AT&T's Broadband Caps Go Live This Week And Are The Opening Salvo In An All-Out War On Cord Cutters

from the tightening-the-noose dept

For a company that just spent $69 billion on DirecTV to unlock "amazing synergies" across the TV, wireless and broadband sectors, AT&T's latest quarterly earnings subscriber tallies landed with a bit of a thud. The company actually posted a net loss of 54,000 video subscribers, a net loss of 363,000 postpaid phone subscribers, and a net gain of just 5,000 broadband customers during the quarter -- suggesting that any "synergies" AT&T envisioned are going to be somewhat slow in coming, if they arrive at all.

That AT&T spent $69 billion on a satellite TV provider on the eve of the cord cutting revolution -- especially given its fixed broadband network lags cable speeds and is in desperate need of upgrade -- turned numerous heads on Wall Street. But skeptics haven't yet really keyed in to the cornerstone of AT&T's plans or its ultimate secret weapon in the war on evolving markets: usage caps.

We've long noted how usage caps are little more than anti-competitive weapons and glorified price hikes levied on uncompetitive broadband markets. And this week, AT&T formally took aim at millions of you with the launch of usage caps on all of the company's broadband customers. Starting this week, U-Verse customers now face caps ranging from 300 GB to 1 terabyte depending on speed -- caps that users can avoid if they're willing to pay an extra $30 per month. Things are worse for DSL customers, who face a fixed cap of 150 GB and need to pay $10 for each additional 50 GB of data consumed.

But usage caps don't just have the benefit of letting duoplists like AT&T and Comcast charge customers more money for the same exact product. In addition to using caps to punish cord cutters, AT&T hopes to (ab)use usage caps to prevent cord cutting altogether. The company has announced it's eliminating caps entirely for customers who subscribe to DirecTV service. In other words, you can avoid aggressive price hikes on your broadband line -- if you pay even more money for a TV service you may not even want. AT&T's doing something similar in wireless, where customers can now only get unlimited data -- if they subscribe to DirecTV.

So while the merger may not have provided notable "synergies" yet, the long play is that it gives AT&T the ability to effectively abuse the lack of fixed-line competition -- to drive captive, capped customers toward AT&T TV services. And as the justification for usage caps has been increasingly debunked, ISPs have stopped really justifying the moves at all. AT&T's statement on the matter barely even tries to give a reason for the new limits:

"We want to continue providing a great experience for our Internet customers so we’re giving U-verse® Internet customers more choices and more data, including an unlimited data option available to any U-verse Internet customer."

And here's the thing: AT&T's only just getting started. Leveraging its NFL Sunday Ticket platform acquired in the merger, AT&T says it wants to launch not one -- but three nationwide streaming services later this year in a bid to become the streaming video provider across the United States. And should the FCC's net neutrality rules fail to stand up in court (and perhaps even if they do), guess who's streaming video service won't count against any of these usage restrictions?

Filed Under: broadband, cord cutting, data caps, tv, usage caps
Companies: at&t, directv

UK Queen's Speech: More, Faster Broadband... But It Will Be Censored And Spied On

from the some-good,-some-very-bad dept

So over in the UK, they just had the annual Queen's Speech in which the Queen lays out a bunch of regulatory proposals, and (as per usual) it's a bit of a mixed bag when it comes to the internet. As plenty of the headlines have blared, one part calls for universal broadband access, with a minimum speed of 10 Mbps (I'm assuming they're only talking about downstream speeds, rather than symmetrical, but who knows...). It would also include "automatic compensation" if your internet connection goes down. That's a very good idea as a starting point (I'd argue the speed should be even higher, but it's a start).

But... with that comes some things that sound a lot... worse. First off, there would be an expansion of the ridiculous "porn licensing" program in the UK whereby sites will need to do "age verification" if they have adult content. Not that anyone's saying that porn should be easily accessible to kids, but age verification is hardly foolproof, and can lead to a variety of other problems, including undermining the privacy of web surfers and just a general chilling effect on creating certain types of content online, for fear of it being locked away or filtered if it's deemed too mature. There are also concerns about how the government implements this ridiculous plan for 10-year prison sentences for infringers, and how that will impact a free and open internet.

And then there's the expansion of internet surveillance that is equally worrisome. There's a lot of stuff about "restricting extremist activity" and trying to stop the children from being radicalized ("think of the children!"). In theory, those must sound like nice ideas, but in practice, they're a broad framework for a massive censorship regime. Free speech groups are already raising concerns about all of this:

The new proposals should avoid creating an environment that could make it even harder for people of all faiths and ideologies to express their beliefs and opinions, the groups said. Current legislation already prohibits incitement to violence and terrorism, and a compelling case for broadening them further through civil measures has not been made.

“The government’s move to counter extremism must not end up silencing us all,” said Jodie Ginsberg, Chief Executive of Index on Censorship. “We should resist any attempts to make it a crime for people of faith to talk publicly about their beliefs, for political parties to voice unpopular views, and for venues from universities to village halls to host anyone whose opinions challenge the status quo. We urge the government to use its consultation to ensure this does not happen.”

As with many regulations, many of these feel like "x is a problem, something should be done, this is something" kinds of solutions, without much thought or concern to the nuances behind the implementation and the wider consequences (intended or not) of those proposals. That's unfortunate, especially when it comes to a platform as important and central to our lives as the internet.

Filed Under: broadband, queen's speech, surveillance, uk

ISPs Are Now Forcing Cord Cutters To Subscribe To TV If They Want To Avoid Usage Caps

from the damned-if-you-do dept

We've noted time and time again how broadband usage caps on fixed-line networks are arbitrary, unnecessary, and harm innovation. They're also a useful weapon against streaming video competitors, and the natural evolution of TV competition. Caps can be used to either punish users who try and cut the cord with higher prices, but they also allow ISPs to exempt their own streaming services from said caps (something currently being done by both Verizon and Comcast), thereby giving these services a distinct and unfair advantage in the market.

But broadband ISPs are now coming up with a new way of attacking cord cutters: forcing them to subscribe to television if they want to avoid usage caps.

Back in January, AT&T announced that the company would be happy to remove usage caps on its wireless network, but only if you subscribe to DirecTV or U-verse TV service. Then last month, AT&T carried this idea over to its fixed-line broadband network, announcing that it would be imposing new usage caps on its broadband users starting May 23. While AT&T says it will generously allow users to pay $30 more per month to avoid usage caps entirely, it also announced that users who subscribe to its TV services will be able to avoid usage caps entirely.

This month, an Oregon company by the name of Bend Broadband followed suit, informing its users that it would be happy to remove its usage caps (ranging from 150 GB to 500 GB), but only if users subscribe to television service. Bend offers up a misleading explanation for why caps are necessary in the first place in a company FAQ:

"The continued migration of Netflix usage from mailed DVD to Internet streaming/download, as well as other data intensive uses of the Internet, are impacting all providers of high-speed Internet service. While we certainly acknowledge and appreciate that content rich services like Netflix make our high-speed offering more valuable to the end user, the volume of data associated with this content drives significant incremental investment in the network and the need to purchase more bandwidth in order to maintain the user experience and this must be funded."

Right, but that's bullshit. U.S. residents already pay some of the highest prices for broadband in the developed world; money that any earnings report will clearly illustrate is more than enough to offset what at this point is only modest network upgrades. As one cable CEO recently noted, most of the heavy investment is over, and the name of the game now is milking these uncompetitive markets for all they're worth until either broadband competition magically sprouts from the ether, or regulators wake up from a deep slumber and shut down the price gouging party.

Usage caps on fixed-line networks are nothing more than rate hikes on uncompetitive markets, and anybody claiming otherwise either has been swindled by a good salesman, or is selling you something themselves.

There's absolutely nothing good about this trend. ISPs are using a lack of competition in the broadband space to impose usage caps. They're then using caps to force subscribers to sign up for TV services they may or may not actually want. It's a mammoth, misleading and anti-competitive abuse of two markets simultaneously, all sold to consumers under the lie that ISPs need even more revenue to keep funding unprecedented investment and innovation. In reality, the entire push may just be one of the largest cons ever perpetrated on consumers in the modern communications era.

Filed Under: broadband, bundling, cord cutting, data caps, isps, tv, tying, usage caps

AT&T Buries Language In Missouri Traffic Bill To Hinder Broadband Competition

from the the-best-lawmakers-money-can-buy dept

Prompted by AT&T, Missouri passed a state law in 1997 that hamstrings towns and cities looking to build local networks to shore up broadband coverage gaps. Since then, AT&T has made repeated attempts to expand those restrictions further, fearing a growing rise in public/private partnerships from the likes of Google Fiber, Ting, or the countless towns and cities tired of AT&T's pricey, slow broadband service. After a failed attempt last year, AT&T this year introduced protectionist bill HB 2078, shortly after shoveling $62,000 in campaign contributions to state leaders.

AT&T's bills vary in scope across the twenty-odd states in which they've been passed. Some ban community broadband altogether. Some saddle towns and private partners with additional restrictions so combating the incumbent duopoly is financially impossible. Others, like HB2078, employ language that forces towns to hold time-consuming public referendums, at which point AT&T can bury the proposal with a wave of negative PR and lawyers.

All of them have tried to sow partisan discord under the pretense of AT&T just being concerned about taxpayers funding the bill for such projects. But the laws serve just one purpose: protect AT&T's stranglehold over an uncompetitive broadband market. That's obviously a much easier sale in states willing to quite literally let AT&T write state law in exchange for cash donation.

The problem for AT&T is that as Google Fiber and other similar efforts have shown a light on the benefits of public/private partnerships to shore up lagging broadband markets, AT&T's behavior has become increasingly unpopular among both political parties. So when HB2078 stalled after passing through the Missouri House committees on Utility Infrastructure and the Select Committee on Utilities earlier this year, AT&T lobbyists got decidedly more clever. They convinced Missouri House Representative Lyndall Fraker to bury the language of HB2078 into an unrelated bill dealing with Missouri traffic issues:

"The bill seems to have lost momentum since mid-March but its sponsor, Rep. Lyndall Fraker, is taking another approach to make sure his bill gets passed, come hell or high water. Session ends May 13th, so he is now banking on procedural tricks, rather than the substance of his legislation. On May 2nd, when a bill relating to traffic citations, SB 765, came before the body, Fracker proposed to amend it with language from HB 2078. Some of the amended language is even more destructive than the original proposal in HB 2078."

As Ars Technica notes, whether the bill can get conference committee approval now that the public has noticed what AT&T and Fraker attempted to do isn't clear. Though should AT&T succeed, it would only help cement Missouri as a broadband backwater, keeping consumers from fleeing to alternative broadband options as AT&T prepares to impose major new usage caps and overage fees across the majority of the ISP's markets later this month.

Filed Under: broadband, lobbyists, missouri, muni broadband
Companies: at&t

Brazil Has To Pause Adoption Of Broadband Usage Caps After Consumers Revolt

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

It appears to have only taken the better part of the last decade, but we finally appear to be reaching the point where people have finally realized that broadband caps aren't about managing congestion, they're about turf protection. Here in the States, companies like Suddenlink, Comcast AT&T and CenturyLink have all rushed toward adopting caps and overage fees as not only a pointed weapon against streaming video competitors like Netflix, but as a nifty way to charge more money than ever for a product that's actually getting cheaper and cheaper to provide.

The same thing is happening in Brazil, where ISPs have convinced telecom regulator Anatel it's absolutely necessary to shift from flat-rate pricing to metered usage lest the Internet explodes (it's surely just coincidental that Netflix's popularity is soaring). And, like here in the States, regulators have been more than happy to help repeat broadband industry claims that you need low caps and overage fees because it's just not possible to continue offering unlimited broadband:

"...The president of the telecom watchdog Joao Resende told journalists at a press event yesterday that it is unlikely that Anatel will challenge operators, since "not all models can accommodate an unlimited service provision and also because the networks won't be able to cater for everybody." Resende added that operators are guilty for making users think that unlimited service provision would be available indefinitely.

The problem is that most consumers and press outlets are perfectly capable of reading earnings reports, and realize that flat-rate broadband has been perfectly sustainable, and that caps and overage fees are really just massive price hikes on uncompetitive markets:

"Companies argue that caps are needed to prevent network congestion, but continued investment in infrastructure to cope with forecast demand consistently announced by these same firms in recent years suggest that usage caps really have nothing to do with network congestion issues. In addition, bandwidth costs for telcos largely remain fixed, and despite major growth in their user base, providers such as Vivo are paying less today for raw bandwidth than they were a decade ago. So really, there is no technical or economic justification for a cap."

Anatel had been pondering regulation that would have codified this shift toward metered usage, but the unprecedented amount of public backlash appears to have the regulator re-thinking its agenda:

"According to Anatel, the decision to let service providers introduce the data limits has now been stalled due to the several complaints that were received, and will remain on hold until the proposals for the new plans have been submitted by operators and analyzed by the watchdog."

That doesn't mean Anatel won't ignore consumers anyway, but it does highlight how consumer activism and revolt can at the very least still give telecom regulators pause. Instead of letting ISPs wage war on innovative services with unnecessary usage caps, less beholden regulators have realized their focus should be on improving broadband competition, which in turn improves speeds (Akamai currently ranks Brazil 80th in overall broadband speed) but organically punishes neutrality violators and prevents carriers from being able to pummel captive markets with such glorified rate hikes.

Filed Under: anatel, brazil, broadband, data caps, usage caps

Ted Cruz Pushing Bill Protecting Large ISPs From Competition

from the defenders-of-the-status-quo dept

We've long noted how ISPs have convinced (read: paid) more than twenty states to pass protectionist broadband laws that prohibit towns and cities from improving their own broadband infrastructure. The bills not only saddle community broadband with onerous restrictions to make them less viable, they often even block towns and cities from striking public/private partnerships with companies to improve broadband. Last year, the FCC voted to take aim at two such laws in Tennessee and North Carolina, arguing the laws do little but protect the status quo, hindering the development of alternative broadband delivery options.

Pressured by ISPs, both states quickly rushed to sue the FCC, saying that the agency was violating "states rights" (ignoring the rights violated by letting ISPs write awful state law). The FCC, in contrast, says its Congressional mandate to ensure "even and timely" broadband deployment under the Communications Act gives it full legal authority to take aim at such restrictions.

Enter Presidential hopeful Ted Cruz, who is now pushing amendments alongside Nebraska Senator Deb Fischer that would make a few changes to the FCC Process Reform Act. According to an early version of the proposal provided to industry trade magazines, the bill would tie the FCC's hands when it comes to trying to eliminate state broadband protectionism:

"FCC Chairman Tom Wheeler says those laws are pushed by incumbents to prevent price and service competition and the FCC has stepped in to preempt state laws in Tennessee and North Carolina. The FCC is currently in a court battle over that decision. The amendment, according to the amendment list obtained by Multichannel News/B&C, "Prohibits the FCC form preventing states from implementing laws relating to provision of broadband Internet access service by state and local governments."

This is far from the first effort of this kind. Tennessee Representative Marsha Blackburn pushed a similar measure last year. Usually, the measures try to sow partisan discord by claiming the FCC has just gone power mad, again hoping nobody notices giants like Comcast and AT&T performing state lawmaker puppetry in the periphery to the detriment of local communities.

Note these towns and cities aren't getting into the broadband industry because they think it's fun; they're exploring alternative options because the private sector has failed across huge swaths of the country. Unfortunately, large ISPs like Comcast, AT&T, and Time Warner Cable quite literally control most state legislatures, ensuring things stay that way. ISPs could prevent these kinds of efforts by providing better, cheaper broadband -- though obviously lobbying our compromised state legislative systems is notably less expensive than deploying new fiber -- or lowering prices to compete.

The problem for Cruz is that while ISPs have historically tried to frame municipal broadband as a partisan debate to sow discord, that has been less effective over time as public/private efforts from the likes of Google Fiber or Tucows have highlighted the need for some bigger picture thinking. The majority of such networks are now being built in more Conservative leaning areas, and the idea of municipal broadband tends to have broad, bipartisan support. Apparently, disdain for duopoly apathy and high prices is one of the few things most Americans can agree on.

As such, rushing to defend giant telecom providers from competition doesn't seem like the brightest bet for somebody trying to win hearts and minds ahead of a national election.

Filed Under: broadband, competition, lobbying, muni broadband, states, ted cruz

Nervous About Regulatory Action, Comcast Bumps Usage Caps To One Terabyte Per Month

from the giving-you-a-little-more-rope dept

After taking a PR beating for several years on the matter, Comcast has announced that it's significantly bumping the company's usage caps. Since 2013 Comcast has been conducting a "trial" in many of the company's less competitive markets, capping usage at 300 GB per month, then charging users either $10 per each additional 50 gigabytes, or providing users the option of paying $30 to $35 per month extra to avoid the cap entirely. But according to a new blog post by the cable giant, the company will be bumping that usage allotment to one terabyte per month starting June 1.

Users will still need to pay $10 per each additional 50 gigabytes of data consumed should they go over the cap. And they still have the option of paying a penalty should they want to avoid usage caps entirely, though Comcast has bumped the price of such an option to an additional $50 per month. Comcast's quick to insist that the terabyte cap is so generous, few consumers will ever find themselves running into the limit:

"A terabyte is an enormous amount of data. It’s far more than most of our customers will ever use in a month. Today, more than 99 percent of our customers do not come close to using a terabyte. Our typical customer uses only about 60 gigabytes of data in a month – that’s far less than a terabyte (in fact, 940 gigabytes less), or less than six percent of a terabyte."

Of course, while that's true today, that doesn't mean it will be true tomorrow. And while the increase is certainly welcome, that doesn't change the fact that usage caps on fixed-line networks still aren't necessary. As we've repeatedly noted, Comcast's cost to provide broadband service remain fixed or in decline, and the company's own support documents and engineers have suggested the caps have nothing to do with congestion or network necessity. That's because they have everything to do with protecting TV revenues from Internet video competitors.

While Comcast's announcement implies Comcast is graciously responding to consumer feedback, the origins of the company's decision lie elsewhere.

With the FCC imposing a seven year ban on usage caps as a Charter merger condition this week, many believe the FCC is signaling it intends to finally crack down on usage caps. The agency has tap-danced around the issue for years, but with a growing number of companies exploring the option -- and a growing number of companies (including Comcast and Verizon) exempting their own content from such caps, pressure has mounted steadily on the FCC to wake up from its regulatory coma on the subject. If that's to happen, it will likely happen after the industry's lawsuit against the agency over net neutrality is settled.

Comcast's also responding to the fact that AT&T is planning to impose its own usage caps starting May 23. AT&T plans to begin imposing usage caps ranging from 300 GB to 1 terabyte, and, like Comcast, charge $10 per each additional 50 GB consumed. Also, like Comcast, AT&T intends to begin charging customers a $30 premium should they want to avoid the charges, effectively charging customers significantly more money for the same service they had yesterday. Comcast bumping its cap to more closely match AT&T's is the U.S. broadband market's rather twisted version of competition.

It seems likely that some news outlets will frame what Comcast's doing as "generous." And while a definite improvement, it shouldn't overshadow the fact that these caps are little more than glorified price hikes on uncompetitive broadband markets, and an anti-competitive weapon against the threat of Internet video disruption.

Filed Under: 1 terabyte, broadband, cable, data cap, fcc, usage cap
Companies: comcast