CenturyLink Claims Broadband Caps Improve The 'Internet Experience' And Empower Consumers

from the pay-more-for-less,-you're-welcome dept

Broadband ISP CenturyLink this week confirmed it's following on Comcast's heels and starting to impose usage caps and overage fees on the company's already pricey DSL services. As we've long noted, there's no reasonable defense for what's effectively a glorified rate hike on uncompetitive markets, but watching ISP PR departments try to justify these hikes has traditionally been a great source of entertainment (at least until you get the bill).

According to a new CenturyLink "excessive usage policy (pdf) being circulated by the company, customers in early trial markets will soon face monthly usage caps of 300 GB for connections 7 Mbps or slower, and 600 GB monthly caps on connections 7 Mbps or higher. Exceed that usage allotment and you'll face overage fees of $10 per each additional 50 GB, up to a monthly maximum of $50 per month. The trial is starting in Yakima, Washington and is expected to expand into other CenturyLink territories later this year.

As data has increasingly shown usage caps to be little more than a cash grab (and not really an effective way to manage congestion should it even exist anyway), many ISPs have stopped giving any justification whatsoever for their rush to cap customers. CenturyLink's PR department, however, does some yeoman's work in its new FAQ, first proclaiming that they're just nobly trying to improve customers' "internet experience":

"Data usage limits encourage reasonable use of your CenturyLink High Speed Internet service so that all customers can receive the optimal Internet experience they have purchased with their service plan."

Yes, charging your customers more money for the same (or less) service sounds like a lovely experience indeed, on par with a day of camping or swimming in the lake! Note that there are people who do consume an "excessive" amount of bandwidth, but traditionally those users can simply be pushed toward business-class tiers. No, these restrictions aren't about determining what's reasonable in terms of bandwidth consumption, they're about saddling all broadband customers with usage restrictions to protect legacy TV revenues from the rise of Hulu, Netflix, and other streaming services.

After the story first broke this week CenturyLink took this narrative a bit further, issuing a press statement to all news outlets claiming that charging more money for the same service is an act of consumer empowerment:

"CenturyLink is conducting usage-based billing trials in Yakima, WA, to allow customers to control their Internet usage. This gives our customers proactive management of their usage and ensures they are being billed fairly. Very few customers will see any change in what they pay for Internet service, as customers will only be billed an additional amount if they exceed the Internet usage limit for the High-Speed Internet plan they purchased. CenturyLink will analyze the data from this trial to determine next steps and make decisions regarding further rollout of usage-based billing."

As we've noted with Comcast's caps, large ISPs like to suggest these price hikes are a "trial" where customer input matters. This lets them argue to regulators that they're not aggressively penalizing users in captive markets, they're just engaged in "creative price experimentation." It also gives consumers the false impression that their feedback matters, when ISPs know perfectly well that consumers loathe being charged more money under what's a highly punitive and often confusing new billing system.

As for usage caps and overage fees giving consumers "proactive management of their usage" while ensuring "they are being billed fairly," keep in mind that unlike traditional utilities, no regulator checks the accuracy of ISP meters. That has historically resulted in ISPs billing consumers for phantom usage, or even charging them for consumption when the power is out or the modem was off. ISPs want to bill like utilities, but the faintest mention of them being regulated as such results in no limit of histrionics and hand wringing from the sector.

Meanwhile, CenturyLink knows full well that customers can't do a damn thing about this glorified rate hike, because they either have no other broadband option -- or their alternate option (usually Comcast) is imposing usage restrictions as well. Behold the competitive glory of a broken broadband market few in government -- and even fewer in the telecom sector -- are actually interested in fixing.

Filed Under: broadband caps, customer experience, isps
Companies: century link

Broadband CEOs Admit Usage Caps Are Nothing More Than A Toll On Uncompetitive Markets

from the pay-more-for-less dept

Time and time again, we've noted how the broadband industry's justifications for usage caps just don't hold water. And while the industry used to falsely claim that caps were necessary due to congestion or to save us all from the bullshit "exaflood," the industry has slowly but surely stopped using any justification at all for what's really just glorified rate hikes on uncompetitive markets. These days, big ISPs like AT&T and Comcast looking to impose usage caps either give no justification whatsoever, or pretend they're doing consumers a favor by providing more "choice and flexibility."

But over the last year, we've seen more and more broadband industry executives making it abundantly clear that usage caps just aren't necessary. For example, Dane Jasper, CEO of independent California ISP Sonic, this week made it clear that there's simply no good justification for caps as the cost to provide broadband services continues to drop. Apparently, you'll be shocked to learn, the "exaflood" was just a bogus bogeyman concocted to help ISPs scare regulators into turning a blind eye to price gouging:

"The cost of increasing [broadband] capacity has declined much faster than the increase in data traffic," says Dane Jasper, CEO of Sonic, an independent ISP based in Santa Rosa, Calif.

Jasper, of course, has reason to challenge his much larger rivals. However, he also backed up his argument with real numbers. A few years ago Sonic (formerly Sonic.net) spent about 20 percent of its revenue on basic infrastructure. Since then, the cost of routers, switching equipment and other related gear declined so much that Jasper says the company's infrastructure costs are now only a bit more than 1.5 percent of its revenue.

For this reason, Sonic has no plans to impose data caps, according to Jasper.

And though Sonic tends to have more consumer friendly policies overall, Jasper's not alone in admitting this. Frontier Communications, growing at an astounding rate after recently acquiring Verizon's unwanted Texas, California, and Florida broadband customers, this week stated it also has no plans to impose caps anytime soon. Why? Well one reason is they bungled the merger so badly they're walking a PR tight rope right now. But company CEO Dan McCarthy also makes it clear the cost to deliver broadband is dropping, making caps unnecessary:

"We want to make sure our products meet the needs of customers for what they want to do and it does not inhibit them or force them to make decisions on how they want to use the product. The nice part of technology and what has happened is that transport costs continue to decline and by putting in the packet optical fabric it takes away a lot of those constraints," McCarthy said. "There may be a time when usage-based pricing is the right solution for the market, but I really don't see that as a path the market is taking at this point in time."

Even companies that do plan to impose usage caps have occasionally admitted that caps are completely untethered from network or financial realities.

St. Louis-based cable operator Suddenlink has caps ranging from 250 GB to 550 GB, depending on speed. Its customers pay the increasingly-standard $10 per each additional 50 GB consumed, and have the "option" of paying an additional fee to avoid usage caps entirely. Yet outgoing Suddenlink CEO Jerry Kent made it abundantly clear on a conference call last fall that the days of investing serious amounts of capital into the network are long gone (especially for cable, where DOCSIS upgrades are relatively inexpensive). These days, the name of the game is milking your captive customers for all they're worth:

"I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down."

These are three CEO admissions worth remembering as companies like AT&T (which just started heavily capping its customers last month) and Comcast (whose usage cap "trials" expand at a rabid clip) push whatever bullshit, half-baked excuse is in vogue this month for what's effectively just a toll on captive broadband customers.

Filed Under: broadband, broadband caps, competition, dane jasper, data caps, exaflood, price gouging, usage caps
Companies: at&t, comcast, frontier communications, sonic, suddenlink

FCC To Ban Charter Communications From Imposing Usage Caps If It Wants Merger Approval

from the throttled-and-capped dept

If you recall, the FCC and DOJ blocked Comcast's acquisition of Time Warner Cable, in large part because of the sheer volume of nonsensical benefits Comcast tried to claim the deal would bring consumers. When Charter Communications subsequently announced its own acquisition of the company, it decided to take a different tack; most notably by taking a more congenial tone with regulators, dialing back the tone-deaf rhetoric and astroturf, and even hiring long-time net neutrality and consumer advocate Marvin Ammori to help seal the deal.

And it's now apparent that Charter's approach paid off. After months of meetings with regulators, both the FCC and the DOJ have announced they intend to approve the deal -- with a few conditions. After Bloomberg leaked word of the looming approval, FCC boss Tom Wheeler issued a statement saying (pdf) that most of the conditions being attached to the deal will focus on preventing Charter from harming Internet video competitors.

According to Wheeler, Charter won't be able to impose caps, engage in interconnection shenanigans, or bully broadcasters into withholding content from streaming providers (something Dish complained about) for a period of seven years:

"In conjunction with the Department of Justice, specific FCC conditions will focus on removing unfair barriers to video competition.

First, New Charter will not be permitted to charge usage-based prices or impose data caps. Second, New Charter will be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of internet traffic to broadband customers. Additionally, the Department of Justice’s settlement with Charter both outlaws video programming terms that could harm OVDs and protects OVDs from retaliation– an outcome fully supported by the order I have circulated today. All three seven-year conditions will help consumers by benefitting OVD competition. The cumulative impact of these conditions will be to provide additional protection for new forms of video programming services offered over the Internet."

The FCC's ban on usage caps is probably the most interesting or the proposed conditions. The agency has by and large turned a blind eye to usage caps and zero rating of content so far. In part because it was unsure whether or not the courts would uphold the regulator's new net neutrality rules (which should be settled any day now), but also because the FCC has been hesitant to engage in broadband rate regulation. Like net neutrality, usage caps are a sign of a lack of competition in the broadband market, and streaming competitors like SlingTV worried that the Charter merger would simply result in yet another giant like Comcast -- with a vested interest in using the lack of broadband competition to hammer emerging streaming TV evolution.

Granted the conditions aren't all that revolutionary in that while Charter has flirted with usage caps, it currently doesn't impose them anyway. And on the interconnection front, the devil will be in the condition details (the threat of neutrality rule enforcement appears to have solved many of these disputes, for now). Meanwhile, consumer groups like Free Press say they aren't impressed, arguing the debt created by the deal will be passed on to Charter customers in still-uncompetitive markets, one way or another:

"Customers of the newly merged entity will be socked with higher prices as Charter attempts to pay off the nearly $27 billion debt load it took on to finance this deal. The wasted expense of this merger is staggering. For the money Charter spent to make this happen it could have built new competitive broadband options for tens of millions of people. Now these billions of dollars will do little more than line the pockets of Time Warner Cable’s shareholders and executives. CEO Rob Marcus will walk away with a $100 million golden parachute."

And while it's probably true that Charter will just find some other way to impose rate hikes on these subscribers, the conditions are at least an interesting signal from the FCC (and the DOJ, that issued its own statement on the approval) that it recognizes the growing threat usage caps are posing to the future of innovative services. Still, the conditions will be no substitute for real broadband competition, the lack of which a bigger, badder Charter will simply have to find new and creative ways to abuse.

Filed Under: antitrust, broadband caps, conditions, data caps, datacaps, doj, fcc, merger, usage caps
Companies: charter, time warner cable

CenturyLink Follows Comcast's Lead, To Start Charging Broadband Overage Fees

from the more-money-for-the-same-shitty-product dept

You can add CenturyLink to the growing number of ISPs charging more money for the same product thanks to limited broadband competition. The company told attendees of an earnings conference call this week that it would be following Comcast's lead and conducting a "trial" of broadband usage caps and overage fees sometime later this year. The company lost 22,000 DSL customers last quarter, and clearly believes that layering an already inferior product with new restrictions and higher prices will surely make its customers happy:

"...Regarding the metered data plans; we are considering that for second half of the year. We think it is important and our competition is using the metered plans today and we think that explore those starts and trials later this year is our expectation."

According to CenturyLink's "excessive use policy," the company has capped customers on 1.5 Mbps or slower lines at 150 GB a month. Customers on lines faster than 1.5 Mbps enjoy the luxury of a 250 GB monthly limit. And whereas ISPs used to provide bullshit justifications for such restrictions (the network congestion bogeyman! it's only fair!), as those excuses have been shown to be nonsense over the years, ISPs have just stopped offering any. Here's how CenturyLink's website justifies these glorified price hikes:

"CenturyLink is committed to providing an optimum Internet experience for every customer we serve. To accomplish this, CenturyLink needs to ensure that customers are on the rate plan that meets their data download requirements. Of the millions of CenturyLink High-Speed Internet customers, a very small fraction has exceeded the download usage limits provided with their monthly plan. It is for this reason that CenturyLink has made the decision to place download limits on residential plans.

That's not really a reason, that's just words arranged to look vaguely like sentient logic. Of course the real reason is because they can.

In most markets CenturyLink enjoys either no competition at all, or they face a cable provider that also has usage caps in place. That's why with the exception of a few cherry picked markets in places like Seattle, CenturyLink users still enjoy speeds circa 2001 or so. And why not add insult to injury, and combine pathetic last generation broadband speeds (which cost very little to actually provide already) with aggressive restrictions and cutting edge, next-generation overage fees?

Like Comcast, CenturyLink calls this a "trial" to keep regulators at bay, since "creative pricing experimentation" sounds so much better than "price gouging uncompetitive markets and erecting unnecessary obstacles to innovation and streaming competitors." Given the FCC has yet to bat an eyelash at the practice, this logic appears to be working. The FCC's also apparently blind to the fact that nobody is confirming whether usage meters are accurate, or that ISP's are now exempting their own services from unfair competitive advantage.

So while you'll hear a lot of media hype about cherry picked gigabit broadband deployments paving the way to our glorious connectivity future, a lack of competition, usage caps and zero rating are ensuring that for broadband customers in most markets, the reality is going to look decidedly less futuristic.

Filed Under: broadband, broadband caps, competition, dsl, net neutrality, overage fees
Companies: centurylink, comcast

Comcast-Funded Think Tank: Broadband Usage Caps Make Netflix Streaming Better. You're Welcome.

from the sinking-to-new-logical-lows dept

As we've noted for some time, the broadband industry (and all the think tanks and politicians that work for it) have spent the last few years trying to vilify Netflix. That's primarily due to the company's support of net neutrality, but also its opposition to anti-innovative and anti-competitive broadband usage caps. These attacks usually start with the criticism that Netflix now dominates around 37% of peak downstream traffic (as if that's a bad thing), followed by some bizarre and unfounded claim that Netflix should be forced to "pay its fair share" (read: give us a cut of revenues despite us having no legitimate claim to it).

While these assaults had quieted down for a while, Daniel Lyons (not the fake Steve Jobs Daniel Lyons) and the American Enterprise Institute last week came out with a bizarre missive on broadband caps, in which Lyons tries to claim that broadband usage caps are a great way to force Netflix "to become a better corporate netizen." As noted above, Lyons starts by highlighting how Netflix consumes a huge amount of peak Internet capacity:

"Netflix has long reigned as one of America’s most significant Internet-traffic generators. Network equipment company Sandvine reports that the video-streaming company is by far the leader in peak period traffic, responsible for more than 33 percent of all fixed Internet traffic during peak hours — more than twice the share of the next-biggest competitor, YouTube. This means that at times when the Internet is most susceptible to congestion, Netflix alone is responsible for one out of every three packets sent through the network."

For clarity it should be noted that Netflix customers are responsible for this consumption. Netflix consumers who, in the United States, already pay more for bandwidth than consumers in most developing countries. Netflix in turn not only pays for bandwidth, it now pays ISPs for direct interconnection to their networks, after ISPs were accused of intentionally degrading peering points to force its hand. Everybody is paying, and paying, and paying some more -- so it doesn't matter one iota how much bandwidth Netflix is consuming -- because consumers are demanding and (probably over)paying for it.

Back in December, Netflix announced it was making some changes to the way it intelligently encodes its titles. This shift involves encoding titles differently depending on type and genre, since cartoons (with static backgrounds) technically eat less bandwidth than live action movies. The move was prompted by one thing: this month's expansion by Netflix into 130 more countries. Netflix's primary concern? Making sure that networks -- especially of the mobile variety in developing nations -- would have a more consistent and trouble-free viewing experience. It was just a smart, albeit admittedly belated shift in improving the way Netflix operates.

Apparently seeing a flimsy logical opportunity for the ages, Lyons tries to claim that Netflix was forced to improve its efficiency -- solely thanks to the wonder and glory of broadband usage caps:

Usage-based pricing forced Netflix to be more mindful of the size of its digital footprint. Because they face potential overage charges, consumers are becoming more aware of the amount of bandwidth their online activities consume. This leads edge providers such as Netflix to develop more efficient methods of delivery, in response to increased consumer sensitivity. The result is a more efficient operation that benefits everyone by freeing up network capacity — which is like broadband providers improving speeds, but without having to install new network lines."

That's an astonishing, incredible load of bullshit.

Netflix has long allowed capped users to adjust streaming quality to manage consumption, but to claim caps are to thank for these improvements is aggressively dishonest. Lyons and his friends at the AEI are funded by Comcast, the same company that's aggressively expanding utterly unnecessary usage caps on millions of consumers. Those caps have one overarching function: to raise rates on uncompetitive markets, give Comcast's own services an unfair advantage, and to protect Comcast TV revenues from Internet video.

There's clearly some worry on the part of Comcast and its think tank friends that the FCC will finally get off its ass and begin pressing Comcast on its anti-competitive abuse of usage caps, but if this is the best argument the AEI can come up with, Comcast may want to reconsider its disinformation budget for 2016.

Filed Under: broadband, broadband caps, data caps, interconnection, streaming, usage caps
Companies: aei, comcast, netflix