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Summary:

Updated with AT&T response: Time Warner Cable may have backed off its plans to meter broadband for now, but AT&T still has tiered broadband trials going on in Reno, Nev., and in Beaumont, Texas. And judging from one consumer’s experience with the trial, AT&T has backed […]

Updated with AT&T response: Time Warner Cable may have backed off its plans to meter broadband for now, but AT&T still has tiered broadband trials going on in Reno, Nev., and in Beaumont, Texas. And judging from one consumer’s experience with the trial, AT&T has backed off of its planned efforts to offer a 150-GB-per-month download tier — and it doesn’t inform users of the caps until after they’ve ordered service.

An AT&T subscriber near Lake Tahoe forwarded me a letter received via express mail a week after she signed up for naked DSL service from the ISP. The letter noted that AT&T has four tiers that allowed downloads of between 20 GB and 80 GB per month. When we reported on AT&T discussing its trial efforts with the Federal Communications Commission back in November, it said that the tiers would begin with a 20-GB-per-month tier and go all the way up to 150 GB per month. Update: AT&T spokesman Seth Bloom says that customers subscribing to AT&T’s fiber-to-the-node U-verse service can sign up for a higher 150 GB per month tier. While it may have lowered its tiers, t The carrier is sticking with a planned $1 per GB charge for users who exceed their limit.

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The smaller cap for lower speeds is disheartening, but what’s more disturbing is that the customer was able to sign up for broadband service without ever knowing they existed. The ISP makes no mention of caps in its online marketing materials or terms of service (screenshots below), and a sales representative said the carrier had no caps when the customer called in to ask. A week after she ordered her service, the customer said she received a letter from AT&T via express mail detailing the metered broadband limits.

I’ve reached out to AT&T to understand why it was pushing a smaller caps and to also figure out if this particular subscriber’s experience was common. Update: Bloom says visitors who get their information from http://www.att.net can access terms of service information that notes the trial, but we were unable to find the info when visiting from http://www.att.com. As Time Warner’s experience has shown, metered broadband isn’t something that the public is happy about. By not informing customers of the trial when they’re signing up for service, and by detailing one plan before the FCC then implementing another, AT&T is pulling a bait and switch with consumers and possibly regulators.

And for those of you ready to point out that this customer can go elsewhere with her business, the answer is no, she can’t. The local cable company, Charter Communications, doesn’t have cable out to her apartment building just yet. However, it too is planning some form of consumption-based broadband billing as well.

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  1. Todd Spraggins Monday, April 20, 2009

    This customer should notify their Attorney General’s office and BBB and register complaints of unfair business practices. There could be the potential of it being illegal misrepresentation since they did not inform the user of service limitations until after the service was purchased. This is not legal advice, just a fellow pissed AT&T indentured serf.

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  2. As a customer of AT&T broadband, I’m really disappointed to see caps looking more and more inevitable. I’m also surprised to see broadband providers in generally handling the implementation so poorly.

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  3. This is not AT&T’s problem or fault.

    You fine sucker voters have firmly placed people in office at the city, state and federal level who pandered to mercantilists.

    These politicians and regulators have reduced competition, creating monopolies and duopolies. It is not AT&T’s place to worry about it, since they’ve been given this monopoly by the powerful chosen elect.

    If you don’t like it, stop supporting it. Demand that local municipal regulations on competition in the market be removed. I’ll bet you see 4 competitors pop up to run infrastructure before the year is out.

    But, no. Let’s blame a market participant who is just doing what is smart: taking advantage of the law. You do understand this is what any regulation gives you, right? Less competition.

    Q.E.D.

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    1. I bet you wouldn’t see any competitors pop up. Ever. Regulation isn’t the problem.

      The communications markets are sick because of fantastically high natural barriers to entering the market. Nobody wants their front lawn dug up 20 times so 20 different provides can run their own cable to your doorstep, and few entities actually have the capital and resources necessary to provide service in any area large enough to generate a profit. Therefore, for most people, you have the phone company and the cable company, and that’s it because they managed to build the infrastructure out before they were direct competitors. Unless someone develops a cheap, reliable high-bandwidth wireless option, there isn’t going to be enough economic incentive to bring additional competitors into the market as long as cabling infrastructure is expensive and exclusive.

      So, how do we fix it?

      Lets’ imagine that every store chain had their own incompatible road systems, so that in order to start drive to Target instead of Walmart to shop, you have to sign a multi-year contract that required the roads to be ripped out in front of your house and re-poured to route you to the new stores. Insane, AND expensive! Why do we do the same with telco? Municipalities owns and operates the road system everyone uses, so let them own and operate the network, too.

      So, my idea is this: have local municipal government seize control of all local fiber and copper cabling under eminent domain. They can operate the network infrastructure themselves or contract it out to a third party. Then, any provider that wants to get into the market (voice, video, ISP) can do so withouth having to redo that work. They would bill the customer a usage tax that is passed to the city for maintenance and upgrades of the infrastructure.

      PRO:
      * True competition – the return of mom & pop ISPs with true broadband service.
      * Network infrastructure is built up where the community needs it, not business strategy.

      CON:
      * Your muny government has to be smart, and that alone may sink the deal. They have to either develop the know-how to operate it or hire someone that knows what they are doing, and the muny has to write the contracts in a way that assures they retain control.

      On a tangent, if conservatives (one of which I might still be) are being intellectually honest, they will do everything they can to support **markets**, not businesses. $0.02.

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    2. All this already occurred… At&t monopoly was torn down by the government in the 80’s. it’s not a monopoly anymore…
      keep up sweety, although att has pretty much been rebuilt to its formal self it still isn’t a monopoly because there is plenty of competition now days. the only reason the government gave them a monopoly back in the 40’s is because it was the only way to get the phone lines laid everywhere. so you should kind of be thankful because if you think there are too many phone lines now, think how bad it would have been had there been multiple phone companies laying out phone lines :)

      google it, i’m out!

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  4. @Dada — You seem to imply that there is a mountain of capital on the sidelines just waiting for anti-competitive municipal regulations to be removed. Once those are gone, you’d have us believe, venture capital and private equity will quickly throw billions of dollars at startup providers to overbuild the telco and cableco duopolists.

    I wish I lived in your world. My world is one in which venture capitalists throw nickels around like man hole covers and private equity flows as freely as glaciers. I challenge anyone to get a business plan funded that raises the hundreds of millions of dollars necessary to overbuild, say, Reno, so that you can better compete on price and service with AT&T and whoever they’ve got for cable.

    And if your solution is to have the government take infrastructure from incumbents and sell it to competitors at artificially low prices, think again. We tried that in 1997 and, aside from contributing to the dotcom/telecom bubble, it was am abysmal failure.

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  5. Does this apply to their uverse offering? I was planning on switching to them this summer for tv and internet.

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    1. Stacey Higginbotham Monday, April 20, 2009

      It only applies to U-verse in areas where they have a trial. Trial cities are Reno, Nev. and Beaumont, Texas.

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  6. These companies are now becoming even more deceptive with their practice. Since their announcement of pricing based on tier & cap make controlversial, they are silently trying out the unattentive subscribes. Beside AT&T, I’m thinking other companies are going to try, if not already, something similar, such as sending email to notify the existing subscribers the changes in their usages. Many unattentive users would think that it’s a proper practice but this is an outright violation of fair practice.

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  7. Oh dear. Someone’s been soaking up dogma again. Let’s not trot out the old canard that all regulation results in less competition. Easy enough to think up new rules requiring competition and abolishing monopoly/duopoly power.

    The problem with caps is that service providers want to have their cake and eat it too. The US has absurdly high broadband subscription fees for absurdly slow service in part because consumers want unlimited plans. A switch to metered bandwidth should be treated like a utility and billed at extremely low margins; service providers appear to want to implement metering at the same fat margins enjoyed for unlimited plans. Sooner or later Congress is bound to make them pick one or the other. It doesn’t cut both ways.

    Meanwhile, the real issue here is abject panic at the thought of becoming dumb pipes. Sorry guys, that’s all you ever were. De facto monopoly/duopoly power facilitated the illusion you were anything more than that. Look at the companies imposing caps and they’ve all got one thing in common – a vested interest in selling video subscriptions. Internet video is the death knell for these companies as anything other than dumb pipes and they’re trying to kneecap the new model in its infancy out of sheer terror.

    Why pay $100 a month for cable when I can watch Hulu for free? Solution – make it impossible for me to watch Hulu more than a handful of times per month. I can’t imagine what this is going to do to Xbox Live gaming. Parents have no idea what they’re in for…

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    1. Dan +1

      …and to the AT&T, Comcast, Time Warner apologists comment here:

      Our apathy let Net Neutrality die. We’ve got no one to blame but ourselves

      savetheinternet.org

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    2. Agree.

      What I know is: why are not Netflix, Microsoft, Apple, Amazon, and others who are dependent on people buying video over the internet not doing something about this? Why do we have to fight these companies battles?

      Because if I get capped (I have ATT DSL), I won’t get cable, I won’t get UVerse, I won’t buy video from Amazon or Apple, and I’ll be using a lot more of those costly mailing envelopes with Netflix. They will pay, I won’t.

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  8. To not inform (clearly) about these limits until service is started is criminal, period. As far as caps go, i’m not happy, but I can sort of understand the need for them in some cases.

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  9. They don’t tell customers about the limits until after they’ve signed up? How is that not fraud?

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    1. Most TOS agreements you have to click through have a clause about changes in terms of service at any time. From a business perspective, it’s not very ethical, and dumb as bricks from a customer service and PR perspective, but it isn’t fraud.

      The only time it’s fraud is when you sell something and deliberately work to deceive the customer. This sounds more like ATT being dumb and ignorant about what’s happening within its own company. Pretty typical for ATT.

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      1. austinandrew Monday, April 20, 2009

        Agree. I don’t think this was willful. Just poor implementation.

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    2. Fraud is more like a cover-up of illegal practice done. I think the right word here would be “deceptive practice”. Customers were not apparently known of “cap” until after the fact signing up the contract. It could be an intentional practice because of fearing that making known of “cap” could drive away customers, just like “bait and switch.” But that’s a speculative extreme. The more likely the case of such implementation is to “bury” this condition in Term and Condition of Services with industry jargon, possibly with the same motive. It’s between legal and fair practice, just depend on if the users passively pay the “bill” or voice against the practice.

      “Cap” and “tiers” are actually the problems. Since these companies did manage to force these practices early on on some the passive users, who just willing to pay the “bill,” it’s too lucrative a profit for them now to give up forcing cap and tiers on all their services. The idea that cap helping companies to recover the costs of service is not fully justify. Evidently, some companies can recover the costs through other means and conjunctive opportunities, make possible, by providing the normal uncap internet access. So really capping and tiers are just “double dipping” the users’ pockets.

      Meanwhile, the government are just recently realized the power of internet access and broadband networks. The potential and opportunity provided by such networks are unravellingly huge. In fact, the users and the demands for internet access are growing exponentially. Unless enough users and consumers making enough complaints, the government will not be quick enough to catch-on or even step in to settle the issue for good.

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  10. As far as calling the Gov’t and the BBB. HA! The Gov’t can’t really do anything, except maybe get you a gift card (to use off your HSI). Especially at the federal level. The BBB is nothing but a bunch of paid off a*s*oles who do nothing but collect “membership dues” from companies such as ATT to protect them.

    Either deal with the cap or don’t use their services. Also the customer CAN SWITCH to the Verizon Wireless EVDO reseller. UNLIMITED EVDO services for $60 per month no contract.

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    1. The BBB has helped me in an arbitration with Sprint, and with the Charter cable company. These were recent, it’s helped me with other companies in the past. I would suggest that perhaps you’re speaking not from knowledge or experience.

      Your suggestion to switch is an abysmal one. Yes, let’s not rock the boat, let’s just be passive, and give up and just take whatever we’re given.

      Glad it works for you, but you’ll have to excuse the rest of us if we don’t choose to lay down in the same road with you, waiting to run over.

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  11. Don’t complain just to the Attorney General or BBB. Complain to your Congressional Representatives. And get others in your community to do the same.

    I believe that ATT undercuts its own ground that this move is based on infrastructure costs. The fact that UVerse subscribers get higher caps demonstrates that ATT is making this move purely because of anti-competitive practices, and as a way of inhibiting the spread of video on the internet. Oh, and it can’t cry about how poorly its doing when its making very healthy profits, and from its broadband service.

    Other cable companies are making the same noises — why on earth the feds haven’t started investigating these companies for antitrust activities boggles.

    Regardless, people making lots of noise helped slow down Time Warner. People have to make a lot of noise about ATT, too.

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  12. Anybody else would be charged with wire fraud…

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  13. Anybody else would be charged with wire fraud…

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  14. if they want to meter they should be fair about it. offer a plan with nothing included and i only pay for what i use plus perhaps a very small monthly line rental fee. $1 per GB would not be so bad if i only have to pay for what use.

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  15. [...] customers are discovering the broadband that AT&T is selling them is capped with low limits, but they’re not being told about these limits until after they’re locked in. It would seem like this is the sort of thing that the FTC has been known to frown upon — not to [...]

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  16. [...] GigaOMblows the lid offwhat will likely be an upcoming target ofStoptheCap!— the ludicrous and unacceptably botched usage cap trial in Reno, Nevada by AT&T. [...]

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  17. [...] GigaOMblows the lid offwhat will likely be an upcoming target ofStoptheCap!— the ludicrous and unacceptably botched usage cap trial in Reno, Nevada by AT&T. [...]

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  18. [...] customers are discovering the broadband that AT&T is selling them is capped with low limits, but they’re not being told about these limits until after they’re locked in. It would seem like this is the sort of thing that the FTC has been known to frown upon — not to [...]

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  19. [...] of video inside corporate networks is straining resources, according to the carrier. But unlike the tiered service that AT&T is experimenting with for its last-mile consumer networks, it’s offering enterprise customers a service that helps them track, compress and prioritize [...]

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  20. Hah, you think US ISPs are bad? Wait till you see what Canada is upto. Check out http://www.tinyurl.com/bellsucks2

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  21. All internet accounts are already capped. The speed you connect at determines how much you can download in any given period. This caps your usage by whatever your speed is. AT&T is selling you an account with a built-in cap and then saying that they have to artificially lower it.

    Why is nobody (and by “nobody”, I mean government agencies) asking these ISPs why they’re selling services that they clearly can’t support? Would a restuarant be allowed to get away with only giving customers half their order? Can a home siding company charge you full price and then only do half your house? Would they let a cable company take away half the channels you signed up for because they say you’re watching the too much?

    So why are ISPs allowed to sell you service that you can’t actually use?

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  22. [...] in a time when cable bills are up by 7.5 percent and broadband providers are talking about caps and metered service, Verizon’s plans to deploy fiber to the home will put pressure on providers that end up [...]

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  23. [...] The Case of AT&T’s Incredible Shrinking Broadband Tiers Time Warner Cable may have backed off its plans to meter broadband for now, but AT&T still has tiered broadband trials going on in Reno, Nev., and in Beaumont, Texas. And judging from one consumer’s experience with the trial, AT&T doesn’t inform users of the caps until after they’ve ordered service. [...]

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  24. In Australia, caps are the norm; mobile GPRS/3GHSDPA rates peak at $A0.10/kb and ADSL is $A30/month with a 3GB cap with $A0.10/MB excess. Unlimited plansrequire $A100+ per month and a multi-year contract. To me, where local voice calls have always been charged at around $A0.30 per call, it is question of revenue model and resource allocation. The argument for no caps goes:
    + unlimited encourages innovative usage e.g. video distribution
    – carrier provisioning is more predicable with caps; should lead to lower pricing (without caps opposite is true)
    – caps lead to surprise bills for excess; no caps have predicatable billing
    + unlimited is simples, administratively; should be reflected in cost
    – most users have no concept of usage and cap, and most will never incur excess (arguable)

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  25. [...] The letter points to the recent metered broadband trials engaged in by Time Warner Cable and AT&T (although others are talking about them as well), arguing that the bandwidth caps are [...]

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  26. [...] Forget Net-Neutrality, How about Net-Reality? [...]

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  27. DSL does not need caps of any sort , DSL does not share a network with the entire country . DSL has it’s own direct connect pipeline to the internet from your modem. DSL caps are stupid criminal greedmongering ideas .
    I can understand why cable would need bandwidth caps beings everyone that uses a cable connection is sharing bandwidth with everyone else on that ISP’s network and p2p programs and bog a cable isp down .
    But DSL capping is just pure greed I will never support this crap , I may just go back to dial-up and say to h3ll with cable and dsl altogether .

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  28. [...] video inside corporate networks is straining resources, according to the carrier. But unlike the tiered service that AT&T is experimenting with for its last-mile consumer networks, it’s offering enterprise customers a service that helps them track, compress and prioritize [...]

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  29. [...] of video inside corporate networks is straining resources, according to the carrier. But unlike the tiered service that AT&T is experimenting with for its last-mile consumer networks, it’s offering enterprise customers a service that helps them track, compress and prioritize [...]

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  30. [...] Warner Cable, AT&T, PlusNet in the UK and most other UK broadband providers are  experimenting or have implemented [...]

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  31. [...] plans on wireline broadband networks such as those attempted in 2008 by Time Warner Cable and AT&T. In a speech this morning outlining his network neutrality proposal, Julius Genachowski said, [...]

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  32. I have been having trouble with my ATT DSL for a few weeks. I moved to a new house last June and switched to ATT because they seemed cheaper and Charter did not have line run to my house, although they have a pole I can run line to about 200 feet away. ATT promised speeds upto 1.5Mbps download for $30 per month. I ran multiple broadband speed tests yesterday, including late last night when use should be low. My lowest speed was 30kbps and the highest was 180kbps. I will be running cable and through conduit to the pole for Charter service. ATT can kiss my hard drive!

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