Stop the Cap! – a view from the U.S.

I recently received and posted a comment from Phil Daumier, editor of the advocacy site Stop the Cap! Since comments tend to get buried, I decided to post it here as a free-standing item (trusting this will pass as friendly promotion rather than infringement).

Phil has an important message to convey – all the more topical given the story posted on theircharter cable, capssite yesterday: Confirmed: Charter Cable About to Ruthlessly Enforce Usage CapsThese are the Charter caps as they stand at the moment:

  • Base Service: 100GB per month
  • Plus & Max: 250GB per month
  • Ultra: 500GB per month

I’d say these caps should make Canadians green with envy, when compared to the Draconian limits imposed by Rogers and other Canadian ISPs. Rogers’ four lower tiers (of six) are capped at 2, 15, 60 and 80 gigs respectively (see my earlier post here). OTOH, I see Charter staff are going after “violators” with a vengeance, not just over-charging for alleged over-use, but potentially threatening to cut off their subs in certain circumstances.

A company rep wrote Stop the Cap! with some qualifiers, including one of my favorite pieces of ISP bullshit:

In December, we [Charter] will begin reaching out to a select group of customers whose use is excessive to make them aware of their usage patterns, to help identify possible causes (e.g., unsecured wireless routers or viruses) and review security options with these customers to reduce the risk of unauthorized Internet use.

No worries, kids, you’re not being punished, they’re just “reaching out” to you like so many orphaned kittens. Charter will be doing this for a “select group” – the usual bandwidth porkers who are spoiling it for everyone else. And they don’t want to interfere with your experience online, just “review security options” to reduce the risk of “unauthorized Internet use.” Unauthorized by whom? Directed to which villains? Crackers? ID thieves? Spammers? It only looks like an attack on their own customers…

You get the point. Here’s Phil’s comment, verbatim and unedited:

Stop the Cap! was instrumental in organizing a consumer revolt against Time Warner Cable’s Internet Overcharging experiment in 2009. Our group was created specifically to fight these schemes, which include usage limits, so-called “tiered pricing” and speed throttles.

We were so successful, our local congressman at the time introduced a bill in the House of Representatives to ban this kind of pricing without real evidence it was financially necessary, and I stood next to Sen. Charles Schumer (D-NY) on the lawn of the cable company in Rochester, N.Y., to bid the experiment goodbye two weeks after word broke it was forthcoming.

We’ve lived and breathed this issue for more than two years now, starting with Frontier Communications introducing a 5GB usage limit on DSL in the summer of 2008 (we fought and got that rescinded as well). Since that time, we’ve battled these schemes in both Canada and the United States because they are simply not financially justified for wired broadband.

As you’ve already noted, there is no real “pay per use” model in effect in either country. Users are crammed into tiers with usage allowances they dare not exceed without fear of overlimit penalties that are punitive. Bandwidth and traffic costs are dropping, often less than a dime per gigabyte in the States, costs to deliver the service are falling as well, yet these companies claim congestion forces them to implement such schemes, even as their investment in network expansion has plummeted.

Canada’s schemes have become ubiquitous because Bell can force them on the wholesale market and cable companies are never ones to leave money on the table. If Bell caps and throttles on the phone side, Rogers, Shaw, and Videotron won’t miss the opportunity to do likewise.

Thankfully, at least Canadians have upper limits on overage penalties. For now. In the United States, proposed overages were either unlimited or topped out at a whopping $100. If that came to pass here, you can bet a shiny loonie they’ll do likewise in Canada.

Time Warner’s original proposed pricing would have literally tripled pricing for unlimited service and especially punished so-called “lite users” — those placing the least demand on their network, with ridiculously low limits and huge overlimit fees. These paltry allowances delivered with low speeds called out provider arguments caps are about controlling congestion.

In reality, they’re about monetizing broadband service to a new degree — speed AND usage.

As we’ve reported this week, Wall Street analysts are predicting providers will slap caps on to prevent customers abandoning video packages. One went as far as to suggest package re-pricing — dramatically increasing broadband pricing while lowering video package pricing to get people to keep their video service.

We’ve also covered the fact Netflix has seen a lower take rate than expected for its streaming service north of the border. Once customers see what high quality streamed video does to their usage allowances, Netflix can become a dangerous proposition for households on a budget.

We’ve argued with providers from phone companies to cable companies about this issue and asked them to prove their case. We are handed provider-financed studies predicting “exafloods” and innovation and job erosion unless providers can “get creative” with pricing. But the innovation was already lost in today’s North American duopoly market, where phone and cable companies deliver the least amount of service for the highest possible price.

If providers continue to insist they cannot survive with flat rate pricing even with the incredible margins they earn on broadband service, it’s one of the best arguments around to nationalize broadband service to deliver world class speeds at reasonable prices. Just as public highways made an enormous difference in our manufacturing economies, broadband for the public good will mean a lot to our digital economies of the future.

But this future is threatened if phone and cable companies get to erect tollbooths and impediments up and down the line.

Phillip Dampier
Editor, Stop the Cap!

data caps

D.E.